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nice trading Tellon...but where to know on Cable

Update Time: Hong Kong 09:00 London 02:00 New York 21:00



FX Analyst - Pro Commentary - April 29th

Schaff Tutorials - System Alerts





General Market Conditions
The Dollar managed a deeper pullback than expected against the Europeans and this morning looks quite weak against the Euro and British Pound. However, key levels have still not yet been broken and until these do we have to assume that we are still within a larger consolidation. If we are to look at each side of the ranges any break of the dollar topside would appear to have quite aggressive bullish implications. On the Dollar bearish side we still need break of 1.1950 Euro, 1.2950 Swissie, 1.7970 Pound and 108.50 Yen. Breaks of these areas would maintain an erratic and choppy medium term correction. Our longer term view (for the rest of the year) is Dollar bullish but we are aware of some shorter cycles turning lower lower at this time that could have effect for the next 10-15 days. What is less clear is how strong the longer cycles are and whether they can override the shorter term softness. Thus we look for price breaks to generate the next larger move.





USDJPY
Price: 110.15
Day View
Resistance: 110.30 110.55 110.70 111.10

Support: 109.85 109.65 109.25 109.00



Bias: Mixed - waiting for breaks

Bullish: The Dollar has reached the minimum target at 110.23-30 and further strength will require a move above this level in order for gains to move to the next resistance at 110.55-70 which we feel could generate a pullback. Note the presence of a possible uptrend channel high around this level. Any further gains will require a break above 110.70 and then 111.10 to push price further to 111.55-75. Next resistance is at 112.85.



Bearish: Having seen the move to 110.23-30 we need to be a little cautious. There does appear to be room for further minor gains through to 110.55-75 but while this holds and on a break below 109.85-95 we would envisage a pullback towards 108.75 once again.





Week View
Resistance: 110.70 111.55 112.85 113.40

Support: 108.75 107.55 106.85 106.00



The upside remains dominant with further gains being seen above the 4-hour Pivot Cloud to maintain the bullishness of the recovery from 108.30. Schaff Trend Cycle has recovered and is close to 100 while FXS-RSI has moved higher close to overbought territory. While not confirmed until we break above the 109.85-110.25-45 area, the structure does appear to look more positive. However, we do suggest waiting for this break else a move back to 106.70-107.20 is possible.



Yesterday's comments continue to apply:

Bullish: The unexpected recovery yesterday does bring a certain bullish feel to price here but we have only seen a three-wave (corrective) move higher thus far. Therefore any bullish stance should ideally wait for a break of the 109.85-110.25-45 area before considering follow-through to 111.55 and possibly as high as 112.15.



Bearish: Failure to break down to lower levels yesterday was somewhat of a surprise but until 110.25-45 is broken we feel that the downside has not been erased completely. Thus should price break down below 108.65 then the odds would then favor the losses continuing towards the strong 106.70-107.20 support zone.



Month View
(Updated 19th April)

Resistance: 109.25 111.15 112.30 114.90

Support: 104.80 103.30 101.30 99.50



Having seen a move back above the 107.21-65 area the emphasis appears to be back on the upside in line with the bullish weekly and monthly cycles. We require 104.80-00 to hold for this and a move back above 109.25 would encourage gains up to 111.15, 112.32 with 114.90 being a higher target to keep in mind. Back below 104.80 would threaten the 103.42 low and call for losses down to 100.40.





EURUSD
Price: 1.1825
Day View
Resistance: 1.1850 1.1875 1.1905 1.1930

Support: 1.1805 1.1780 1.1858 1.1725



Bias: Mixed - waiting for breaks

Bullish: The reversal from 1.1950 has been strong and is testing lower as we write. To maintain any chance of a more bullish stance we need to see price remain above the 1.1758-1.1805 support zone. While this support holds and on a break back above first 1.1850 and then 1.1875-1.1905 we would then see room for recovery. Further resistance is at 1.1950 once again.



Bearish: We are seeing a test of the first support at 1.1805 as we write. This does have potential to hold with further support at 1.1758-80. Thus only a break of the 1.1758 low (and a long term daily uptrend support) would provoke a much stronger reaction lower. First support is at 1.1725 which should be watched and on a break here losses would favor a move through to 1.1650 at least.







Week View
Resistance: 1.1940 1.2085 1.2135 1.2205

Support: 1.1855 1.1725 1.1645 1.1530



Price once again failed at the 1.1950 level and provoked a reversal below the 4-hour Pivot Cloud and dents the bullish outlook. Schaff TC1 is now declining while FXS-RSI has reversed from overbought territory. The 1.1725 - 1.1940 range is crucial to the next larger move and break will generate the sentiment for the coming month. Be aware that any break of the 1.1725-60 area could produce an aggressive reaction lower.



