Forum on trading, automated trading systems and testing trading strategies
newdigital, 2014.04.05 18:14
The GBP/USD pair fell during the week, but really didn’t have that wide
of the range. The 1.65 level below is still support as far as we can
tell, and as a result we think that this market will offer a buying
opportunity soon. Any supportive candle in that general vicinity has us
buying, but the question then remains whether or not we would even get
there? After all, the Friday candle was in fact a hammer, which of
course is a nice buying opportunity and signal as it were.
newdigital, 2014.04.05 18:15
Weekly Forex Outlook & Review for the 7th to 11th of April
According to Bollinger, the bands should contain a majority of the price action, which means that a move outside of the bands should be considered significant. Generally, as the prices move closer to or break through the upper band, the market could be considered overbought and as the prices move down to or break through the lower band, the market could be considered oversold.
Indicators: Bollinger Bands ®
newdigital, 2013.08.06 13:51
How Bollinger Bands Indicator Works
Bollinger Bands calculations uses standard deviation to plot the bands, the default value used is 2.
Bollinger considered the best default for his
indicator to be 20 periods moving average and the the bands are then
overlaid on the price action.
Standard Deviation is a statistics concept. It
originates from the notion of normal distribution. One standard
deviation away from the mean either plus or minus, will enclose 67.5 %
of all price action movement. Two standard deviations away from the mean either plus or minus, will enclose 95 % of all price action movement.
This is why the Bollinger Bands indicator uses the standard deviation of 2 which will enclose 95 % of all price action.
Only 5 % of price action will be outside the bands, this is why
traders open or close trades when price hits one of the outer Bands.
The Bollinger Bands indicator main function is to
measure volatility. What the Bollinger Bands upper and lower limits try
to do is to confine price action of up to 95 percent of the possible
This indicator compares the current closing
price with the moving average of the closing price. The difference
between them is the volatility of the current price compared to the
moving average. The volatility will increase or decrease the standard
newdigital, 2013.08.06 13:54
Bollinger Bands and Volatility
When volatility is high; prices close far away from
the moving average, the Bands width increases to accommodate more
possible price action movement that can fall within 95% of the mean.
Bollinger bands will widen as volatility widens. This
will show as bulges around the price. When bollinger bands widen like
this it is a continuation pattern and price will continue moving in this
direction. This is normally a continuation signal.
The example below illustrates the Bollinger bulge.
High Volatility and Low Volatility
When volatility is low; prices close closer towards
the moving average, the width decreases to reduce the possible price
action movement that can fall within 95% of the mean.
When volatility is low price will start to
consolidate waiting for price to breakout. When the bollinger bands is
moving sideways it is best to stay on the sidelines and not to place any
The example is shown below when the bands narrowed.
newdigital, 2013.08.06 13:57
Bollinger Bands Indicator Bulge and Squeeze Technical Analysis
The Bollinger Bands are self adjusting which means the bands widen and narrow depending on volatility.
Standard Deviation is the statistical measure of the
volatility used to calculate the widening or narrowing of the bands.
Standard deviation will be higher when prices are changing
significantly and lower when markets are calmer.
The Bollinger Squeeze
Narrowing of Bands is a sign of consolidation and is known as the Bollinger band squeeze.
When the Bollinger Bands display narrow standard
deviation it is usually a time of consolidation, and it is a signal that
there will be a price breakout and it shows people are adjusting their
positions for a new move. Also, the longer the prices stay within the
narrow bands the greater the chance of a breakou
The Bollinger Bulge
The widening of Bands is a sign of a breakout and is known as the Bulge.
Bollinger Bands that are far apart can serve as a
signal that a trend reversal is approaching. In the example below, the
bands get very wide as a result of high volatility on the down swing.
The trend reverses as prices reach an extreme level according to
statistics and the theory of normal distribution. The "bulge" predicts
the change to downtrend.
newdigital, 2013.08.06 14:04
Bollinger Bands Trend Reversals- Double Tops and Double Bottoms
A Forex trader should wait for the price to turn in
the opposite direction after touching one of the bands before
considering that a reversal is happening.
Even better one should see the price cross over the moving average.
Double Bottoms Trend Reversals
A double bottom is a buy setup/signal. It occurs
when price action penetrates the lower bollinger band then rebounds
forming the first low. then after a while another low is formed, and
this time it is above the lower band.
The second low must not be lower than the first one
and it important is that the second low does not touch or penetrate the
lower band. This bullish Forex trading setup is confirmed when the
price action moves and closes above the middle band (simple moving
Double Tops Trend Reversals
A double top is a sell setup/signal. It occurs when
price action penetrates the upper bollinger band then rebounds down
forming the first high. then after a while another high is formed, and
this time it is below the upper band.
The second high must not be higher than the first
one and it important is that the second high does not touch or penetrate
the upper band. This bearish Forex trading setup is confirmed when the
price action moves and closes below the middle band (simple moving
newdigital, 2014.04.08 17:41
AUDUSD Technical Analysis (based on dailyfx article)
newdigital, 2014.04.10 06:55
AUDUSD Technical Analysis 10.04.2014 morning (based on dailyfx article)
Trading the News - David Song in FXCM Expo 2011
Major economic events and fundamental developments are monitored by
currency traders as it reflects the strength of a country's economy.
