Nzd/Usd: File this one under winner

One of the most basic trading setups that I've been using for a long time gave me a good trade today and I was able to pocket 70 pips. It was a trade that consisted of selling the Nzd/Usd or Kiwi short. Here's the chart:Here's the setup:

1) There's an established downtrend or sell signal (or uptrend if you're buying) on the higher time frame...in this case the higher time frame used was the daily chart, and the sell signal for the daily chart was the same as the signal for the hourly...a macd and stoch combination,

2) The MACD signal line has begun declining and is about to cross the moving average,

3) The stochastic is oversold and is moving lower.

Once I saw all of these conditions in place, I placed the trade and set a stop just above the upper Bollinger Band and I set a profit target for 70 pips based on the lows from earlier in the day. This trade ended up being a textbook trade because it played out perfectly...have to enjoy it because that doesn't happen that often.

So how did I come up with this trade? I found it by doing my daily scan through the charts this morning. I like to look over all of the daily, hourly, and 5 minute charts for all of the major currency pairs and a few of the popular crosses every morning. Going through the motion of looking through these various charts in different time frames helps me stay in tune with the market and it often generates a few trading ideas as well. This is a practice that I highly recommend and it's easy to do. Just spend 10-15 minutes and look over charts at roughly the same time every day and make note of any potential setups, patterns or trades.

Good luck out there.

TLT

Live Forex Trade

Here's a trade that I currently have on. I'm short the GBP/USD pair because my system is giving me sell signals on both the 1hour and 4hour time frames. Although the cable has been basing lately and it looks like it might break out soon, this choppy price action is providing a pretty good opportunity to pocket some pips, even if the move is just a pull back before the breakout. Bottom line...it seems to be a pretty good low risk/high reward trade. Here's a 3 hour chart from my brokerage account that shows my various entries(down triangles), stops(redlines), and targets (green lines). I don't know if all the targets will get hit, especially the bottom 2, so my game plan is to watch the system and exit if I get a reversal signal before the targets are hit. It's kind of a take what you can get attitude for this trade. We'll see how it plays out.

Good luck out there.

TLT

TLT Trender Signals

Here are this week's readings.

Weekly Wisdom Quote

"The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, or for the get-rich-quick adventurer. They will die poor."

Jesse Livermore
How to Trade in Stocks

Eur/Usd Analysis

The Eur/Usd has been bullish lately but that might change soon. We've already seen a big drop today and the gap on the 4 hour chart has almost been filled as the pair now begins to enter oversold levels. Here's a 4 hour chart:To put all of this into proper context, we should look at the daily chart to see if there are any signs of this move being significant. From my chart, I can see 3 reasons to short the pair if there is a follow through with today's move. Here's the daily chart:The 3 signs: 1) sell on trender line, 2) fisher transform is forming a bearish crossing (although it has not crossed yet), and 3) bb width stopped making new highs and is now heading lower.

These signs tell me that we might see a sharp reversal if, and this is an important if, we see follow through with the selling into the close today. All of the above reasons will be null and void if the selling doesn't continue. So what's the game plan? If bearish conditions are still present going into the close, I'll put on 1/4 of my position before today's close with a wide stop up around the 1.3750 level and look to add to the position on Monday.

This trade will be a bit of a process, which will consist of slowly adding to the position and tightening stops if selling conditions continue to improve. The good thing about building a position like this is that you don't get caught with your pants down if the trade turns against you right away...I've only put on 1/4 of my trade initially and my stops will be quickly tightened if the trade turns against me later, so there can't be too much damage done if the trade doesn't work out. One key is to use proper position sizing...only risk 2-4% of total capital on any given trade and ideally you risk even less. We'll see how it turns out. Have a good weekend.

TLT

Why Prayers Are Usually In Vain

Something a little different for today. Here's an excerpt about Joseph Murhpy, who was a former monk, psychotherapist and he specialized in Consciousness and the Subconsciousness. The excerpt below was taken out of the book 50 Self Help Classics by Tom Butler Bowdon and it is discussing a section from Murphy's own book entitled The Power of Your Subconscious Mind...both of which are excellent books.

Our universe is one of law and order, [Joseph] Murphy wrote, therefore there should be nothing “mystical” about getting answers to our prayers. It is a process no more mysterious than the erection of a building. One who knows the workings of the subconscious mind will learn how to pray “scientifically.”

What does this mean? Prayers traditionally consist of earnest utterances to God followed by “hoping for the best.” Logically, however, such prayers will carry little weight or power because they are framed in doubt. It is the great irony of conventional prayer (the pleading, wishing, hoping variety) that it involves no faith. Real faith is simple: the knowledge that something is happening, is being provided, present tense. When prayers become occasions to give thanks for the fact of
assistance (even if it has yet to materialize), they cease to be a mystical ritual that we hope God will notice, and become a co-creating process with definite ends.

