EUR/USD is looking interesting here. If the area at 1.3450-13550 holds today, I expect to see 1.38 and then 1.40 in a couple of weeks. Right now it looks like a Wyckoff Formation in the making. MACD divergence also confirms this theory.
Posts Tagged ‘MACD’
Dangerous formation for EUR bears.
March 2nd, 2010
Got the confirmation today. We are going UP.
February 25th, 2010Today I have got the confirmation, I was talking about – the pullback is over for the time being, and the next stop for SPX is 1113 – 1120.
it also looks like EUR/USD has also reached the bottom for awhile. The pullbacks are keeping being bough back, MACD shows divergence.
As for the stocks, we’ve got an ugly opening today, but managed to make it all back. Also, a lot of stocks have closed the day with big gains, erasing the losses for the previous days. One of those stocks is POT.
This is a nice buy here a 110-111, with the stop below 105 and a next weeks target at 122. Short term target is ~116. You may also want trade through ATM Call options, as they offer a better R/R for a trade.
I personally have bough March Calls@110 at 5.05. Stop below today’s low. Looking for 122 next week, though it all depends on tomorrow’s price action. If SPX is not able to break above 1113 I am out of my position.
What to look for in equity, currency and gold markets in year 2010.
December 31st, 2009This is the last post for the year. The price action for the last month indicates, that equities and currencies are not moving in the tandem as they used to. Despite the rise in the USD, equities were able to add more to their gains. So, my target of 1130-1140 has been reached. Now I am at the crossroads, as some indicators are pointing to a pullback in January, while others for a more run and bump price action to come.
The above chart of SPX indicates, that the rising trend we have witnessed since March, is losing its pace. The only thing that might help this thing to go higher is a violent buying, as one we’ve seen in July. Right now, nothing suggests that this is going to happen, in fact the there are good chances that we might see 1080 by the end of January. Using Wyckoff Schematics, I have 1030 as my second target. This is nothing outrageous, as 9-10% pull back would be healthy for this market. Though there are some things that suggest, that bull is not dead yet.
The first bullish indicator is XLF. Financials have been lagging during the latest rally but the chart below indicates that they have finally found solid support and have a good chance of rising as high as 15.50-15.75. This is actually a pretty save play, as you can buy at 14.40-14.50 and place a stop below 14.20, giving you a nice R/R.
It may sound odd though, but XLF is also the sector that may trigger the reversal of the broader market. In this case we need to watch 14.40-14.00 area losely, as a drop below 14.00 might lead to a sharp selloff.
Other indicators of the reversal are GOLD and EUR/USD.
To support the bear’s case, EUR/USD must stay below 1.4480-1.45. To get more confirmation, I would like to see 1.4070-1.4050 by mid January.
The same thing is about GOLD price action, as long as it is below 1110-1115 price tag.
So, all in all this makes me a cautious bear, as the chances of another run and bump action in SPX are strong. Who knows, maybe the big layers, have dumped EURs, just to accelerate the rise in equities later? I don’t know that, so as a trader the safest option is to trade what I see… But HEY, enough of this, there will be a lot of trading days going forward, as for now:
Use of multiple timeframes when trading.
December 14th, 2009We often see a lot of arguing what time frame to use while trading, some insist on using short term charts, while others suggest that short term price movements is just a noise and can’t be relied on. Although it depends on the strategy, whether you are a scalper or a swing trade, the combination of several time frames is still the best option of all. The reason for that is easy – while the longer time frames help you to determine the direction of the main trend, and major support resistance levels, the 1- or 5- minute charts will help you find the best entry point.
Here is an example with EUR/USD pair:
Even though the medium term chart has turned bearish, in the longer term we are still in the bull mode. So, you decide to go long EUR at some point. So, you start the analysis with a 4- and 1-hour charts.
On the chart above you see the first signs of a possible turnaround – a MACD divergence and that the price is testing resistance point. Being an experienced trader, you understand that if the price breaks above the resistance at 1.4680, then according to Wyckoff Schematics it can run as high as 1.4900. So, you don’t want to miss the train. You start looking for an entry point with the best Risk/Reward ratio and zoom to the 15-minute time frame.
The 15-minute shows us that a reversal is highly possible, and in fact the price has already tested the resistance at 1.48. Now it has pulled back to a 50% Fibonacci retracement, making 1.4650 a perfect spot to enter a long trade with a good R/R ratio.
The last step is enter the trade. For that you zoom to 1-minute chart and place a buy order somewere between 1.4652 – 1.4647. Then you place a tight stop of 15 pts.
The trade above has not only great R/R potential, bu it is also a stress free one:
- You know that your odds of winning are high.
- You have a predetermined stop in place, which protects you from further losses in case things go wrong.
- This short term trade has a potential to become a swing trade with more than 1/10 Risk/Reward ratio.
In conclusion, I’d like to add that this is the type of trades you want to make each time – stress free, with high reward potencial. There is no need to rush in every trade you see, just be pacient enought to look for the best ones, and you’ll see your account growing expotencially.
Stocks Market Projection for the week (07.09)
September 7th, 2009As the market will be closed for a Labor Day today, here is what to expect on Tuesday.
Right now we are at a pretty critical point. Every 10 pts. rise or drop might determine the market direction for the coming weeks.
From the chart above, you can see a potential Head & Shoulder forming and 1020 is a critical point here. If that resistance holds, we have a good chances hitting 960. If not, I would be looking for 1050.
I personally tend to believe that we are going lower, the only thing that worries me is a MACD, which is indicates more upside to come. So, here is how I’m gonna play it:
- Enter 1/2 of my initial short position in SPY at 102.00-102.50. Place stop at 103.40
- If we go lower – hold into my position and add the remaining 1/2 below 100.50.
- If we go higher eventually, will close my short. I’ll try to re-short near 105.00 (need to see the divergence confirmation from MACD first though).
MACD Divergence
December 15th, 2008I am not a huge fan of indicators, as they all seem to lag behind price action. I also tend to keep things as simple as possible (K.I.S.S. – Keep it Simple, Stupid). Still, there is one indicator I really like – MACD. It is a great tool when used properly and in this post I’ll show you what I mean.
There are different ways to use MACD indicator. The most profitable for me is Negative Divergence. It forms when a stock/commodity/index advances or moves sideways, and the MACD declines. It is the first sing that the price is losing momentum and reversal is highly possible. The Negative Divergence in MACD can take the form of either a lower High or a straight decline. Negative Divergences are probably the least common of the three signals, but are usually the most reliable, and can warn of an impending peak. Usually used in combination with W-tops/bottom, rising/falling wedges. Most reliable when divergence occurs at some important support/resistance area.
Works in different time frames, though the longer the time frame, the more reliable is signal.
Examples:
NB! Avoid tops/bottom picking (using MACD divergence) on a strong trending day (significant up/down move without any meaningful retracement – see the last chart).
Profitable Trading!