Yesterday's comments continue to apply:

Bullish: The recovery from 1.1775 threatened the 1.1940 resistance on Friday and while there has been a new low at 1.1758 there has been no confirmation of the downside yet. Still, break at 1.1950 is required to generate a correction to the entire downside from 1.2927. Any further gains now would imply follow through to 1.2035 and probably back to 1.2160. Further resistance is at 1.2220-40.



Bearish: With a further test of the 1.1940-45 area the structure appears to be failing the downside view. However, the only chance we see of further losses would be if yesterday's high at 1.1947-50 holds and we see loss of 1.1855 which we feel would then favor a retest of 1.1758 and breach here would allow losses to resume towards 1.1645 and probably 1.1510-30.





Month View
(Updated 19th April)

Resistance: 1.2085 1.2325 1.2455 1.2655

Support: 1.1720 1.1560 1.1310 1.1165



While the progress lower has been choppy we do feel that the repeated rejection around 1.2400-55 and the decline from there should now allow price to move down to the Double Top target around 1.1720-50 and we suspect now a stronger decline. Support at 1.1560 may hold for a while but we while 1.1820-50 holds we consider the larger risk to be lower to 1.1165 over the next 4-6 weeks.





USDCHF
Price: 1.3085
Day View
Resistance: 1.3105 1.3120 1.3140 1.3160

Support: 1.3065 1.3040 1.3015 1.2970



Bias: Mixed - waiting for breaks

Bullish: The pullback from 1.2952 confirmed a 3-wave structure lower from 1.3226. However, this could still be part of a larger decline and we need to watch for signs from short term price behavior. We feel that a test of 1.3120 is probable at the very least. Break here is needed to take price to the next resistance at 1.3160 which could well hold. Thus only above 1.3160 would allow price to accelerate higher towards 1.3226 once again and probably higher.



Bearish: Failure to break below 1.2952 yesterday was disappointing. This now leaves one possible bearish view which would require 1.3120 and 1.3160 to hold. Thus on a rejection from this area and a break back below 1.3040-50 we would then look for losses down to 1.2950 once again and probably lower to 1.2825-45.





Week View
Resistance: 1.3160 1.3225 1.3385 1.3485

Support: 1.2950 1.2835 1.2770 1.2710



Price held above 1.2950 and broke back above the 4-hour Pivot Cloud which brings us to a pivotal area where bullish & bearish sentiment are balanced. Schaff Trend Cycle has recovered and is moving towards 100 while FXS-RSI has recovered from oversold territory. We see the 1.2950 area as important with a minor uptrend line resting here while the 1.3160 area presents important resistance on the topside. If the topside breaks, be aware that the reaction could be quite aggressive.



Bullish: The recovery to 1.3100 has disappointed but we require a move above 1.3160 to bring a stronger bullish case. Only a break here would trigger a retest of the 1.3225 high and a probable follow-through to 1.3385 with 1.3485 also implied.



Bearish: Failure to move below 1.2952 is a concern for the bearish view and represents a minor uptrend line from 1.2710. Note also how on the 4-hour chart we have seen a series of lower highs in FXS-RSI and thus a break of 1.2950 would confirm this divergence and a decline to 1.2710 once again.



Month View
(Updated 3rd April)

Resistance: 1.3085 1.3235 1.3410 1.3700

Support: 1.2625 1.2515 1.2180 1.1700



The expected move higher has met with some early choppy price action but we feel this should now move onto the 1.3220-35 area this month at the very least and do see some risk of seeing gains extend to 1.3410. Watch this area since it could cause a pullback. Further resistance is around 1.3700.





GBPUSD
Price: 1.7680
Day View
Resistance: 1.7700 1.7725 1.7760 1.7795

Support: 1.7665 1.7640 1.7625 1.7575



Bias: Mixed - waiting for breaks

Bullish: The failure at the 1.7970 resistance generated a strong reaction back lower. On the face of it this looks quite bearish but will not be confirmed until 1.7625-40 is broken. Thus while the 1.7640-65 area holds and a move is seen first back above 1.7700 and then 1.7725 we can begin to look for cautious gains once again. Next resistance would then be at 1.7755-65 and then the pivot resistance at 1.7815.



Bearish: The drop from the 1.7970 resistance has been aggressive and does give a bearish feel. However, we will remain cautious until we see break of 1.7625-40. Only then would we feel the larger picture is turning aggressively bearish and would look for immediate follow-through to 1.7490 at least - slight caution here - and if this breaks then further losses are likely towards 1.7450 and possibly lower.