Trading the News is often difficult as it producers sharp movements in
the exchange rate, but can be used to generate trading opportunities.
David Song will go through a basic strategy that will provide tools to
help manage the risk of loss, along with a few trading tips that can
assist currency traders to avoid being on the wrong side of the market.
Forex News - How to Trade News Announcements
"Use the Forex News"One of the reasons so many forex traders
come to the Forex market is because of the potential to make fast money.
With huge amounts of leverage, and extremely volatile price movements,
many traders look to focus on trading forex news since this can produce
some of the fastest movements that the forex market might see.Unfortunately,
a lot of these types of traders will fail. Forex news can be
notoriously difficult to trade as price movements can be so wild and
volatile. Not only can these movements be unpredictable, but forex
traders will often employ sloppy risk management and end up turning a
short-term trade into a long-term problem. There has to be a better way to do this. Some
traders choose to just avoid trading forex news, or those trading
longer-term strategies often try to 'trade around them.' But there are a few different ways to try to "use the
forex news". For one, since these price movements can be so wild
and volatile, it may offer longer-term forex traders the opportunity to
get a better entry price than they would have initially anticipated. Let's
say that the EURUSD is trading at 1.3000, and a trader wants to go long
with a 100 pip stop and a 300 pip profit target; but NFP is 30 minutes
away and our traders doesn't want to take the risk of losing 100 pips so
shortly after placing a trade designed to be open for a few days. So
our trader waits... Once NFP comes out, the trader sees price
hurry down to 1.2950 before finding support shortly after the data was
announced. Our trader can then buy, keeping their stop at 1.2900, and
now can look for a 350 pip profit target. Their original risk-reward
was going to be 1-to-3. Now, it can be 1-to-7, and they were able to
get long the EURUSD at a much better price.
The other way to use
the forex news is to trade the volatility that can come from news
announcements. This involves placing an entry order to go long
above resistance, and an entry order to go short below support. This
way, if the volatility from the news release creates a price movement
that could go on for days, forex traders could potentially enter at the
early portion of the move as prices initially move on to make new highs
newdigital, 2014.04.11 07:38
2014-04-10 22:45 GMT (or 00:45 MQ MT5 time) | [NZD - Food Price Index (FPI)]
if actual > forecast/actual = good for currency (for NZD in our case)
New Zealand March Food Prices Dip 0.3%
Food prices in New Zealand eased 0.3 percent on month in March, Statistics New Zealand said on Friday.
That follows the 1.0 percent decline in February and the 1.2 percent gain in January.
On a yearly basis, food prices climbed 1.2 percent after adding 0.2 percent in February and 0.9 percent in January.
The 1.6 percent fall for grocery food was influenced by price falls across most of the subgroups.
NZD/USD Forecast April 11, 2014, Technical Analysis
The NZD/USD pair
fell after initially trying to rally during the session, showing that
perhaps we are going to pull back slightly. The area between here and
the 0.85 level should offer plenty of support, and as a result we are
willing to buy a supportive candle between the two levels. We believe
that a supportive daily candle would be reason enough to serve buying as
is market would be going higher eventually as the upward momentum is
ready to continue. We ultimately believe that the 0.90 level is the
target, and that the New Zealand dollar will eventually head to that
fell to trade at 0.8642 on more lackluster Chinese economic data. Data
this morning showed that Chinese inflation eased to 2.4% and the
producer’s price index also printed lower than expected. Last month the
Reserve Bank embarked on a tightening cycle, lifting interest rates 25
basis points to 2.75 percent as it tries to stem inflationary pressure
in the economy. Food prices make up almost 19 percent of the consumer
price index, the inflation measure used by the central bank.
First-quarter CPI is due for release next week.
REINZ, the most up
to date source of real estate data in New Zealand, announced today that
there were 7,315 dwelling sales in the month of March, down 10.0% on
March last year, but up 19.4% compared to February. The national median
price reached a new record high of $440,000, which was an increase of
$44,000 compared to March 2013, and an increase of $25,000 from
February. Auckland and Canterbury/Westland both recorded new high median
prices of $637,000 and $401,000, respectively.
The food price
index fell 0.3 percent in March following a 1 percent fall in February,
according to Statistics New Zealand. Food prices rose 1.2 percent on an
annual basis, the first time all five components of the index increased
since September 2011.
newdigital, 2014.04.12 18:28
The Nikkei as you can see fell during the totality of the week, closing
below the ¥14,000 level. However, there is a significant amount of
support below this level as well, and therefore we are not quite ready
to start selling. This area could produce a supportive candle, and we
would be willing to take a supportive candle on either the daily or
weekly chart, as we believe ultimately this market will test the ¥16,000
level yet again as the uptrend should continue. Selling is not an
option at this moment.