KILL PULLBACK

AT THIS POINT WE CAN KILL THE PULLBACK LIMIT ORDER. AT THE CLOSE OF THIS 4HR BAR WE WILL HAVE A VALID FOLLOW THROUGH BAR TO THE SHORT PIVOT IF WE GET A CLOSE BELOW 9806.

WHAT WE ARE WITNESSING NOW IS A REVERSAL TEST OF YESTERDAY'S 4HR BULL PIVOT. WHICH MEANS THAT IF WE CLOSE THIS BAR BELOW 9806 THE ODDS ARE HIGH THAT WE WILL TEST THE BOTTOM OF THE 4HR RANGE BAR FROM YESTERDAY AT THE 9753 AREA.

BUT REMEMBER THE DAILY RANGE BAR IS STRONGER THAN THE 4HR RANGE BAR AND REALLY THERE IS NOTHING UNUSUAL ABOUT WHATS GOING ON.

THE MARKET IS TESTING THE DAILY BULL PIVOT,WHICH IT NEEDS TO DO IF IT IS TO CONTINUE UP. THE LOW OF YESTERDAY IS THE LOW OF YESTERDAY'S OUTSIDE BAR THAT FORMED THIS CURRENT BULL PIVOT SO UNTIL THE MARKET BREAKS THIS LEVEL, THE BIAS IS STILL UP BECAUSE THE DAILY PIVOT IS STILL IN PLAY.

AS LONG AS THE DAILY PIVOT IS STILL IN PLAY THE BIAS IS STILL UP. THE INTRADAY LEVELS ARE SECONDARY SUPPORT/RESISTANCE TO THE DAILY.

THE CLOSE OF THE DAILY RANGE BAR FROM LAST WEEK IS THE REAL TRUTH AT 9787. IF WE BREAK BELOW THIS THEN THE OPEN OF THE 4HR RANGE BAR IS NEXT.

THIS IS WHY IT'S GREAT IF YOU CAN MONITOR THE MARKET BECAUSE THAT WAY YOU COULD HAVE BEEN SHORT AT THE FORMATION OF THE BEAR PIVOT AND YOU WOULD NOT CARE WHERE SUPPORT WAS FOUND BECAUSE YOU WOULD JUST TURN AROUND AND GO LONG ON A BULL PIVOT, WHICHEVER SUPPORT LEVEL WAS FOUND. YOU DON'T REALLY CARE.

THE ONLY THING IS THAT WHEN YOU ENTER AT THE CLOSE OF A PIVOT BAR WITHOUT WAITING FOR THE PULLBACK, YOUR STOP HAS A MUCH LARGER RANGE, BUT IF YOU WAIT FOR THE PULLBACK YOU RISK MISSING THE MOVE.

SO, THIS IS REALLY WHERE YOUR VOLUME RULES CAN HELP YOU. SAY YOU ARE LOOKING TO ENTER SHORT ON THE 4HR PULLBACK TO THE PIVOT. HOW DO YOU KNOW THE PULLBACK IS NOT GOING TO MAKE IT BACK TO THE PIVOT POINT SO YOU DON'T MISS THE MOVE.

OKAY, LOOK AT YOUR 30 AND 60 MIN. SEE HOW YOUR VOLUME RULES COULD HAVE CLUED YOU IN THAT THE PULLBACK WAS OVER AND WAS NOT GOING TO REACH THE PIVOT POINT.

THE LAST BAR ON BOTH THE 30 AND 60 MIN BOTH CLOSED UP ON LOWER VOLUME. THIS WAS A SIGNAL THAT THE PULLBACK (TEST) OF THE 4HR SHORT PIVOT WAS OVER.

ALWAYS, ALWAYS, ALWAYS... LOOK DOWN AT LEAST 1 TIME FRAME FOR YOUR EARLY SIGNALS.

JERRY

GBP FINE TUNING ENTRY

OKAY, IF YOU ARE IN A POSITION TO MONITOR THE MARKET, YOU COULD THEN FINE TUNE YOUR 4HR SHORT LIMIT ORDER , PULLBACK ENTRY IN THIS WAY.

