Technical Templates

[akhunzada ali]

hey guys,
i have a quick question for you guys, its again about the pairs i am sorry but couldn't find a better place to ask someone about this.Its about pairs movement up and down, i will give you an example , last friday after the gdp figures were released in the US, Euro came down across the board Eur/usd ,Eur/jpy and Eur/chf they all came down .Now as a newbie i was expecting only eur/usd to come down as the news was about the Us , now i do know about the correlation among different currencies but my question is Ok Correlation worked on friday after the new release but today eur/usd has been going down after the new york open but the Eur/Chf Went up after the new york open and eur/jpy moved sideways .Now how should the pairs be picked and how to know when the Correlation amongst the currencies will likely take part and when not ?? thanks

Regards
Ali

[shona123]

I have a quick question for you guys, its about pairs movement.
I will give you an example:
Last friday after the gdp figures were released in the US, euro came down across the board with Eur/usd...Eur/jpy and Eur/chf all falling. I was expecting only eur/usd to come down as the news was about the US.

It wasn't just about the GDP though Ali.
Risk aversion was high in the markets due to the escalation of unrest in the Middle East. Whenever fear raises it's head traders & investors head for safer assets & out of the more risky speculative instruments.

Last Friday & Monday the markets were also trading into month end.
Along with the end of financial quarters (end of March, June, Sept & Dec), month end trading sessions are used as book squaring opportunities for major Bank desks, funds & commercial entities.
This will often result in sharp price readjustments as money flows impact the various individual currencies.

Today eur/usd has been going down after the new york open but the Eur/Chf Went up after the new york open and eur/jpy moved sideways.

There was no real driving force behind the Yen yesterday. Data was non-existent, therefore eurjpy was at the mercy of risk sentiment. Generally, you can use eurjpy & the swiss currencies as pretty accurate risk barometers in the markets.

Eurusd was blowing off a little froth on this latest leg up & simply booking profit leading into today's data & Friday's non-farm payroll report.

How should the pairs be picked and how to know when the correlation amongst the currencies will likely take part and when not ??

You'll get a decent guide to what's driving a currency pair by observing at least a months worth of price data via your technical charts.
A 60 or 240 minute chart will clearly highlight the flows & reflect the fundamental sentiment currently playing out in the markets.
So, if prices are forming higher highs & higher lows & the specific fundamental output on the base currency is reflecting a positive tone, simply look to buy pullbacks on your preferred entry trigger timeframe.

Do the reverse for shorts.

If you use the technicals in tandem with the relevant fundamental data output affecting the various pairs, that exercise will assist you in filtering the appropriate currencies for likely trade opportunities.

If I were you I would filter down your watch pairs & simply pick a small selection (2 or 3) of highly traded pairs.
Begin familiarizing yourself with the technical movement & their reaction to risk appetite & fundamental output.
Trying to juggle too many pairs & attempting to absorb all the differing criteria that impacts those pairs will simply confuse & frustrate you.

[jack mason]

February has contained the recent uptick in eur/usd during the first few weeks of the new years action by printing a clear lower high above 1.3720.
6 weeks worth of data via the 240min chart clearly identifies the upper & lower potential supply-demand zones from last weeks closing ticks that will form intial target levels on entries based off set up triggers in line with price flows into next week.


The last couple of weeks worth of price activity based on the 60min chart focuses the near-term trigger levels that will signal me in based on the dominant flows & directional bias.

[jjay]

You got your drop & pullback through the prior weeks lows Jack, shame it failed to kick on.
Most of the high volume pairs are flopping & thrashing around this week.
Todays reccy above 3550 popped a few trailing (short) stops this morning, but again there's no real driver to kick it on.

[jack mason]

You got your drop & pullback through the prior weeks lows Jack, shame it failed to kick on.

Indeed I did Jay. Took the short through 3505 during yesterday's european morning trade off the pullback but was forced to scratch it a couple hours later when the initial momentum dried up.

It didn't really pressure Tuesday's low after that so I’m sidelined on this pair for now.
No harm done, I'll sit patiently & wait for it to show it's colors.

In the meantime the trusty & reliable Gold long position has cranked back into an accommodative buy on dips, so all is still well with the world!

[JimmyMac]

From 13 February:
6 weeks worth of data via the 240min chart clearly identifies the upper & lower potential supply-demand zones from last weeks closing ticks that will form intial target levels on entries based off set up triggers in line with price flows into next week.

