A-B-C-D Trade - page 109
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36K.......was the Change in Non-Farms Payroll.....missed by about 100K.
My trusted calculator is spitting out: USD 105 billion spent in 1st month of QE2, divided by 36,000 jobs = $2.9 million per job.
The Press Club, who hosted Fed Chief Bernanke's speech, are asking him to exchange his parting gifts for a more suitable one, a pair of handcuffs.
Don't ever believe what the analysts and "masses" are telling us. Think outside the box.
Unemployment rate dropped more than projected to 9.0%, as opposed to "consensus" of 9.5%.
The U.S. needs to add about 200,000 jobs annually just to cover the new job seekers coming into the workforce for the first time.
As per a guest on Bloomberg, the U.S. economy/GDP needs to grow 2% "above" trend to keep up, and about 4.5% to make a difference. He sees growth in the U.S. actually declining in the 2nd half of 2011.
End of week price action for study purpose. Take Andrew's Pitchfork tool (insert tab of MT4). Plot requires click on 3 points. AUD/USD Daily:
1) Oct 15, 2010 High
2) Dec 21, 2010 Low
3) Dec 31, 2010 High
Now, switch this chart to 30-min interval, which is attached. We can see the pitchfork provide resistance at the 2 peak candles 01:30 and 14:00.
These 2 peaks also qualify as a BAJA divergence signal for a SELL. 15-min trigger entry at 15:15 open price 1.0171.
Fib Retracement Tool plot:
Low = Feb 2nd 17:00 low 1.0057
High = Feb 4th 14:00 high 1.0199
61.8 = 1.0109 (hit 1.0110 at 18:00)
Reward/Risk = 58/33 pips and ratio of 1.8/1
The risk/reward calculator can do the work for you.
If we want to be conservative, exit a portion or all of our position at the 38.2 fib of 1.0144.
****
As posted previously, there was a bounce trade opportunity (in between the 2 peaks). High was 1.0193 and bounce made it to the 23.6 fib of 1.0160 prior to exit ahead of NFP.
R/R very good on these trades. Be patient, learn how to identify, calculate R/R, and consider layered entry.
The U.S. Treasury Department has just released this statement after conducting a study:
"No major trading partner is manipulating its currency".
The attached EUR/USD 30-min chart zooms in on the Jan 18th bounce off of the previous week's high.
Draw a horizontal line on a previous week's high/low on the weekly chart. This example also had divergence with the 2 peaks. Fib retracement plotted to diagram exit levels.
The pair probed slightly higher than previous week’s high of 1.3454, so allow room for this possibility. Somewhere around 10-20 pips, and/or layer S/L levels
We have a blended entry price of 1.3450, from the layered entry strategy..
Use R/R calculator to estimate scenarios with different exit points, as well as understand where the “break-even and trend the balancepoint is.
In this example:
Low = Jan 17th 09:30 1.3243
High = Jan 18th 14:30 1.3465
S/L 1.3469 (15 pips above weekly high)
Previous week’s high 1.345
Entry 1.3450 (19 pips risk)
Reward to Risk ratio (R/R) at exit levels:
23.6% 1.3413 = 1.3
38.2% 1.3380 = 2.6
50% 1.3354 = 3.7
61.8% 1.3328 = 4.7
At the 23.6, how many lots can we exit to ensure the entire trade will end up 2:1 reward/risk, based on balance take-profit at 38.2% fib?
If we exit 50% of position at the 23.6, and 50% at 38.2, what is the overall R/R?
USD/CHF approaching last week's (Feb 4th) high .9593 neighborhood.
Fib fan at .9571 being tested just above 61.8 horizontal of .9569.
USD/CHF had nice bounce at 12:00 to 78.6.
EUR/JPY was not off weekly high, and bounce 4 pips during mid-Asian for 23.6, before MAKING A 138.2 TO UPSIDE and DOWNSIDE.
EUR/USD had 3-pip probe of Asian High before a large reversal to 138.2 to downside of 100 pips.
AUD/USD broke out of triangle to upside and bounced off Asian High for 23 pips
on a 50% retrace.
Gold had a $4 bounce to downside 50% at 09:00, formed a triangle, and made a 139.2 to upside.
Charts of bounces per previous post.
EUR/JPY was not off weekly high, and bounce 4 pips during mid-Asian for 23.6, before MAKING A 138.2 TO UPSIDE and DOWNSIDE.
**
Should read " bounce started 4 pips from top..."
Let's re-post the EUR/USD Daily chart with fibs.
1st ABC (red):
A = Nov 4th high 1.4281
B = Nov 16th low 1.3448
C = Nov 22nd high 1.3785 (38.2% of A-B)
D and FE 100 = Nov 30th low 1.2968
Point B acted as resistance for balance of year. The 4th bounce from that level on Jan 4th made its way to the area of the regular 161.8 fib of 1.2933.
The Jan 9th Sunday candle was point of reversal.
The 2nd ABC pattern (white) developed, with Swing B at the same resistance/price level as Swing B from 1st ABC (1.3448).
The 2nd ABC's Swing C was nearly a 38.2% pullback. It respected the red FE 61.8 of the 1st ABC pattern.
The route from C-D was temporarily interrupted on Jan 27th/30th with a pullback. This was a bounce off of the 1st ABC's Swing C level.
When we plot A = 2nd ABC's Point C and B = 1st ABC's Point C...... the pullback was 38.2% (this plot not shown on chart).
The 2nd ABC made a FE 100 and probed slightly higher to the 1st ABC's 50% fib.
***
Where were the high probability bounce opportunities?
Edit: note that the yellow fibs are derived from 1st pattern's A-B.
Since we're on the Daily chart:
Aug 8th to Jan 30th, EUR/USD had reversals on Monday (GMT).
Reversed 19 out of 25 weeks for a 76% ratio.
We touched on this subject when outlining the Sunday Reversal Candle (SRC). The above statistic does not even consider the size of the Sunday Candle.
For you analytical types,
1) Count number of pips gained on Monday reversals Aug 8th - Jan 30th.
2) Try looking at the price range of the Sunday candle, which is 19:00-23:59 GMT, and using the high/low as breakout points. Count pips gained on Mondays.
The market is open at 19:00, however, not all brokers offer Sunday candles. We are having a hard time finding a data base that can provide historic prices on past Sundays, which would be required to conduct proper back analysis for assignment #2.
Alternative, we can take the Friday closing price and the Monday open price as the substitute range for breakout for assignment #2.
Edit: Clarification. The Friday close/Monday open level would be used as the breakout point for the entire week.