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Sergey Golubev
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Weekly Fundamental Forecast for GOLD (based on the article)


XAU/USD"The Federal Reserve released its 4th quarter projections this week and although the committee did upwardly revised their year-end GDP forecast to 2.4%, they lowered inflation expectations with Core PCE (Personal Consumption Expenditure) revised lower to just 1.5% from 1.7%. This was the second consecutive reduction we’ve seen in the Fed’s inflation forecast and continues to suggest the central bank remains uneasy with the continued softness in price growth. It’s also worth noting that the interest rate dot-plot suggests the Fed remains committed to one more hike this year, expectations for the terminal or longer-run rate were lowered with the median forecast now calling for a nominal rate of 2.75%. The point is that although markets did need to reprice the December, the end rate suggests the glide path will likely be even slower than expected. That said, look for USD gains to be limited. From a technical standpoint, the prices do remain at risk near-term with the decline likely to offer favorable points of entry for the bulls."

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Chart was made on MT4 using iFibonacci indicator and MaksiGen_Range_Move indicator from CodeBase (free to download).

Sergey Golubev
Moderator
99093
Sergey Golubev  

Weekly Fundamental Forecast for Crude Oil (based on the article)


Crude Oil - "The price of a barrel of Brent crude, the global oil benchmark, hit a near 5-month high this week as the supply/demand imbalance continues to narrow but traders are now looking for additional action from OPEC when the current arrangement ends in March 2018. The latest release from the joint OPEC - Non OPEC Ministerial Monitoring Committee (JMMC) said that in August compliance with the production cuts hit a record 116%. And recent reports from both OPEC and the EIA showed that demand for oil continues to rise as global growth expands."

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Chart was made on MT4 using iFibonacci indicator and MaksiGen_Range_Move indicator from CodeBase (free to download).

Sergey Golubev
Moderator
99093
Sergey Golubev  

An Interview With Technical Analyst Chris Ciovacco (based on the article)

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John Navin: Technical analysis as a profession -- how did you get started?
Chris Ciovacco: With an engineering degree, an analytical mind, and a love for economics, a career in the financial markets was a natural fit. Technical analysis is one of the tools of the trade.

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Navin: In the morning, as markets are opening here, what's the first thing you look at?
Ciovacco: The S&P 500. If you want to know what the weather is like, look out the window.  If you want to monitor the health of the U.S. stock market, look at the S&P 500.

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Navin: Many chart readers are expressing concern about the length of this bull market, but you've remained bullish. What are your reasons?
Ciovacco: Since the U.S. election, the weight of the evidence has clearly said the odds of good things happening are higher than the odds of bad things happening.  Many indexes around the globe have broken out from multiple-year consolidation patterns, which looks more like the early stages of a secular bullish trend rather than the late stages of a bull market. In short, we have remained bullish because the facts in hand have remained bullish.

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Navin: This chart of the S&P 500's "percent of stocks above the 50-day moving average" shows declining peaks from late last year until now. What are your thoughts on this?
Ciovacco: Market breadth speaks to the percent of stocks participating in a rally.  Given both the Vanguard Total Stock Market ETF (VTI) and the Vanguard Total World Stock ETF (VT) made new all-time highs this week, it is difficult to make an argument the present rally does not have broad participation.  We also have new all-time highs this week in the NASDAQ, Dow, and S&P 500.  If we want some additional strong breadth evidence, we can add the new all-time high in the equal-weight S&P 500 ETF (RSP). Participation in the rally has been very broad. Can stocks rise when the S&P 500's "percent of stocks above the 50-day moving average" is making a series of lower highs?  Yes, the chart below shows declining peaks that took place over a 347-day period.  During the same period, the S&P 500 gained 24.38%.
The daily correlation between $SPXA50R and the S&P 500 has moved between -0.64 and 1.00 over the past 15-years.  Sometimes $SPXA50R zigs and the S&P 500 zigs sometimes $SPXA50R zigs and the S&P 500 zags.  If $SPXA50R or any other measure of breadth leads to a problem for the stock market, it will show up on the chart of the S&P 500; something that has not happened yet.

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Navin: You identify your work as "trend following." How would you briefly describe that to non-professionals? And, how would you differentiate trend following from "passive investing"?
Ciovacco: Unlike a passive pie-chart investor, a trend-follower waits for a bullish trend to form before taking a position.  A pure trend follower maintains the position until the trend rolls over.  Therefore, a long-term trend follower exits during the early stages of a new bearish trend and only reenters a market when a new bullish trend has formed.  A passive investor would hold during the entire period, which means a passive investor using an ETF (SPY) or mutual fund tied to the S&P 500 would have had to endure a drawdown of 47% in the 2000-02 bear market and a 55% drawdown in the 2007-09 bear market.
Unfortunately, passive investing only works if you hold during the good periods and bad periods. Even if you hold during the bad periods, it can result in an incredible amount of emotional strain and countless sleepless nights.

