Forum on trading, automated trading systems and testing trading strategies
newdigital, 2014.04.12 18:47
The GBP/USD pair broke higher during the week, but as you can see pulled
back to the 1.68 handle. That to us is the area that we need to get
above in order to start buying again, as we feel that the market will go
to the 1.70 handle without too many issues. However, we also recognize
that the 1.65 level is supportive, and as a result we should find a
supportive candles down there to start buying as well. We are bullish of
the British pound in general.
newdigital, 2014.04.12 18:49
The EUR/USD pair rose during the week, breaking above the 1.38 level
handily. However, we need to get above the 1.3950 level, and for that
matter the 1.40 level in order to feel comfortable enough to start
buying and holding onto the position. If we do that though, it would
break above a downtrend line from the monthly timeframe, which of course
would be a massive bullish sign in a market that has been actually in a
downtrend since the financial crisis began. Granted, we’ve had long
moves up and down, but if you look at the monthly charts, you will see
that we are in fact in a downtrend.
newdigital, 2014.04.15 07:49
Trading the News: U.K. Consumer Price Index (based on dailyfx article)
Slowing inflation in the U.K. may spur a larger correction in the
GBP/USD as it allows the Bank of England (BoE) to retain its highly
accommodative policy stance for an extended period of time.
Why Is This Event Important:
The BoE may further delay its exit strategy in an effort to address the
ongoing slack in the U.K. economy, but Governor Mark Carney may show a
greater willingness to normalize monetary policy sooner rather than
later as the central bank anticipates a stronger recovery in 2014.
Easing input prices paired with the slowdown in private sector credit
may prompt businesses to offer discounted prices to U.K. households, and
a weaker-than-expected inflation print may generate a larger pullback
in the GBP/USD as it raises the BoE’s scope to retain its highly
accommodative policy stance for an extended period of time.
Nevertheless, the resilience in household consumption along with the
pickup in wage may encourage U.K. firms to raise consumer prices, and a
stronger-than-expected CPI print may heighten the bullish sentiment
surrounding the British Pound as it fuels interest rate expectations.
How To Trade This Event Risk
Bearish GBP Trade: U.K. CPI Slows to 1.6% or Lower
February 2014 U.K. Consumer Price Index
GBPUSD M5 : 24 pips price movement by GBP - CPI news event :
The YoY figure for U.K. CPI came in at 1.7% as expected and the MoM
figure at 0.5%. The Pound saw a move to the upside that was quickly
retraced, but the GBPUSD pair ended the day up 45 pips from the release.
As for insight into this print, if we do see CPI come in under market
expectation it is likely that we may see GBP weakness. This may be
especially pronounced in the context of a possible double top and
resurgence of USD strength post-Retail Sales that came in better than
expected on Monday morning in NY.
newdigital, 2014.04.15 12:57
Forex Trading Video: EURUSD Drops and GBPUSD At-Risk On Monetary Policy Focus
The strong risk aversion of the last two weeks was on a weak footing to
start this new trading period. In its absence, we find rate speculation
more than capable of taking its place. Responding to a very clear
threat, the Euro
dropped Monday against all of its major counterparts. Clearly unnerved
by the currency's strength, ECB President Draghi upgraded his threat to
forcibly drive the Euro down via monetary policy channels. Ahead, we
will see whether the US Dollar and Pound
will exploit the unfavorable position of their counterpart or join it
with important inflation readings. The risk theme is still in play, but
our attention must now be split with interest rate speculation. We look
at both drivers and their trade implications in today's Trading Video.
EURUSD and GBPUSD Trade Setups May Need to Wait
Short-term ranges are more appropriate trade opportunities than major
breakouts and trend development into the end of the week. Past the
half-way point of the week, we have seen the risk aversion momentum from
last week stall, most of the major event risk go by and Friday's market
holiday liquidity drain move another day closer. Short-term setups with
clear technical levels tend to outperform in these circumstances. As
for the growing medium-term opportunities in pairs like EURUSD and
GBPUSD, we need to prepare for the tech/fundamentals/market conditions
stars to align. We discuss both immediate options and bigger setups a
little further out in today's Trading Video.
Ichimoku Trading for Beginners
Indicators: Ichimoku Cloud
newdigital, 2013.11.25 12:23
Ichimoku Cloud (based on The Definitive Guide to Trading Trends with Ichimoku Cloud article)
Many traders are asked what indicator they would
wish to never do without. The answer has never wavered as there is one
indicator that clearly illustrates the current trend, helps you time
entries, displays support and resistance, clarifies momentum, and shows
you when a trend has likely reversed. That indicator is Ichimoku Kinko
Hyo or more casually known as Ichimoku.
