The View Down River

Glad to see you guys are still posting here. I have been traveling the last couple days and could not check in.

Also, I will be on a little cruise all next week so I hope you guys keep things going here. I will try to check in from time to time.

I am taking a look at the "Big ECB Move" today. I see some signs that this may be a little short lived but not too sure at the moment.

What do you guys think? Anybody short yet?

DRT

 

Do you guys remember this bond chart I posted a few days ago?

Guess I thought it might head up a little.

Is this normal movement for a day like today? Maybe someone can give me their thoughts

DRT

 

How much do you pay in tax of forex trading profits?

 

I just ran across this site (link provided below) from another fella's thread here at ET. They provide free charts which are price/volume histograms of several of the more popular mkts, the Euro FX contract among them. Once selecting the euro from the homepage, don't overlook the mouse-driven price/volume % scrollbar as you observe the day vs. day, week vs. day and month vs. day charts.

Seems to me this is kind of a cool tool in aiding one to determine previous important levels of S/R. I'd be very interested to hear anyone's impressions of the usefulness of this information. And to DRT particularly, would this provide any clues to your price value analysis?

Link:

http://www.chart-ex.com/chart-index.jsp


Regards ... tbone

 

We seem to be losing momentum here and so, I thought I would post my view of the Euro and see if anyone has any comments.

For those who has been following the Dollar Index can clearly see that the key overhead resistance here is 90.72, which has stopped each advance of the dollar since December 05. It is the key level to watch.

The funds have begun the process of liquidating their long US$ positions and while not short just yet, appear to moving in that direction. Friday's COT figures will be interesting. OI is contracting as well. Therefore, I do not expect to see this overhead level at 90.72 taken out.

Iran will be opening its oil bourse on March 20th and accepting only Euros as payment. Norway is now taking the position that its oil should be sold in Euros as well. The Euro Zone is also expecting strong growth in the next 3 quarters.

Taken together we may have an occasion where both the fundamentals and the technicals are lining up for a long entry on an intermediate basis. Jesse Livermore described such situations as "being able to rely on the strength of underlying conditions".

My upside target in the Euro has not changed from my earlier posts: 1.2509 to 1.2653. My time frame is from early April to about the 2nd week in May for these targets to be reached. These are cash figures.

In the short term, I expect to see a low reached of 1.1865 (March 7th low) or just below before the next significant rise begins. There may be an upward spike to the 1979 level and, this would represent a possible short entry to the 1.1865 level. However, if 1.1951 is not taken out today this spike less likely to occur.

There can be no doubt about the continuation of the intermediate bull trend above the 1.2093 level. This marks the March 6 high and, a break and a buy on a trade above this level, represents the safest possible long entry. Again on a cash basis.

I am going to wait until this short term correction is complete and then post my entry level on a long trade.

Just a brief reminder: The EH06 contract last trading day occurs at 9.16 am CST on the second business day immediately preceding the third Wednesday of the contract month.

I take this to mean March 14th.


Good luck to everyone.

 

hello BLR - kudos for your excellent analysis (at least for today's session - it was "spot" on; and I'm thinking this is not the first time for that here ;>) I hope you respected your work and loaded the boat. I know it definitely helped pave the way for my fanatical scalping activities.

I wish I could contribute to the longer time frame discussions in this journal, but I doubt that my thoughts on the mkt's direction for the next 12 ticks would be of much interest here - lol. But I would be interested in hearing more of your thoughts concerning your mkt perspective. For example, I am easily convinced that the daily chart is displaying a bullish, bottoming posture. But when I switch to a weekly chart, I am equally convinced of the long term down trend being intact. So, when you mention an intermediate target in the 1.26 zone, are you viewing that as a corrective move in the down trend? Or, perhaps, do you have in mind that if that price zone is reached, then you will have a reason to believe that a major trend change has occurred?

I apologize if these questions don't make alot of sense. I guess I am basically asking how you account for the differences portrayed in the varying time frames, if you wouldn''t mind being so forthcoming.

Regardless, keep up the great work - I for one appreciate your posts. Trade well ... tbone

 

Thank you tbone for you kind words. I apologize for the delay in responding but I have been in the process of moving and that, combined with my day job has kept me occupied for the last few days. It is the case that if you make enough projections some of them actually work out to be correct. lol

In response to your inquiry I will say that I use Elliott Wave as a base for my analysis. I know that some find it arcane, difficult to interpret or worse, just plain useless, but I have found that when a wave count can be plainly placed on a chart, it has been an effective trading tool for me. If nothing else it forces me to sit down each night and ask myself what is the current position of the market (within the context of the overall trend), where is it likely to go and, when is it likely to get there. It is also important to note that most of the big players use EW and therefore, the target points it identifies are likely to be areas where the guys with the real money are going to make some decisions about how allocate their trading capital.

Having said that, we did see a low of 1.1856 on Friday, just below where I thought we may stop before moving higher. The close on Friday was 1.1906, the high was 1.1929.

I agree with you that the daily chart is bullish and a low has probably been put in at Friday's low. My orientation is to the long side.

The weekly chart has a reversal bar, down which may indicate a bearish condition. The beginning of the week saw an open of 12045 and ended the week at 1906 . Down 139 pips (all of these quotes are cash). Is it possible that the market could take out that 1.1823 low (Feb 27/06) before moving higher, and if it does the downside should be very limited.

However, my view is that the action we are seeing is part of the bottoming process and next week's action should see the market move higher. My upside target is still 12509 to 12653 before the current corrective move is over.