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Navin: What's the best book on technical analysis? How about trend following?
Ciovacco: Since there are countless ways to approach the financial markets, investors and traders are best served by reading a wide variety of books and deciding which approach best fits their personality.
Systems are easier to follow when you have developed them on your own.  It is more difficult to maintain the level of required discipline when using a black-box strategy created by a third party. Books that fit well with my personality are Trading For A Living by Dr. Alexander Elder and Trend Following by Michael Covel.

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Navin: What are your thoughts on value investing -- the Warren Buffett/Graham & Dodd methods? For example, are they compatible with technical analysis -- or are they contradictory?
Ciovacco: One of the great things about the financial markets is the more you study history, the more you respect our way is not the only way.
Markets consider everything, including valuations.  Technical analysis is a method for monitoring markets. Therefore, value investing is compatible with technical analysis.
Warren Buffet is rewarded for correctly identifying value when the stock price starts to go up.  Therefore, Mr. Buffet, like anyone else, needs a bullish trend to make money. A technical investor also needs the market to see value for a bullish trend to continue. Whether they know it or not, a technical investor is incorporating the concept of value into all their decisions, since the market takes valuation into account.

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Sergey Golubev
Moderator
99093
Sergey Golubev  

EUR/USD Intra-Day FundamentalsECB President Draghi Speech and range price movement 

2017-09-25 14:00 GMT | [EUR - ECB President Draghi Speech]

if actual > forecast (or previous one) = good for currency (for EUR in our case)

[EUR - ECB President Draghi Speech] = Speech about the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee, in Brussels. 

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From rttnews article :

  • "Euro area economic recovery is now firm and broad-based, and the latest data suggest the momentum is set to continue in the period ahead, European Central Bank President Mario Draghi said Monday."
  • "The ongoing recovery is, crucially, driven by domestic forces, and the labor market has notably improved. Overall, we are becoming more confident that inflation will eventually head to levels in line with our inflation aim, but we also know that a very substantial degree of monetary accommodation is still needed for the upward inflation path to materialize."

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EUR/USD M5: range price movement by ECB President Draghi Speech news event 


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Chart was made on MT5 with BrainTrading system (MT5) from this thread (free to download) as well as the following indicators from CodeBase:

All about BrainTrading system for MT5:

Sergey Golubev
Moderator
99093
Sergey Golubev  

Brent Crude Oil - daily bullish breakout; 59.23 is the key (based on the article)

Price on the daily chart broke 100 SMA/200 SMA reversal level to be reversed to the primary bullish market condition. The price is testing 59.23 resistance level to above for the primary bullish trend to be continuing.


  • "Oil was up 3% today, hitting the highest levels since April. Remember, as we discussed a couple of weeks ago, if oil can sustain above the $50 level, watch for the inflation chatter to begin picking up. Why? Whether the Fed likes to admit it or not, oil prices play a big role in the inflation picture. This break has now led to about a 6% move in the price of oil, and we're now trading cleanly above the 200-day moving average (bullish)."
  • "And there are a lot of fundamental tailwinds to keep oil moving much higher, not the least of which is an OPEC production cut into the persistent draw on supply over the past six months, AND an expected pop in demand into the end of the year (as expected by OPEC)."

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The chart was made on M5 timeframe with standard indicators of Metatrader 5 except the following indicators (free to download):

Sergey Golubev
Moderator
99093
Sergey Golubev  

Intra-Day Fundamentals - EUR/USD, USD/CAD and USD/CNH: The Conference Board Consumer Confidence

2017-09-26 15:00 GMT | [USD - CB Consumer Confidence]

  • past data is 120.4
  • forecast data is 119.9
  • actual data is 119.8 according to the latest press release

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - CB Consumer Confidence] = Level of a composite index based on surveyed households.

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From official report :

  • "The Conference Board Consumer Confidence Index®, which had improved marginally in August, declined slightly in September. The Index now stands at 119.8 (1985=100), down from 120.4 in August. The Present Situation Index decreased from 148.4 to 146.1, while the Expectations Index rose marginally from 101.7 last month to 102.2."

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EUR/USD M15: range price movement by The Conference Board Consumer Confidence news events


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USD/CAD M5: range price movement by The Conference Board Consumer Confidence news events


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USD/CNH M5: range price movement by The Conference Board Consumer Confidence news events


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Chart was made on MT5 with BrainTrading system (MT5) from this thread (free to download) as well as the following indicators from CodeBase:

All about BrainTrading system for MT5:

Sergey Golubev
Moderator
99093
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2014.04.03 20:56

Discovering the Forex Holy Grail 

This is a title that is hard to read or write without smiling. The “holy grail” is the mother of all Forex jokes and cynical constructions. Yet it exists, is staring us all in the face, but is widely ignored, because the psychological stresses of working with the grail are paradoxically greater than most people can cope with.

