A-B-C-D Trade - page 116
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In a continuance of our comments on bounce trades off of significant highs and lows: Attached are:
4-hour USD/JPY. We have drawn a horizontal line on significant highs on 2nd chart.
Jan 7th 83.67
Dec 15th 84.50
An extension on Feb 11th to FE 161.8, which was about the same as the Jan 7th high is illustrated in the 1st chart.
2nd chart re-plots ABC, with hit to Jan 7th high forming Swing B. Pair bounced down to 83.08 to establish Swing C. This bounce opportunity went for gross 58 pips.
Feb 15th (yesterday), pair surfaced above Point B, but ran out of gas as witnessed by the lower RSI. This is also a qualifying condition for the 2nd peak of a BAJA divergence sell.
It drifted down but not very much as of yet, as that significant price of 83.67 is currently acting as support.
Notice the ABC's FE 100 is at 84.55, virtually the same as the other significant high from Dec 15th.
The "X" marks on 2nd chart are 2nd BAJA peaks/dips.
Well, it's about time. A 60-Minute show on how the U.S. Securities Exchange Commission (S.E.C.) in so inept that it can't recognize the frauds.
"They are made up of lawyers that can read the legal documents, but have no industry experience". This quote is from the whistle blower that made at least 5 written complaints to the S.E.C. about how Bernie Madoff's fund was making impossible gains that are mathematically impossible. His 1st complaint was in the year 2000.
Madoff had also been a Non-Executive Chairman of Nasdaq. I guess they also don't investigate their own. Yet, nobody has even heard that the S.E.C. is under any scrutiny for not catching this scam, that took 5 minutes for the whistle blower to figure out.
This episode of 60-Minutes On CNBC is named Bernard Madoff Schemes, and is scheduled to play again Feb 22nd.
EUR/USD had a BAJA bullish divergence on the 20:00 30-minute candle. 21:30 entry at 1,3487. Up move was a 138.2 from plot derived from late U.S. swing and 1.3475 Low for Point A.
Small pullback of 23.6 prior to FE 78.6 to upside 1.3569. This destination is about same as using Asian session low for Point A, with FE 100 = 1.3567.
The 06:30 thrust candle was also a BAJA SELL, with 08:00 trigger price 1.3545. However with 09:30 GBP data (jobless claims) and looming 10:30 BOE Inflation Report, this was a no-trade.
Pair revisited high and bounced back down. BOE just released and pushes pair down to current 1.3528 thus far.
Edit: Added 15-min chart, notice bounce off Swing C price (red horizontal).
Positive housing data and PPI at 13:30 but negative 14:15 data gave USD pairs whipsaw action.
Earlier U.K. data had driven EUR/USD to 1.3461, just below day's low, and caught by fibo fan's 78.6 based on Low = Feb 14th 1.3427 and High = Feb 16th 1.3569.
Let's pick up technical from where we left off in last post. EUR/USD stalled at previous Swing C price area after BOE Inflation Report, which was dovish*.
We shall plot an ABC using that point as the pivot for Swing B. A shorter interval chart like the 15-min provides better view of swings. The bottom was captured by the plot's FE 127.
Using the fib retracement tool and plotting the A-B, we arrive at bottom supported by the regular 200% extension.
The tightest ABC plot would be swings (on 5-min): 11:35/12:35/13:05, which resulted in FE 161.8 for bottom.
*When a country is assessed or projected as/to experiencing high inflation, traders and investors buy that currency. The opposite if viewed as low(er).
GBP/USD dropped 100 pips from day's high, and dragged EUR/USD lower after U.K. Inflation Report. It found support at the 138.2 as measured from session high to 11:00 pivot.
The DAILY chart perspective had last 2 major pivots of Feb 9th high and Feb 14th low, producing 50% fib of 1.3585, which was resistance for today's last move up.
Are there traders that trade that bounce down? Absolutely. If we move the plot's high to Feb 2nd, the resistance point is the 38.2% fib.
Gross pip gained off bounce was to 1.3539, about 45 pips. The bounce retraced exactly 38.2%. The reward to risk was about 4:1.
So, on a day when it seemed impossible to trade due to data, there was an opportunity if the trader knew how to recognize it.