The dollar was higher on Friday however it was the result of the jobs report and comments made about higher interest rates. The strength here may appear to be a mile wide but it looks very shallow to me. I agree that the funds are not yet short but they have certainly backed off their long positions and, unless and until they decide to increase their long holdings, the next move for the dollar is down. The dollar did spike and hold that 90.72 level which is key, but I not certain that the index is going to be able to hold that level into next week.

I am going to continue with the assumption that the current action is a correction to the Dec 31/04 high at 1.3670. These corrections take the form of a 3 waves two of which, A & C carry the market lower. The first Wave A which now appears to be complete at the low of Feb 27/06).

My view is that we are now in Wave B which if correct, will take us higher to the 1.2509 – 1.2653 area and, this price target will be reached in the April 7th to May 12th time period.

At that point Wave C will begin and the Euro will correct down to the 1.1000 level or a just a little above before the next major up move beings. My long range plan it to be in a position to sell into that weakness from at least the 1.2509 price level with as large a line as I am able given prudent risk management strategies.

Longer term charts suggests the dollar will correct to 80.40 before a bottom is reached.

However that is in the future and we need to trade today’s market. For this week there are three good long entry points that offer a good risk reward ratio.

1. Long on a trade above 1929 with a stop just below Friday’s low.

2. A safer trade is long above the March 9th high at 1.1953 with a stop placed according to your risk tolerance.

3. The safest trade is long above 1.2093, the March 6th high. There can be little doubt in my view that a trade above this level would confirm the current position of the market and it brings the upper targets of 1.2509 to 1.2653 just mentioned, into focus.

I was not in the market on Friday and only had a chance to scan a charts a couple of times during the day.

I will be taking ½ of my normal position on a trade above 1.1929. I will be entering the remainder of my positions on a trade above 1.2093. Since I do not trade the cash market this number will be adjusted for the M06 contract.

As always I appreciate any comments especially those that take a completely different view. I am willing to change my opinion on a moments notice and try never to get “married” to any one view point.

I apologize for the length of this post.

Good luck to everyone.

 

Hi BLR - thanks, and please don't apologize for the length of your post - it made for a very interesting read! I was a bit disheartened, tho, to learn of your employment of EW. Anything more than a 5 wave advance and a 3 wave correction, and I'm left shaking my head in confusion and frustration - lol.

I have a few more questions, but please only answer if so inclined, and more importantly, when time permits (we also made a move a few months back, so I commiserate with you :>) Do you base your analysis on the cash mkt simply because of the continuity of the chart: or, to phrase differently, so that you do not have to deal w/ the discrepancies of the varying back-adjusted futures charts? Also, do you rely on one particular time frame from which to derive your Elliot counts?

Living in the day-trading world, I don't even have a good source for long term charts - thus, this next question may seem even more vague. Considering the last long-term high at 1.3760 - did the bull trend from the previous long-term low exhibit the classic 5 wave count? And if so, is that when an Elliot chartist will accept a major trend change, and start a new count in the opposite direction? (Very afraid my ignorance will really be shining here - heheh)

Thanks again, BLR - have a great week! Regards ... tbone

 

tbone:

I am long part of my position from 1.1933

I use the cash chart because I have found that it is cleaner in its patterns. I simply enter the futures contract when the cash chart has hit my targets. I have attached a one of my charts that is labelled with the wave counts as I see them.

The advance to the Dec 04 high does appear to be a clean five wave pattern and it certainly meets the definition of a trend. The wave count between Waves 2-3 also breaks down into a 5 wave pattern. As I have said not everyone is in agreement with EW effectiveness. It is part of what I use to try to make sense of what I see and I am no expert in the area.

The wave pattern down off the high was clearly five waves and meets the definition of a Wave A. I always use one time period longer from the one I am trading. Since I tend to hold my positions for several weeks, I begin with the weekly chart and work my way down to the daily and then hourly. I don't use only EW but it is my way of trying to see if there is some structure there that will allow me to figure out the next significant move.

I always make the assumption that the previous trend will remain in force after the correction is over. In this case the high of Dec 04 should be exceeded when this correction incomplete. If the 1.1000 area doesn't hold then we would have to consider a new trend may be in the making.

I use a real time cash feed, currently SAXO but I have used others. It allows me to flip quickly between weekly, daily and hourly charts. Given that I hold my positions for longer periods the hourly charts and those of a shorter time period don't have much impact on me during the day. I have a eod feed as well that allows me to construct charts on a monthly, daily and weekly basis.

Good luck tonight, I don't know yet if I will be up tonight when London is opening or, just trust my stop will do its magic if things go terribly, terribly wrong.

All the best

 

Once again, BLR, thank you very much for your time and effort in sharing your views. I love this stuff (trading) - maybe I can "sit a spell w/ Mr. Prechter" in the future. Having very limited knowledge of the subject, its easy to pass over when it seems most of the forum "press' on EW comes from the dissenters' camp. But what appeals to me is how it allows you to have a sense of where the market might be, and to where it might want to go. As an aside, I just happened to start reading a thread tonite titled "Objective Elliot Wave" found under the Technical Analysis forum - no doubt you are aware of it , but if not , I would surely think you would find it interesting. Apparently the originator, gharghur2 has been successfully applying his own version of EW theory for a long while.

I wish you nothing but success w/ your current position, as I eagerly await the coming week. It certainly seems, at least of late, that the boys in London are getting the lions share of the euro's daily movement. But having left a job a few years back that dictated "3rd shift" service, I'll leave that action to the gravediggers among us - lol. All the best ... tbone