Before the existence of the holy grail can be proven, it has to be defined, as many grail hunters are not really clear about what it is they are looking for.

The Forex Holy Grail Concept

The holy grail is a system or strategy with clear rules that works well enough to ensure effortless trading which is profitable overall. Very often such a system is seemingly found, only for it to fail later, at which point the grail quest must begin again. This is also a larger metaphor for the journey undergone by many retail traders as they struggle to achieve profitability by hopping between different systems and styles.

The major mistakes that less experienced traders make when they build strategies are either to base them on too limited an amount of historical data, or to over-optimize them with too many indicators that make it curve-fitted. This is important to understand, and if you are one of these traders, the sooner that you come to the realization that this is a fruitless and time-wasting path, the better it will be for you. I hope this article will shorten your path to profitability.

The Holy Grail Revealed


The answer is simple. Instead of trying to build the perfect strategy that most profitably fits the historical data, take a step back, relax, and contemplate the big picture of how markets statistically tend to move. After all, as the holy grail is surely a robustly profitable trading strategy that never stops working, logic holds that it has to take advantage of a permanent and persistent “flaw” or phenomenon in the market. So forget about candlesticks and indicators for the time being, and think about speculative markets. What phenomena do they exhibit that might be exploited by the trader? There are two that are common and repetitive:

Mean Reversion – after the price pulls away from a longer-term average price, sooner or later it always returns to the average price, which is another way of saying “what goes up, must come down”.

Fat Tails within the Returns Distribution Curve – in plain language, markets tend to overreact, rising and falling excessively due to the human sentiments of greed and fear acting upon market participants.

Can either of these phenomena be exploited? Looking at mean reversion first, it is possible but problematic, as stop losses may need to be very wide and profits are by definition limited. I cannot see this as the basis for a holy grail.

The overreaction of markets and their tendency to produce excessive returns on a statistical basis is the holy grail, or rather, provides the basis for a holy grail: a methodology that will make effortless profits over time.

The best way this can be explained is to imagine taking a handful of salt grains and throwing them up in the air. Suppose you were then able to measure the distance of each grain of salt from the throwing point. You would find that most of them would be relatively close to you, with a few outliers that had travelled further away. If you make a graph showing the distribution of the results, the graph would look like a bell curve, which is a typical and “normal” distribution:



The bottom axis shows the distance travelled by each grain of salt. The percentages show how many grains travelled each given distance.

Now suppose that you were constantly buying and selling randomly in the Forex market, and you measured and recorded the maximum possible gain of each trade over thousands of trades and thousands of days. If you constructed a version of the above graph with those results and superimposed it upon the earlier graph, the result would look something like this, with the dotted lines representing the market’s returns distributions:


So, it can be established that speculative markets such as the Forex market produce more excessive returns, both positive and negative, than can be expected from a “normal” returns distributions model. A greater number of excessive price events happen than would normally be produced by simple randomness. In plain language, the market offers more big winners and losers than it really should.

Here is the holy grail: the use of tight stop losses will remove the excessive losing events, and the use of wide take profit targets will allow the “fat tail” of excessively positive returns to be captured. Yes, it can be this simple, although it is not without a few potential pitfalls.

In order to illustrate exactly how the fat tail phenomenon can be exploited, let’s examine some back test data run on Gold and the major Yen crosses from 2011 to 2013 over a period of 3 years. These were the most volatile and trending instruments in the Forex markets during most of this period. If a very simple trading strategy of entering upon the next bar break of any engulfing bar on the H4 chart in the direction of the engulf was followed, using a stop loss placed just the other side of the engulfing candle, the following results would have been achieved by instrument and reward to risk profit targets:


Notice how a very simple, straightforward strategy that takes no account whatsoever of trend, direction and support and resistance can be made into a positive expectancy of 53 cents gain for every dollar risk, simply by not taking profit until reward has reached 50 times risk!

It would be simple to improve these results by moving stop losses to break even after a certain period of time on every trade. This is because the strongest winners usually will only retest the entry, if at all, relatively quickly.

Even the Holy Grail has Pitfalls

The holy grail exists, but it has to be handled with caution. You can find the grail by trading the right instruments that move with maximum volatility, i.e. those markets that are most attractive to speculation, and using simple entry strategies to ensure you participate in the market’s excessive movements in the direction of your trade. You do not have to be right or forecast the major moves: you just have to be there, cut your losers short, and let your winners run. The natural tendency of the market to produce fat tails will do your work for you.

