Technical Templates

[jcpfx]

if I may enquire, what exactly is the significance of low liquidity?

Just that in these types of circumstances, anything can happen.

Moves that ordinarily would get supported at a particular technical level often don't.
Breakouts will pop & fade very quickly due to lack of sufficient follow-through due to illiquid participation.
Prices can shift aggressively for no apparent logical reason, other than the fact a medium sized order block goes through, which under normal volume trade wouldn't impact or affect the movement, but because the particular instrument is thin, the move is exaggerated.

No-one is or was suggesting that these periods aren't tradeable from a retail angle, because clearly they are. But from a wider wholesale perspective (which one or two of these guys participate in) it can cause erratic dealing conditions.

As long as folks are aware of the potential knock-on effects, then no harm done.
The last part of my reply was simply explaining the reasonings about the order book & why this week is still considered a bedding in period for the wider market.

Thank you for the clarification, much appreciated. It must seem obvious to many, but it wasn't to me

It is logical though...common sense

[jcpfx]

Good morning speculators,

as visualxray noted yesterday, low liquidity means that levels may not hold as usual. The Euro action has proven him right, as the recent support zone was broken and now the 1.3170/80 zone looks to me like a good place to try & short it for a push into 3070s. The economic data out of Europe was mixed, but even so, we closed the gap and put in a lower low...bearish tone if you ask me.



The way yesterday ended has shown some action that has changed my outlook on some other pairs. Kiwi is still looking good, having put in a higher 4h low and the action so far has it inside yesterday's range. Might be a candidate to short upon a failure at highs or long upon a failure at yesterday's low (8293 on my chart).



EurNzd has shown some stiff resistance in the 5830s (close to year open) so my short entry levels have shifted down to there.



Cable has headed lower even after some good data prints yesterday, but the US ISM probably took center stage having printed over 50 again. Also, the Fiscal Cliff drama is not yet over and that could also be a component of the bearish tone on many pairs/crosses.

Love to hear your thoughs, and thanks for the support in any case

[xerb]

as visualxray noted yesterday, low liquidity means that levels may not hold as usual. The Euro action has proven him right, as the recent support zone was broken and now the 1.3170/80 zone looks to me like a good place to try & short it for a push into 3070s. The economic data out of Europe was mixed, but even so, we closed the gap and put in a lower low...bearish tone if you ask me.

Love to hear your thoughs

I agree with those comments jcp.
Even in these sporadic low volume periods I tend to stay loyal to the basic structure of the approach & let that be my default to any potential entries I may wish to initiate.

Taking the EURUSD as an example (& simply using that template to map & plot any other likely entry opportunities on other pairs), the 4 & 1 hour charts are displaying lower top cycle behaviour with the move down through last week's lows at 1.3165, the confirmation that a bearish tone is indeed taking hold.

Once that primary bias is in place I can drill down & pick off any pullback cyclical action & either play a hook (short) entry or perhaps a 1-2-3 continuation short or even a combination thereof to get me aboard with acceptable risk & forward potential.

[jcpfx]

Thanks for the support there Xerb,

hopefully the Euro plays out as planned Although there isn't much to get it going this morning...only GER unemployment in 30 mins... then the stage is passed to USD for Jobless, ADP and FOMC minutes later this afternoon...

We'll see

[jcpfx]

EurUsd over & out



Reluctant to say that I had inserted a TP at 3134 before having the necessity to step away from the screen for physical issues...

A profit is a profit...but what a MISSED profit as EurUsd is now below everything...

I hope Xerb is still in this trade milking it for all it's got..

[jcpfx]

And here came the stop:

Cable showing failure at o/n lows - last week's highs + hook but no good





Again...any comments on this are more than welcome...

[xerb]

EurUsd over & out
A profit is a profit...but what a MISSED profit as EurUsd is now below everything...

I hope Xerb is still in this trade milking it for all it's got..

I've milked it as far this 1.31 round number jcp, which coincides with the current 1 month average daily range.

I rarely consider trailing or running moves during periods of low liquidity/participation, so if the opportunity exists to get close to the day's ADR & it also happens to kiss a significant zone such as a round number/figure or a pre-identified area of support/resistance I'll usually take that & cash out especially if it offers odds better than even money!

I'm not sure what your comments are regarding the GBPUSD though?
Were you long or short?

I have that pair as neutral/bearish on my charts today, particularly given the immediate hourly cycle momentum & the fact it needs to scale back above 6250 (today's early morning highs) in order to arrest the current bearish tone.
Very similar to my previous EURUSD comments/shaded area re; 3190

[jcpfx]

Good stuff Xerb,

Cable was a long attempt upon the failure at o/n lows + hook...I may be wrong in my trend view here but I was still thinking the cycle was up until the 6150/70 zone was taken out.

I see you refer to the 1H chart a lot as well...I am still sticking to the 4H as my primary trend identification chart and then switch to the 15Min "tactical" or "entry" tf..I skip the 1H to avoid confusion... is there information I'm missing in skipping the 1H?

Thanks and congrats on that trade!

[Sarah Foster]

Good stuff Xerb,
Cable was a long attempt upon the failure at o/n lows + hook...I may be wrong in my trend view here but I was still thinking the cycle was up until the 6150/70 zone was taken out.

The cycle was invalidated jcp when 6250 failed to contain the upswing this morning during the tokyo trading window (circled on the 1st 4 hour graph).
The 1 hour chart simply offers a bit more clarity that's all.

The way I've read & interpreted the guys views on cycle momentum is to try & ensure the higher timeframe (hourly) high-low steps are valid & in sync, otherwise the probability factor of continuation is reduced.

I've annotated that lower hourly high (6250) which xerb referred to on my 1 hour chart & marked up the cycle sequence where I would have been looking for 15min long opportunities.
Because it represents the most recent lower high into today's action & has printed a lower low, price really needs to re-engage a long bias above 6250 & hold to offer a high probability opportunity.

[jcpfx]

Good stuff Xerb,
Cable was a long attempt upon the failure at o/n lows + hook...I may be wrong in my trend view here but I was still thinking the cycle was up until the 6150/70 zone was taken out.

The cycle was invalidated jcp when 6250 failed to contain the upswing this morning during the tokyo trading window (circled on the 1st 4 hour graph).
The 1 hour chart simply offers a bit more clarity that's all.

Ciao Sarah,

thanks for clarifying the cycle. I may need to go over the basics again. I took an example from VisualXray from some time back on the 3d on EurUsd action in October:



And what I had been looking at was instead the following analysis:



Could you give me some insight here? Am I over complicating things and/or missing something obvious?

Thank you.