You don't have to chase the market. Wait for the herd to finish its mad dash. Your experience will allow you to estimate where the subsequent bounces will be. Wait in the tall grass and grab your pips when it's safe.
This was a great R/R, the exact type of trade you want. As mentioned, we don't even have to win much more than 50% of good R/R trades, to come out ahead every month.
**
AUD/USD had a BAJA BUY near same time as EUR/USD, at 20:30. Entry at 21:15 open price .9956. If position held through low-impact AUD data at 00:30 (which was mixed), gain was to 1.0007 before significant retrace began at 03:15.
After retrace, it formed a 2nd peak with 06:30 candle (30-min) that qualified as a BAJA signal. However, pair moved down 50 pips before entry trigger signal, thus a pass (no-trade).
EUR/USD choppy during European session.
As U.S. data was mixed, with CPI as projected but jobless claims rising, EUR/USD drifted higher and struggling now at fib resistance.
1-Hour ABC has swings of 1.3461/1.3587/1.3534, resulting in FE 61.8 = 1.3612.
Yesterday's European session low-high, has regular 138.2 = 1.3610.
Asian High = 1.3608.
1-Hour Murrey Math Line 7/8th = 1.3611
Currently New York lunch period, and would be riskier entering during balance of day.
The BAJA caught the pivot low on EUR/USD with the 09:00 30-minute candle. Entry 09:45 1.3571 was 35 pips from low of 1.3536, which is normally acceptable based on our research.
Weighing all factors, including scheduled data, this was a good pass (no-trade). Attached 15-min chart has arrows pointing to divergence signals, entry, and data release.
EU medium-impact data 09:00 and 10:00 created choppy action.
Considering high-impact U.S. data starting at 13:30, this was either a small gain, break-even, or small loss - depending on trader's management.
Guest Peter Wallison on Bloomberg stated HUD lowering standards starting in 1992, led to housing collapse since there was so much sub-prime loans.
USD 221-363 Billion in losses on backs of tax payer. Wallison thinks it will be more.
***
Add to this, Wall Street's ability to package these high-risk loans and get them stamped as AAA Grade by the inept credit agencies, for sale to the world. These Mortgage Backed Securities and Collateralize Debt Obligations (CDO) became "toxic assets" on the balance sheets of most banks, etc.
While still FED chief, Greenspan had to be told that 20% of all mortgages were sub-prime, to his dismay. Later, a retired Mr. Greenspan denied that FED policy (while he was chief) flooding market with cheap money contributed to that bubble, especially when he was selling his book.
He has since changed his stance, but said that Congress would have blocked any efforts to stem the tide. This is called "finger pointing", even if it may be true.
The truth is, he and the FED made a strategic mistake. Yes, he did call the heavy real estate buying and price levels "exuberance". However, the cheap money was the cause. Regulators also guilty for not catching it.
In 2008, France was one of the first critics to lash out at Wall Street. During the recent Davos Economic Summit, the CEO of a large U.S. bank, I think it was J.P. Morgan, complained of over-regulation.
I called this arrogance, but a colleague said it was simply "not caring". Fortunately, the French representative stood his ground on this subject.
Subprime mortgage crisis - Wikipedia, the free encyclopedia
newer book and interesting take: 13 Bankers
EUR/USD
Indicator SQ9(Price)
Start Price Feb 2nd high = 1.3860
Direction = Down
Pullback = Feb 9th high 1.3743 ====90-Degree level
Pullback = Feb 17th high 1.3626 === 180-Degree level
Trend line on all 3 peaks, per attached 1-Hour chart.
Pair currently at 61.8% retrace from 2nd peak to Feb 14th low (the 180-degree). This is also about same as our recent daily plot as posted.
30-Min BAJA Bearish Divergence at 23:30 candle.
15-min trigger entry = open of 00:30 1.3619.
The previous post has big picture fibs that can be used for support along with conservative round number and previous pivot 1.3600/01.
Here is the 30-min chart with arrow pointing to 15-min trigger for sell. Currently stalling at 78.6 fib 1.3593 from plot:
Low = 17:30 1.3584
High = 23:30 1.3626
As mentioned, also doesn't hurt to monitor longer interval chart S&R, should trader decide to go further with portion or all of position.