EURO/DOLLAR 5-4-7007

4hr chart


If you were checking up on me yesterday then you can see the elements of which I spoke about in today's trading action.

Yes we did get a bull pivot above the yellow line on the intraday. Yes the market did show continued strength and was moving up according to plan. Of course I got out on 4hr 3 bar equilibrium on the chart, since I entered on the 4hr pivot I got out at 4hr 3 bar.

If I had enterd off the 1hr signal I would have gotten out at 1 hr 3 bar... Of course I knew that there was a pending important news (US) data) announcement coming at 8:30 AM, and of course, even if price had not reached my 3 bar target I still would have gotten out before the news broke.

So, The E/D did indeed get the extra push it need to go down, as one of the possibilities I spoke of yesterday, near the low of 3 bar. This so called surprise (U.S. jobs data, and manufacturing data) that suddenly bolstered the U.S. economy overnight. Once again the news is used when price won't cooperate with the operators objectives. Here is some real news. Only 5 people control all the media outlets.

Do you think they are operators or herd. (lol) Do you think they would let news come out that would help their assets or hurt their assets. Nahhh...they and their buddies wouln't do things like that would they...?

Why don't you drop down to a 1 minute chart right before a major data announcement and tell me what happens on your chart BEFORE THE NEWS COMES OUT.

Let's be real. The state of an economy does not change from day to day or week to week. The U.S. economic data has been bad for a while now. That's what they say has been driving up the Euro. If it wasn't so funny it would be so funny!

Do you really want to know why I made sure I threw in my news caveat to you yesterday. Because if you haven't noticed, the talking heads on your financial shows were talking about how the dollar needs to rise against the Euro because it will hurt the economy. Yes they were debating back and forth about the pros and cons. When you start hearing talk like this you know there will be some stink in the game. This is no big deal when you know how it works so, I know I've said it before but you have to follow pending economic data announcements.

I usually know whats coming because I have sites I visit that post these. One good one if forexfactory.com. You should go there or a site like it every single day as part of your trading routine. They not only tell you when but they give you the expected numbers. So, this tells you sentiment of the big boys. Supposedly. But it really is the loud bang that spooks the herd (that's you and me just in case you don't know your place in the food chain).

But anyway, when the market doesn't cooperate surprise, surprise, theres always a surprise. So, today's surprise was no surprise to me. I was in and out like the mouse that stole the cheese without springing the trap.

But enough about that for now it's just that it's always fun to see just how dumb they consider the herd (us) is.

Now carrying on with our theme of 3's. We've been talking about 3 bar equilibrium but I would like to mention another type of 3 that fits in with 3 bar.
I like to call it "THE RULE OF THREES." By the way, have you ever noticed that 3 has been a mystical number to man as far back as you can go. I mean 3 is one of those magical numbers. I mean... well I'll save it for now because you know me. I'll get started and we'll never get to what you really want to hear.

See, the rule of 3's is not really a rule at all. I haven't had the time to really study the probabilities but it is uncanny how often this happens. So, instead of a rule, consider it one of those helpful guidelines.

If you look back on your charts, you will notice that more often than not, a counter trend pullback will end after the 3rd bar. Yep I use this tidbit of knowledge in my trading but I could tell you a hundred other things too. I mean, where do I stop you see.

Now, 3 is the first major fibonacci number and Fibonacci on charts are most often related to pullbacks (retracements). Did you know not only is their three footsteps for a human to attain balance but it also requires 3 steps for a running human to stop. Try it...

Let me stop cause I might say something crazy like, "MAN AND MARKET ARE ONE."

Consider the elements we've been discussing yesterday and today about the E/D. Let's look at where we stand at the end of today's action.

Closed right near the bottom range of 3 bar equilibrium (green line) I drew for you yesterday. Had another day of volume divergence (close below yesterday's low, but lower volume) that's further slowing down. Then consider that today was the 3RD day down in a counter trend direction.

Okay, based on what I told you yesterday and today here is what I expect to happen from here.

I expect price to at least touch the low of 3 bar (the green line) and maybe even fall below it. But I do not expect a close below it. I expect the market to close up today on lower volume. If that should happen I expect an attempt to form a bull pivot on Monday.

Now I'm not saying that's what's going to happen I'm only saying that's what I expect. And again I say, I don't trade what I expect the market to do, I trade what it does.

No doubt I plan a strategy for both contingencies. Because, If my expectations are not met and we do get a close below the green line, then I will be looking for an opportunity to go short on a pullback up to the green line.

Oh yeah...When I say look for a trading opportunity, that means look for an intraday pivot at the relevant support or resistance level. If I'm thinking short trade, then an intraday short pivot at resistance is an opportunity and if I'm thinking long trade, then an intraday long pivot at support provides an opportunity.

To continue, even if we do end up with a close below the green line tomorrow I expect the market to pull back up and try to touch the yellow line today before that happens.

That means, if I'm in a mood to try and capture a quick 20-25 pips I'll go long on an intraday pivot above the green line. Especially since, even though the current move is down, the trend is still up in addition to the elements I've already described. Even though the range between the green and yellow lines is about 38 pips, a pivot will probably leave room for 20-25 pips if I enter at the actual pivot point.

So if I do this I will have to be sure of the trade because the risk/reward won't be great. I not telling you to do this, in fact you should not, but it's just to let you know that every trade I make does not fall within the guidelines of LCM. I teach you what I know will work and like me, if you want to go outside that, it's on your head not mine.

Sometimes it's just fun to take a small calculated risk. Because for me being disiplined all the time just gets dry. Beside. it's gives you ideas about the range of possibilities.

In closing I think you could use this information. Listen...if you are trading with the idea of intraday profits, take profits at intraday support or resistance levels. You can't go in with the idea of making a daily profit level off a 1hr chart.

I mean you should ride it up by taking your profit at 3 bar and reenter on continuation, the reenter on a continuation signal as outlined in the continuation section in LCM. Then the total may add up to a level of profit as if you were trading the daily. Only less risk.

I am jerry...that is all