There are two major pitfalls that this might lead you to. The first is that you will be better served by a more intelligent exit strategy than simply aiming for a fixed reward to risk multiple. You need to be booking wins above 10 R:R, ideally towards 25 R:R or even beyond, but each trade will be different. Look to exit around those levels but use some intelligence and discretion. Also, being prepared to move stops to break even when the trade is a certain distance or time in profit should help.

The second major pitfall lies in the fact that this type of strategy will always produce very low win rates, where you will lose as much as over 90% of your trades. This will inevitably cause very large losing streaks which will severely test both your mental strength and your money management strategy. The grail gives gold, but it is hot to touch and burns the unwary! Do you have what it takes to sit through twenty or more losing trades in a row? Do you have a money management strategy that will properly protect you from ruin should you begin with a long losing streak? Will you be diversified and uncorrelated enough in order to keep losing streak risk to a minimum?
One final danger is worth a mention. It is natural to try to filter entries. However it is very problematic to distinguish entries that are likely to reach a ratio of 25:1. Furthermore, missing just one of these winners will set back your overall expectancy, unless the method used will also filter out at least 25 losing trades at the same time.

These are some questions to ponder and investigate. Spend some time back testing. The holy grail has been placed in your hands!


Sergey Golubev
Moderator
99093
Sergey Golubev  

Gold - daily ranging bullish; 1,263 support (based on the article)

Daily price is on bullish ranging above 100-SMA/200-SMA reversal area within 1,357 resistance and 1,263 support levels. If the price breaks 1,263 support to below so the daily bearish reversal will be started, otherwise - the ranging bullish trend will be continuing in the near future for example.


  • "Spot Gold: Retail trader data shows 74.5% of traders are net-long with the ratio of traders long to short at 2.93 to 1. The number of traders net-long is 4.2% higher than yesterday and 15.8% higher from last week, while the number of traders net-short is 13.1% lower than yesterday and 21.3% lower from last week. "
  • "We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Spot Gold-bearish contrarian trading bias."

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Chart was made on MT4 using iFibonacci indicator and MaksiGen_Range_Move indicator from CodeBase (free to download).

Sergey Golubev
Moderator
99093
Sergey Golubev  

U.S. Commercial Crude Oil Inventories news event: intra-day ranging bearish; daily ranging bullish; 59.48 is the key

2017-09-27 15:30 GMT | [USD - Crude Oil Inventories]

  • past data is 4.6M
  • forecast data is 2.9M
  • actual data is -1.8M according to the latest press release

[USD - Crude Oil Inventories] = Change in the number of barrels of crude oil held in inventory by commercial firms during the past week.

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"U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.8 million barrels from the previous week."

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Crude Oil M5: ranging bearish. The price is located above 100 SMA/200 SMA reversal levels in the bullish area of the chart for the ranging within 56.31/55.61 support/resistance levels.

If the price breaks 58.01 resistance level to above on M5 close bar so the secondary rally within the primary bearish trend will be started.
If the price breaks 57.71 support level to below on M5 close bar so the bearish reversal will be scontinuing.
If not so the price will be on bearish ranging within the levels.


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Crude Oil Daily: ranging bullish. Daily price is far above Ichimoku cloud in the bullish area of the chart for 59.48 resistance level to be tested to above for the bullish trend to be continuing .


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Chart #1.
The chart was made on M5 timeframe with standard indicators of Metatrader 5 except the following indicator (free to download):

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Chart #2.
The chart was made on D1 timeframe with Ichimoku market condition setup (MT5) from this post (free to download for indicators and template) as well as the following indicator from CodeBase:

Sergey Golubev
Moderator
99093
Sergey Golubev  

NZD/USD Intra-Day Fundamentals: Reserve Bank of New Zealand Official Cash Rate and range price movement 

2017-09-27 21:00 GMT | [NZD - Official Cash Rate]

  • past data is 1.75%
  • forecast data is 1.75%
  • actual data is 1.75% according to the latest press release

if actual > forecast (or previous one) = good for currency (for JPY in our case)

[NZD - Official Cash Rate] = Interest rate at which banks lend balances held at the RBNZ to other banks overnight. 

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From official report :

  • "The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent."
  • "Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly."

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NZD/USD M5: range price movement by RBNZ Official Cash Rate news event 


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Chart was made on MT5 with Brainwashing system/AscTrend system (MT5) from this thread (free to download) as well as the following indicators from CodeBase:

Same system for MT4:

  1. Brainwashing. Trades: manually and using EAs (MT4)
  2. Brainwashing EAs - the thread (MT4)
  3. Brainwashing: system setup for trading manually and for EAs (MT4) - the thread 
  4. Brainwashing: system development (MT4) - the thread