Okay, so you're probably asking what praying and trading have in common. Well, the point of the excerpt is that prayers are in vain when the person praying "hopes" but does not believe that something is happening or will happen. How about when you're trading or even planning your trades. Do you "hope" the trades will work according to your plan or do you "know" they will. The point is: Have faith in your trades and your trading plan. Not having complete faith could be wreaking havoc on your subconscious and you might not even be aware of it. Just a little food for thought.

Good luck out there.

TLT

New Theme These Day: Dow Up and Dollar Down

I hope everyone's having a good week so far. Sorry about not posting TLT Trender Signals this week, I was a little overloaded with work when I got back in town.

There seems to be a new theme of "Buy Stocks and Short the Dollar" these days and it's a trend that we haven't seen for a while. Does that mean we've seen the bottom for equities? Perhaps. Will stocks come crashing back down after everyone loses faith in the government's latest plan to save the day? Could happen as well. So what do you do with these conditions? Look at the recent price action and determine (beforehand) what actions you will take depending on how prices play out. Come up with your buy/sell points and be sitting back ready to pull the trigger if the conditions you plan for occur.

Here's a S&P 500 Chart:Notice that I have marked several spots on the chart: 1) the rsi, 2) the support just over $800, and 3) the 20 day ema. If the S&P pulls back to 800 but closes above the support line and the rsi is still not oversold, I'll be looking to go long. I'll also be keeping my eye on the 20 day ema because it could be a could point to buy into the market in the near future.

Okay, now for the dollar. Here's a chart of the Eur/Usd pair:
All of the indicators on the chart remain bullish (trender lines are both green, fisher transform is above moving averages and has been moving up and the bb width has been expanding from a narrow base) and now we're starting to see some congestion on the daily chart. The pair looks to be forming a flag, which is probably a bullish sign. I'm going to wait for a break above or below the levels pointed out on the chart and then trade in that direction because currencies have a habit of forming bullish or bearish patterns and then quickly trading in the opposite direction.

Best thing to do now is to plan and be patient...don't rush into any trades in this market.

Good luck out there.

TLT

Gone Camping

Be back Sunday evening. Hope everyone has a great week.

TLT

Fed Attempts To Boost Economy and the Dollar Tanks

This Yahoo news article states that the Fed has launched a "bold effort" to boost the economy...here's what I think the article should be titled, along with a chart to show the 400 pip drop in the dollar. Ouch, I closed out a long Eur/Usd trade last night...wish I'd a held for just another day. Coulda, woulda, shoulda, blah, blah, blah...not good to dwell on such things.

S&P About To Hit Some Resistance

The US markets have had a nice little rally, but should we be surprised? I think not. We were due for some kind of bounce after the fresh lows that were reached in February. So the question on everyone's mind is whether this rally is just a bear rally or if it's a legitimate rally and likely the beginning of a turnaround. In my most humble opinion, it is way too early to tell.

The S&P is about to hit some major resistance just over the 800 mark. There are a couple of resistance points and trend lines that line up with the 50 day moving average, which should make for some interesting trading activity. Here's a chart to show you what I mean:
We'll need to see the S&P climb and stay above that area of resistance in order to indicate that we might be seeing a true reversal. Notice that in the past 6 months, when the S&P has traded above its 50 day moving average, it has only stayed above it for 3-7 days and then fallen back below. If it breaks the average again, wait for it to prove itself by staying above the average for a significant amount of time and also be ready to short if it falls back below.

I'm sure you've already seen this but just in case, there is one other piece of information that's out today...Russia is promoting the idea for a new world currency. They've been criticizing the dollar as the dominant currency...LOL...I guess they expect the world to listen to them because their currency has been so stable. In case you don't follow the Ruble, here's what I'm talking about.

Good luck out there.

TLT

Eur/Usd: Reversal or False Breakout

The stock markets are continuing there 4-day rally and the Eur/Usd is following suit. There's been some weakness in the dollar after the substantial gains in the indexes and the Eur/Usd is beginning to look like a potential reversal in trend in coming. Here's an hourly chart that shows the current uptrend:
So what's the game plan now? Well, you can either sit on the side line and wait for the follow through or take a little nibble and buy on a small dip with the intentions of adding to the position if the pair continues up. This will be one heck of a shorting opportunity (go long the dollar) if this move ends up being a false breakout, but I'm not going to fade the break in anticipation...I just don't feel like I have a great grasp on the markets at the moment and I need to see a little price action to get my bearings. We'll see how it turns out.

Good luck out there.

TLT

TLT Trender Signals

Weekly Wisdom Quote

“When you are inspired by some great purpose, some extraordinary project, all of your thoughts break their bonds: your mind transcends limitations, your consciousness expands in every direction and you find yourself in a new, great and wonderful world. Dormant forces, faculties and talents become alive and you discover yourself to be a greater person than you ever dreamed yourself to be.”