Week View
Resistance: 1.7815 1.7970 1.8030 1.8160

Support: 1.7625 1.7490 1.7330 1.7255



Price held to the bottom end of the 1.7970-00 resistance advised yesterday and prompted an aggressive decline back below the 4-hour Pivot Cloud that is poised above the key 1.7624-40 lows. Schaff Trend Cycle is declining and close to zero while FXS-RSI has matched this decline and is close to oversold. Overall we still require a break of the 1.7624-1.7970 range to provide the new medium term direction. Care if the downside breaks as the move could be aggressive.



Bullish: With price failing at the low end of the 1.7970-00 resistance advised, it confirmed a three wave move higher and caused a strong reaction lower. While this does not appear to support a bullish view, while 1.7624-40 holds there is still a scenario that could see a move back to the 1.7970-00 area. Break of 1.7815 confirms.



Bearish: The reaction lower from 1.7970 has been swift but we need still to be a little cautious until the 1.7624 low breaks. Should this occur the downside is once again favored to 1.7490 at least. This level needs to break to generate a continued strong move lower that should reach 1.7254 at least and possibly as low as 1.7135-65.



Month View
(Updated 19th April)

Resistance: 1.8300 1.8605 1.8875 1.9025

Support: 1.7650 1.7165 1.6905 1.6565



The move lower has met with a choppy start but we feel that we should now see losses resume and expect to see progress to the next support at 1.7650 this week. From there we should see a correction develop but the coming 4-6 weeks looks bearish towards 1.7165.

Hi foale,

You asked yesterday about my trading.

For quite some time, I had been trading the 250's with their trend both up and down. A bit like croc's 123 system, except that I would try to enter on the turn at the end of the pullback rather than on the break. I would trade certain large caps, but I'm not a scalper and I've never really enjoyed that style.

The advent of SETSmm left me a bit in the wilderness. SETSmm certainly favoured scalping and the momentum upon which I had been reliant for so long seemed to have gone. I therefore started to look for different markets and switched my attention to the SEAQ's outside of the 250. The same system/strategy except that the spreads may be a bit wider and you need a bit more patience.

About that time, a friend suggested that I look at FX which I did. I spent a lot of time looking at the charts and developing a strategy that could work. I liked the emotionless "it's only a number" aspect and also the fact that it's a seamless 24/5 market with no gaps. Guaranteed stops are a big plus. I initially looked at USD/JPY and EUR/USD before I cottoned on to the low margin requirement of Cable.

I look for trades of 2 or 3 days plus which, I guess, is similar to Tellon. Hats off to you for scalping 200 pips yesterday ........ I don't think that I could do that everyday. I'd much rather get in on the turn and add to the position so that I get a total of maybe 600 or 700 pips from a broader 250 or 300 pip move over the 3 days.

A week or so before Easter, I allocated a pot exclusively to Cable trading. Believe it or not, I've multiplied the pot 27-fold in those 6 or 7 weeks.

Hils - very impressive results, amazing.

Regards
Rob

Morning All,

Thank you for your comments there Hill. Nice to see how you trade there. I had one question do you have a maximum limit on the number of units your trade. I.E once you reach 4 units you are loaded and place no more?

Im currently Short Euro 11833 from last night.

I dont see to much action till around 13:30. Myself..

Thanks for replying Hilary...interesting reading

Wow that is an impressive performance
I will be reading your comments even more closely now

I have started to look more at FX as things have got quite boring on the CFD/shares side atm

Cable at the very bottom of its range this am
A break of todays lows or failire to is what I am focusing on at the moment

I now trade only Cable..as concntrating on one is plenty to worry about
and the Eur/Usd does not seem so volatile

I do like to bank my profits though
though I will look to entering longer positions at perceived price extremes

Once again great performance Hilary

Tellon,

Regarding adding to winning positions, it's a strategy that I'm still trying to hone.

The theory is quite simple. Cable has a 1:200 margin requirement. To begin with I increased my position size by 50% every time the position moved 100 pips in my favour. That way, I would only use margin which had been freed by the position moving into profit and wouldn't be calling on other margin. It's called Pyramiding. For example:

Open long 10/pip at 17100
Add 5/pip at 17200
Add 7.50/pip at 17300
Add 11.25/pip at 17400
and so on .....

It then occured to me that the largest positions were weighted towards the end of the move and the possible loss from the last position could significantly erode the gains from the early positions. I then experimented with setting a size limit on the later positions so that the trade did not become too "top heavy". I've also experimented in other ways with adding at closer intervals and not adding at all once the postion has moved more than 150 pips in my favour.