Ichimoku is a technical or chart indicator that is
also a trend trading system in and of itself. The creator of the
indicator, Goichi Hosada, introduced Ichimoku as a “one glance”
indicator so that in a few seconds you are able to determine whether a
tradable trend is present or if you should wait for a better set-up on a
Before we break
down the components of the indicator in a clear and relatable manner,
there are a few helpful things to understand. Ichimoku can be used in
both rising and falling markets and can be used in all time frames for
any liquid trading instrument. The only time to not use Ichimoku is when
no clear trend is present.
Always Start With the Cloud
The cloud is
composed of two dynamic lines that are meant to serve multiple
functions. However, the primary purpose of the cloud is to help you
identify the trend of current price in relation to past price action.
Given that protecting your capital is the main battle every trader must
face, the cloud helps you to place stops and recognize when you should
be bullish or bearish. Many traders will focus on candlesticks or price
action analysis around the cloud to see if a decisive reversal or
continuation pattern is taking shape.
In the simplest
terms, traders who utilize Ichimoku should look for buying entries when
price is above the cloud. When price is below the cloud, traders should
be looking for temporary corrections higher to enter a sell order in the
direction of the trend. The cloud is the cornerstone of all Ichimoku analysis and as such it is the most vital aspect to the indicator.
Time Entries with the Trigger & Base Line
Once you have
built a bias of whether to look for buy or sell signals with the cloud,
you can then turn to the two unique moving averages provided by
Ichimoku. The fast moving average is a 9 period moving average and the
slow moving average is a 26 period moving average by default. What is
unique about these moving averages is that unlike their western
counterparts, the calculation is built on mid-prices as opposed to
closing prices. I often refer to the fast moving average as the trigger
line and the slow moving average as the base line.
components are introduced in a specific order because that is how you
should analyze or trade the market. Once you’ve confirmed the trend by
recognizing price as being below or above the cloud, you can move to the
moving averages. If price is above the cloud and the trigger crosses
above the base line you have the makings of a buy signal. If price is
below the cloud and the trigger crosses below the base line you have the
makings of a sell signal.
Confirm Entries with the Mysterious Lagging Line
In addition to the mystery of the cloud, the lagging
line often confuses traders. This shouldn’t be the case as it’s a very
simple line that is the close of the current candle pushed back 26
periods. When studying Ichimoku, I found that this line was considered
by most traditional Japanese traders who utilize mainly Ichimoku as one
of the most important components of the indicator.
Once price has broken above or below the cloud and
the trigger line is crossing the base line with the trend, you can look
to the lagging line as confirmation. The lagging line can best confirm
the trade by breaking either above the cloud in a new uptrend or below
the cloud in a developing downtrend. Looking above, you can see that the
trend often gathers steam nicely after the lagging line breaks through
the cloud. Another benefit of using the lagging line as a confirmation
indicator is that the lagging line can build patience and discipline in your trading
because you won’t be chasing the initial thrust but rather waiting for
the correction to play out before entering in the direction of the
Trading With Ichimoku Checklist
Now that you know the components of Ichimoku here is
a checklist that you can print off or use to keep the main components
of this dynamic trend following system:
1.Where is Price in Relation to the Cloud?
2. Is price consistently on one side of the cloud or is price whipping around on both sides consistently?
3. Which level of the Ichimoku would like to use to place your stop?
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Something Interesting to Read April 2014
newdigital, 2014.04.09 17:18
The Complete Guide to Day Trading: A Practical Manual From a Professional Day Trading Coach
by Markus Heitkoetter
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newdigital, 2014.04.18 10:45
Trading Video: Liquidity Delays EURUSD, GBPJPY, Yen Setups
Great trading opportunity lies ahead, but expectations must be
reasonable for when and where we can act. The final trading day of this
week will be drained of liquidity due to the observation of a market
holiday for many regions, and the subsequent conditions curb the
necessary developments we need to instigate the seismic shift that we
are inevitably heading towards. In today's trading video, we discuss why
short-term trade setups are ill-advised but why medium-term setups for
the likes of EURUSD, GBPUSD and others offer considerable opportunity.
newdigital, 2014.04.19 16:49
The Nikkei had a good week, climbing from the ¥14,000 level to close at
¥14,500 roughly. With that, we feel that the market continues to go
higher, and that the selloff recently has merely offered another buying
opportunity and suggests that we are probably going to head to roughly
¥16,000 given enough time. We are bullish of the Nikkei, and do think
that eventually the uptrend continues itself as there are far to be
reasons the think that the Bank of Japan will continue to support the
stock market in Tokyo.
newdigital, 2014.04.19 16:52
The DAX initially fell during the week, but found enough support below
the €9200 level to turn things back around. If that’s the case, it
appears that the market has found enough bullish orders to push back
above the €9400 level. Now that we’ve cleared the €9400 level, we feel
that the market heads to the €9700 level. That level is fairly
resistive, but once we get above there we feel that this market
eventually heads to the €10,000 level, which is our longer-term target
for this market place.