LOOK AT THE CHART AND FOCUS ON THE 4HR AND THE 1HR. YOU CAN SEE THAT THE 4HR IS IN PULLBACK MODE BUT THE 1 HR IS TRYING TO BULL PIVOT.

WE WON'T KNOW IF A BULL PIVOT HAS ACTUALLY FORMED ON THE 1HR UNTIL THE END OF THIS 1HR BAR. BUT WE CAN SEE THAT THE CLOSE OF THE LAST 1HR BAR HAS FORMED A POTENTIAL SWING BAR. SO WE CAN PROJECT AHEAD OUR 3BAR COUNT FROM THERE TO THE 9853-56 RANGE.

BUT WHAT WE DO KNOW IS THAT IF IT DOES PIVOT WE CAN SEE RIGHT NOW WHERE OUR 3 BAR TARGET WILL BE ON THE 1HR IF THE PIVOT DOES FORM AT THE END OF THIS BAR , THAT IS THE 9853-56 RANGE.

SO NOW WE CAN ADJUST OUR 4 HR LIMIT SHORT ENTRY TO 9853-56, THE PROJECTED 3BAR LEVEL OF THE 1HR. A FILL THERE WOULD REDUCE OUR POTENTIAL STOP TO 20-25 PIPS.

AND, MOST LIKELY THERE WOULD BE AT LEAST A SMALL BOUNCE OFF THAT 1HR 3BAR SO THAT IF THE 4HR DID CLOSE UP AFTER YOUR 4HR SHORT LIMIT ORDER HAS BEEN FILLED YOU CAN STILL CLOSE IT WITH A SMALL PROFIT AND THEN LOOK TO GO LONG WHEN THE LONG SETUP IS FORMED.

IF THE 1HR PIVOT DOES NOT FORM THEN ADJUST YOUR SHORT LIMIT BACK DOWN TO 9846. THEN IF THE 1HR GOES DOWN AND PIVOTS UP AGAIN LOWER, YOU MAKE THE SAME ADJUSTMENT AND RECALCULATE YOUR PULLBACK ENTRY BASED ON 3BAR IN THE SAME WAY.

YOU DO THIS AS LONG AS THE 4HR PULLBACK IS IN PROGRESS. AT THE END OF THE 4HR PULLBACK (TEST) BAR, IF YOUR SHORT ORDER HAS NOT BEEN FILLED YOU CANCEL IT AND RE-ANALYZE THE SETUP BASED ON THE CLOSE OF THAT 4HR BAR.

YOU'RE IN THE GAME EITHER WAY AND YOU DON'T CARE IF THE MARKET GOES UP OR DOWN. JUST RIDE THE WAVES BABY, JUST RIDE THE WAVES.

YOU MAY THINK THIS IS PLAYING IT TOO FINE BUT IT WORKS AND IF YOU ARE TRYING TO WORK WITH A $250-300 MINI ACCOUNT IT IS THE PERFECT WAY TO LOOK AT THINGS.

IT IS NOT THE WINNING TRADES THAT DETERMINE YOUR SUCCESS BUT THE LOSING ONES, AS IN WHEN YOU LOSE YOU LOSE SO SMALL THAT YOU CAN STILL STAY IN THE GAME FOR A LONG TIME. LIKE YESTERDAY'S 21 PIP DRAWDOWN.

IF YOU CAN KEEP YOUR AVERAGE LOSSES IN THAT AREA YOU WOULD HAVE TO LOSE ABOUT 10 TRADES IN A ROW BEFORE YOU SET OFF YOUR MARGIN ACCOUNT LIMIT.

JERRY

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GBP PULLBACK

NOW IF YOU WANT TO PLAY BOTH SIDES THIS IS HOW YOU DO IT.

WE HAVE A BEAR PIVOT ON THE 4HR.

