Order In My Little Trading Universe

As a born German I have a natural disposition toward creating order in my little universe. Early in my career this sometimes posed to be a challenge as trading as an activity is not anything like solving math or physics problems. There’s a lot of chaos, randomness and emotions involved – all of which get in the way of what ‘logically is expected to happen’ based on prior observation at least. I think we all have been through this process to some extent or the other. Once you start learning what to look out for and what really works however you revert back to relying on a few selected particulars and combined with mental discipline you arrive at order in your little trading universe.

In other words – if we survive the first few years of trading we all form some type of mental paradigm that in some way or the other gives us a reliable edge. Many traders simply refer to their ‘system’ but I think it’s a lot more than that – part of it is also the ability to look at a selection of charts and to immediately get a sense of what really goes on down in the ugly underbelly of the financial markets. We would like to think it’s all based on logic and common sense but the human brain works in mysterious ways and many decisions we think are analytical at first start with some type of emotional response.

We then start to bring in logic and common sense and try to justify these emotions with the rules we have developed over time. My personal process of doing that is this very blog and writing the articles many of you have enjoyed actually help me personally to arrive at what I believe are reasaonble conclusions as to why I am taking a particular stance on the market. It also commits me to that very outlook – unless of course I decide to change my mind. As you can imagine exposing my conclusions to a critical (and also paying) audience however ups the ante by quite a bit, I can assure you that 😉

Anyway, what I in particular look out for, and what has worked quite well in the past, are inflection points where I see several unrelated markets arrive at a similar setup – you could call it synchronization points. That in itself raises the odds on not just taking advantage of each respective setup I am looking at but all across the observed vertical. Today just so happens to be a great example of a synchronization point and I give you one chat for free and the other two are for the subs only:

We start with the spoos (i.e. the E-Mini S&P 500 futures) which have been happily bubbling higher, just as proposed in yesterday’s update (but who’s boasting?). But I did also mention that we would be running into a cluster of resistance and for a more in-depth overview please refer to my post. On a more short term basis the spoos are nearing the ‘end of the easy money game’ turning point at which I would probably expect a bit of profit taking. Our candidate for a short term reversal is the 1160 mark which just so happens to be near the 100-hour SMA, the 25-day SMA, as well as the 1159.75 NLBL. A breach above that will eventually set us up for a push higher but we all know they’re not going to make it that easy for us.

Now, as hinted above, there are two more charts which seem to be in exact sync with what is happening over on the spoos:
[amprotect=nonmember] Charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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The NZD/USD is also approaching resistance – in this case we have  an hourly NLBL plus the upper 25-hour BB, the upper 100-hour BB. On top of that there’s a daily NLBL tight at 0.7708 and the lower daily 100-day BB line looming above (obviously near that hourly resistance cluster). Look familiar?

The USD/CAD is painting the exact opposite with an hourly NLSL at 1.0369, near the lower 100-hour BB and the daily NLSL lurking at 1.036. Turn the chart 180 degrees and you basically have the same exact setup.

I’m going to keep a very close eye on the FX side as that is really where the game is being played and decided. And I strongly recommend you consider these three charts before structuring your positions. This is one of these moments when things all come to a point and when the odds are starting to favor those few who pay attention to those subtle synergies between what appear on the surface to be completely unrelated markets.
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My apologies for plastering all over Volar – I strongly recommend you take a look at his latest sentiment update.

Cheers,