Patanjali

Funny Friday Video

Check out this cocky guy and watch what happens. This video is pretty close to what happens when you start getting cocky with trading and about the markets in general.



Hope your having a good Friday.

TLT

The New Erkel

Buy in Eur/Gbp and a Word on Trading Psychology

I had previously been short the Eur/Gbp but now I've reversed my position...I was probably a little early with my short anyway. Part of trading is being nimble. You have to put the ego to the side and close or even close and reverse positions when your system or indicators tell you to. I'll be the first to admit that this is much easier said than done and I still don't claim to not fall for the "ego trade" every now and then, but I'm working on it by staying conscious of my self and my trading.

This Eur/Gbp trade is an excellent example of what I'm referring to. I was short and was short before my system gave me a full blown sell...a little ego and probably some greed were the root causes of this decision. Now, the pair has broken out into a full blown buy and I closed my current trade and entered a new one in the direction of the signal. Like I said, it's hard to put the ego aside and place trades only for profit and not to "feel good" or be "right" but it is a worthy goal to strive for at all times. Here's a chart of the pair that shows the buy signal:Do you ask yourself why you put on each and every trade? Do you again ask yourself why you have each and every open trade open? Do you reflect on past trades, both profitable and unprofitable, and ask yourself what your reasons and motivations for each trade were? These are tough questions but it is critical to learn how to be absolutely honest with yourself and answer these questions to the best of your ability.

Good luck out there.

TLT

TLT Trender Signals

Here are this weeks Trender readings.Notice that Nzd/Usd and the Gbp/Usd pairs are still trending down and the Usd/Cad pair is still in an all out uptrend.

Weekly Wisdom Quote

“If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them.”

Bruce Lee

A Lost Friday

This afternoon was a very unproductive afternoon, despite the fact that I have lots of work to do. Oh well...I think my subconscious already knows that I'm working all weekend anyways, so it made me want to slack off a little this afternoon. The only great thing about this afternoon was making the video below.

I had my boss watch a video and we recorded his reaction with my computer's webcam (pretty popular thing these days). If you have to ask what the video is, then you're not going to get the joke anyway...there are hundreds of similar ones on youtube just search "reaction." For what it's worth, here it is:


Have a good weekend.
TLT

Golden Opportnity?

Excuse the pun. Take a look at the chart...it speaks for itself.

Usd/Jpy: Nothing Goes Straight Up or Down

The Usd/Jpy is pulling back pretty strongly this morning...don't know why but then again I don't usually ask why, just try to trade the chart patterns. The pair has been trending up for a while within a good channel, here's an hourly chart with a linear regression trend channel that shows the current uptrend.As you can see, the pair has been steadily trending for some time now. Does this break signify the beginning of a trend change? I don't know...my gut says no but I'm biased because I'm long the pair. Nothing goes straight up or down (or at least it is a rare occurence) and a good pullback is probably long overdue. I added a little to my position this morning and am sticking with the "buy the dip" plan until I'm proven wrong. I'll know I'm wrong when my stops are hit (still a couple of hundred pips away from that) or when my system registers a sell signal on the daily chart...sell signal will probably register if the pair closes below 96.70 level. Since neither of those conditions have occured, I'm adding.

Good luck out there.

TLT

Blockbuster...ehh, maybe we'll just hit the Redbox

Blockbuster (BBI) lost a whopping 77% today...although it did bounce back a little in after hours trading but I don't read too much into after hours trading. So what's going on with Blockbuster? I don't know but I do know one factor that is surely contributing to Blockbuster's troubles--Redbox.

Redbox? I know, you're thinking, "What is that?" "I've heard about it but don't know what it is." Or maybe you do know and you can disregard the prior statements. Either way, the Redbox has been a hit for its owner...Coinstar (CSTR). Yes, Coinstar owns the Coinstar machines that turn your change into cash for a 10% fee and they also own Redbox--the red machines that you can rent dvds from for just $1 a night. What's all the hype about? Well, take a look for yourself, here are 6 month daily charts for both of the stocks...you can see for yourself which stock is seeing inflows of capital and which is seeing the flight of capital.I know which stock I'd put my money in.

Good luck out there.

TLT

Market Carpet for Today

Often, I like to look at the Market Carpet over at Stockcharts.com to get a quick view of what asset classes and sectors are performing well and poorly. Here's the Market Carpet of what has been the best and worst performers of the past 2 days.
Notice that the number one performing asset over the past 2 days has been the US dollar. This is somewhat comforting, being that I am very long the dollar right now. I think that the Yen had a little rally but it was likely just a small bear rally, and given that the dollar has been crushing the yen lately, it was probably due. We'll see what happens, but for now, my money is where my mouth is and that is in the Dollar...I think it will rise sharply against the Euro in the very near future. Only time will tell.

Good luck out there.

TLT

TLT Trender Signals

Here are the readings for this week.