In a recent post I discussed a new indicator that I have built to identify pullbacks. Recently I was asked if I was trading the indicator. Absolutely not!
I use indicators for two purposes - firstly to identify specific criteria that are part of my trading plan, or a trade setup that I am testing. For example, I have an indicator that identifies swing high and swing low fractal bars. Using the indicator allows me to adjust the detailed criteria that define these price patterns so that I can speed up back-testing.
Secondly I use indicators as a measure of momentum, or more correctly, changes in momentum. This is easiest to understand using an analogy with physics. If an object is moving it has 3 characteristics: position, velocity and acceleration. I use price charts to assess position, price charts plus moving averages to assess velocity, and indicators to assess acceleration.
Saturday 10 October 2009
Thursday 8 October 2009
Target Reached
The title says it all!
+target.png)
And just as a reminder, here is the chart from when the target was first identified:
.png)
+target.png)
And just as a reminder, here is the chart from when the target was first identified:
.png)
Friday 2 October 2009
EURJPY Gartley Outcome
Hot on the heals from the Gartley for GBPCHF, here is the outcome for the 2nd Gartley pattern that I identified, this time on EURJPY.
+outcome.png)
The pattern successfully identified the entry level (green line segment) and the target price (light blue line segment). Just to be very clear, this is not a retrospective analysis. The levels were identified on an earlier post whilst price was still moving upwards.
The final impulse move downwards is attributable to the Non Farm Payroll announcements at 13:30 (UK time) that delivered worse than expected results (although maybe not so surprising).
So now I'm getting quite excited by geometry!
More of a geometric challenge for me was the EURUSD posting from yesterday. The wedge geometry identifies a bullish move to a target price level. My entry price for a trade was below the level a the time, and it looked like I had missed the chance of an elegant entry. But a poor NFP result was expected to push USD higher, which could have created a move totally contrary to the geometric "prediction". So was looking like either the move wasn't going to happen, or I had missed it. I was curious to see how the geometry would deal with a significant news event. I thought it would just break the pattern, but actually the outcome was a bullish impulse move preceded by a spike downwards - giving me both my entry and a push towards my target. WOW!
.png)
+outcome.png)
The pattern successfully identified the entry level (green line segment) and the target price (light blue line segment). Just to be very clear, this is not a retrospective analysis. The levels were identified on an earlier post whilst price was still moving upwards.
The final impulse move downwards is attributable to the Non Farm Payroll announcements at 13:30 (UK time) that delivered worse than expected results (although maybe not so surprising).
So now I'm getting quite excited by geometry!
More of a geometric challenge for me was the EURUSD posting from yesterday. The wedge geometry identifies a bullish move to a target price level. My entry price for a trade was below the level a the time, and it looked like I had missed the chance of an elegant entry. But a poor NFP result was expected to push USD higher, which could have created a move totally contrary to the geometric "prediction". So was looking like either the move wasn't going to happen, or I had missed it. I was curious to see how the geometry would deal with a significant news event. I thought it would just break the pattern, but actually the outcome was a bullish impulse move preceded by a spike downwards - giving me both my entry and a push towards my target. WOW!
.png)
GBPCHF Gartley Outcome
Yesterday I posted a setup based on a potential Gartley pattern. Here is the outcome.
+outcome+3.png)
How cool is that!
+outcome+3.png)
How cool is that!
Gartley on EURJPY
Oh dear, I seem to be seeing patterns everywhere. Lets see how this one pans out. If it's a Gartley pattern I'd expect price to rise to the trade entry level marked by the green segment, with a target price marked in light blue and the stop in red.
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EURUSD Wedge
In earlier posts I had been anticipating the breakout of EURUSD, then waiting for a subsequent pullback to make an entry; however, price didn't pullback to the levels that I was looking for. Recent commentaries that I have read for EURUSD are very bearish. Here is a contrarian view, based on the geometry of a bearish descending wedge formation.
Price has retraced to a confluence of 50.0% and 61.8% fibonacci levels. The last 2 lows appear just below a monthly pivot level, and are divergence against momentum indicators. Projections from the wedge formation anticipate that price could reach 1.4750 in Mid-October. I've indicated a potential entry level, based at the last low. However, its possible that this price won't be revisited and an alternative would be to scalp an entry on a smaller time frame somewhere close the the pivot level at 1.4545. Of course the NFP announcement tomorrow could cause a swing to the low side to trigger the entry. If the result of the NFP is further bearish movement, I still think there would be a possibility for entry at about 1.4450.
Price has retraced to a confluence of 50.0% and 61.8% fibonacci levels. The last 2 lows appear just below a monthly pivot level, and are divergence against momentum indicators. Projections from the wedge formation anticipate that price could reach 1.4750 in Mid-October. I've indicated a potential entry level, based at the last low. However, its possible that this price won't be revisited and an alternative would be to scalp an entry on a smaller time frame somewhere close the the pivot level at 1.4545. Of course the NFP announcement tomorrow could cause a swing to the low side to trigger the entry. If the result of the NFP is further bearish movement, I still think there would be a possibility for entry at about 1.4450.
Thursday 1 October 2009
Gartley Pattern
Is this a Gartley Pattern? Hmmm, I'm not so good at detecting these! The ratios seem right, but it looks abit "squishy" to me. Anyhow, I've marked my trade setup (paper only!) to see how it performs.
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