You nailed those upside staging posts virtually to the pip young man, well done!
Price tagged the top zone on Friday before closing out the week at the lower 3750 level.

As is usual when price begins threatening heavy stop levels, it made another run for your identified zone early this week & located yet more supply.
If they can find a way through that topside defense at last weeks highs they should locate sufficient order flow to take a shot at the 3950-80 zone.

I assume you legged into this uptick at some stage after your failed shorting attempt. It's not like there weren't plentiful opportunities along the route.
Keep up the nice work!

[jack mason]

I assume you legged into this uptick at some stage after your failed shorting attempt. It's not like there weren't plentiful opportunities along the route.

Sure did Jim.
I stayed loyal to my analysis as per my chart on the previous page, & waited a couple days to confirm prices were ratcheting back into bullish mode (printing higher highs & higher lows on the hourlies) & got in during that run up in prices aided by hawkish ECB rhetoric on the 18th through 1.3630 off the pullback.

Got stopped out again 3 days later though when all that Libyan chaos & Moody's credit downgrades sparked more risk aversion.
You're never quite sure how ugly it can get when risk gets cashed out so I simply covered my longs & stood back a while.

Once it blew itself out I climbed back in around the same place (3655) on the move back up later that afternoon.
Took 2 attempts to get a foothold but I finally managed to stay seated……so far!

If they can find a way through that topside defense at last weeks highs they should locate sufficient order flow to take a shot at the 3950-80 zone.

That's another good call.
I got a little more potential supply marked off 100 pips further up & nothing much more in the way until 1.42
It's not taking too much effort for the bulls to run prices. As long as the (ECB) hawks keep chattering we might get a bit more mileage out of this uptick.

Lets hope the NFP circus doesn't dump on the party too much!

[Ray_1]

Hello everyone,

I just finished reading 26 pages of the thread and saw familiar stuffs. Glad to see JimmyMac and jjay here. TT thread over at babypips is quiet without all of your inputs. From what I read all of you are still using the good old simple and easy template (Week HL, Previous Day HL and HH LL formation on charts). Hope all of you can make it a long stay here and maybe bring Tess and Jos presence here.

[JimmyMac]

I just finished reading the thread and saw familiar stuff.
Glad to see JimmyMac and jjay here.
From what I read all of you are still using the good old simple and easy template (Week HL, Previous Day HL and HH LL formation on charts).

Hi Ray,
Long time no see. Yes, nothing changes on that score....simple is always best!
You can't really go wrong if you use solid technical markers such as those (+ the average days range numbers) & trade in tandem with clear directional flow.

Hope all of you can make it a long stay here and maybe bring Tess and Jos presence here.

Unfortunately those two won't be posting here Ray.
We've had a private client forum with a live trade room running for a couple years & it's getting busier by the month. Jocelyn & the other guys (Andre, Sean, on the bid, apache rider etc) who previously helped Tess out on the Technical Templates thread are obviously needed in there now.

Tess assured Pipcrawler that she would continue to address & cover any questions or queries that popped up on the TT thread, but it will very much be on a strictly reactive rather than a proactive basis across there from now on.

[goldtop]

Hello everyone,
I just finished reading 26 pages of the thread and saw familiar stuff.
From what I read all of you are still using the good old simple and easy template.

Hi Ray.
If you've read Carll's post on that thread over there from last Saturday, then it would have offered a bit of a heads up to the likely outcome of prices failing to attract continued upside momentum into the new week.
Here's a snatch of his analysis & one of the charts highlighting the important levels he earmarked as probable attention grabbers when trading kicked off a new week 4 days ago;

...in order to keep the bullish dominant bias honest those lower 2 zones between 3850 back to last weeks lows at 3710-50 will need to include some decent bids if euro bulls are to remain confident.

The next potential fulcrum playing out is this 1.37 number.
Not only does it mark up last weeks lows but it represents the halfway point of this leg up from 1.34 into the current highs.

A micro view of last weeks action gives us a cleaner look at this recent resistance level at 3850 & the higher low steps that will prove critical if the euro bulls intend to keep this uplift in play...

As expected, that 3850 zone contained some pretty solid bids & it took a couple days to absorb, process & finally work through the orders.
Shorting into the lower high yesterday when it failed to climb back beyond Tuesdays lower high slip (& initial bounce off the 850 bid zone) offered the lowest risk odds play on this pair so far this week.
If you missed that opportunity, then placing a short bet as it dropped through yesterdays low still kept you on the right side of the current weeks flows.