I don't think there's a right or a wrong. It's what you feel most comfortable with.

edit: I also favour leaving limit orders to add at the prescribed levels. It removes more of the emotion, imo.

Hilary......WoW......thats one very impressive rasult.
Have traded Cable in a small way but only on a scalping basis
which i find very difficult, if its not too cheeky of me could
you give us some indicators on chart settings that your looking at,
understand if you don't want to.
Keep up the good work, again, Very impressive.
cheers Steve.

Hil,

I have read about a group of futures traders who add to there postions depending how volitle the market currently is. Allowing for whipsaw in volatile times and capturing tight progits in non volitile times.

The formula can be confusing but theres an example at the bottom

TR (True Range) = Maximum (H-L, H-PDC,PDC - L)
N = (19 * PDN + TR) / 20

Where PDN = Previous Days N & PDC = Previous days close

Start with a 20 day moving avearge of TR since on the 1st day you need a PDN.

Starting postion = 1%(Or your own risc) of Account / N X Dollars Per Point ($1 on cable mini)

This would be the number of contracts traded on a day.

Then increasing in size would be at 1/2 N intervals to a maximum of 4 units per futures market.

I.E today, (USD/GBP) (With a smaller time scale (Days not months target)

I calculate PDN as 180 (I didnt do a full 20day just wanted to give an example)

N = ((19 * 180) + 271) / 20 = 184.55

So 4:1 (Reasonable Levrage) for 10000 = 40000
Mini Contracts $1 a point

Unit = (1% 40000)/(184.55 * 1) = 2.1 (rounded to nearest whole number) = 2 a pip

So
GBP/USD
N = 184.55
Your System Sell or Buy signal say it said sell = (Say Now - 1.7635)

First Unit Added (2 point) 17635
2nd = 17635 - 1/2 N or 17543
3rd = 17543 - 1/2 N or 17451
4th (final) = 17451 - 1/2 N or 17359

Now if you only ever want to risc 2% of account levarage all you do is put
stop loss at 2N Above latest entry. I.E stop moves down as entrys
move down.

4th Entry 17359 (Stop at 17727) Obvioulsy this is a real 8% risc due to levarage

By using an entry system that reacts to volatility you will enter tighter on a quite time and wider at more volatile times. with stops being tighter or wider
capturing a higher percentage of a move.

Sorry if it doesnt make sense just part of a money managemnt system imtrying to
implement.

Hilary do you have a position at the moment
I am still batting from the short side

Was that the final test on Cable b4 the decent to 1.7500
ie the spike up to 1.7625


Lets see if it starts to move 3-4 mins b4 the figures...like we have seen for the last few big announcements

amazing huge moves in Forex and no posts...

Hilary...what do you make of these figures...

amazing huge moves in Forex and no posts...

Hilary...what do you make of these figures...

amazing huge moves in Forex and no posts...

Hilary...what do you make of these figures...

amazing...all thisa action in FX and no posts...

test

testing.

Foale,

I caught the down move yesterday, but I closed out late yesterday of my own volition and I've been out of the market today as I've had other things to do.

As I see it, the downtrend from yesterday is still intact even after the US data. My strategy now is to draw a falling resistance line between the high of yesterday and the high of today and then to buy the break. Will it break in afternoon US trade or overnight Asian trade? Who knows? I'm in 2 minds whether or not to leave a limit buy or simply to wait and see in the morning. The holiday on Monday is a bit of an intangible too.

As for the news itself, it lessens the likelihood of an imminent rise in US rates and with a likely rise from the MPC next week we should see some upside over the coming days from Cable, imo.

Tellon,

That strategy is too much for me to get my head around atm. I'll look at it though.

Hil,

I think its a clever way to enter new trades in different volatility

Foale,

I was short as you know (From my previous post) so got wipped out at 13:30. -75pips. I tightened my stop loss right before data came out just incase (was 167)

Went to the dentist after that, I dont think its worth going long so just waiting for the dust to settle. IMO 4.1 was a good GDP. Higher than bush administartion expected and not to big a jump. Nice longterm sustanable growth. That leads to inflation and intrest rate rises. Personaly I thought it was a reason to buy the dollar.

No entry till 9am for me tomorrow. As for asia I think its a 3day holiday? so there should be quite low volume overnight.

I got caught out ofter the figures yesterday
Was not expecting Cable to be so strong...
Gave away the mornings gains

Tellon you might be right re yesterdays figures
and this ams price action maybe the market reassessing
yesterday afternoons move

That line of yours Hilary starting to look like resistance is holding
and dollar bulls reasserting themselves...

As usual Fridays figures awaited with trepidation