NOW, WE KNOW THAT IT WILL TAKE AT LEAST TO THE CLOSE OF THE NEXT 4HR BAR FOR THE MARKET TO FORM A BULL REVERSAL ON THE 4HR.

LOOK AT THE CHART. THE PIVOT POINT OF THIS BEAR PIVOT NEEDS TO BE TESTED. IF IT PULLS BACK TO THE PIVOT POINT DURING THIS CURRENT BAR, THAT IS A PULLBACK TO THE PIVOT INSTEAD OF A REVERSAL TO THE PIVOT.

THEN YOU COULD GO SHORT AT THE PIVOT (WITHIN THE RANGE OF THE BEAR SWING BAR) WITH YOUR STOP ABOVE THE HIGH OF THE BEAR SWING BAR.

FOR EXAMPLE; YOU COULD PLACE A LIMIT ORDER RIGHT NOW TO GO SHORT ANYWHERE BETWEEN 9846 AND 9872 (THE RANGE OF THE SWING BAR). AND PLACE YOUR TARGET AT 9820.

AT THE END OF THE 4HR BAR, IF YOU ARE NOT IN YOU CANCEL THE ORDER. IF YOU ARE IN AND THE MARKET IS STILL WITHIN THE RANGE OF THE PIVOT AT THE CLOSE OF THE BAR, YOU WOULD CONSIDER AN EXIT. THE BEST PULLBACK PLAYS WILL BOUNCE BACK QUICKLY OFF THE PIVOT.

IF YOU ARE NOT IN AT THE CLOSE OF THE BAR, YOU START LOOKING FOR A BULL PIVOT BACK UP.

THIS WAY IF YOU'RE IN AT THE CLOSE OF THE BAR AND IF LOOKS LIKE A REVERSAL IS COMING YOU CAN CLOSE OUT YOUR POSITION AND LOOK TO SWITCH LONG, CLOSING OUT YOUR PULLBACK PLAY WITH A VERY SMALL LOSS OR A SMALL PROFIT.

SINCE THE RANGE OF THE SWING BAR IS ONLY 26 PIPS YOU CAN PLACE YOUR STOP 4 OR 5 PIPS ABOVE IT AND RISK ABOUT 30 PIPS.

YOU WOULD PLACE YOU TARGET AT THE OPEN OF THE LONG RANGE BAR SINCE WE KNOW RANGE BARS ARE SUPPORT/RESISTANCE.

SO, YOU COULD ALSO PLACE A LIMIT ORDER TO BUY AT THE RANGE BAR OPEN.

IN THIS WAY YOU HAVE 2 OPEN ORDERS, 1 LONG AND 1 SHORT. YOU HAVE BOTH SIDES COVERED. THIS IS REALLY THE ESSENCE OF LCM.

YOU COULD PLACE BOTH LIMIT ORDER AND CHECK BACK AT THE CLOSE OF THE NEXT 4 HR BAR TO ASSESS YOUR POSITION. NO PIP BY PIP STRESSING.

THIS IS HOW YOU PLAY BOTH SIDES. YOU CAN FLOW AS THE MARKET FLOWS AND IN THIS WAY IT DOESN'T MATTER WHAT YOUR BIAS IS BECAUSE YOU ARE RIDING THE WAVE WHICHEVER WAY IT FLOWS.

IF THE MARKET CONTINUES DOWN WITHOUT TESTING THE PIVOT, THEN WHEN IT DOES HIT SUPPORT THE ODDS ARE MUCH HIGHER THAT IT WILL REVERSE BACK UP TO TEST THE PRIOR BEAR PIVOT.

AND PERHAPS MOST IMPORTANTLY, LOW STRESS TECHNIQUE.

JERRY

GBP 7:45 EST

NOTICE HOW THE GBP HAS REVERSED DOWN ON MULTIPLE TIME FRAMES. SEE, THIS IS NOT A PULLBACK. NOW, INTRADAY YOU ONLY WANT TO ENTER LONG ON MULTIPLE PIVOT REVERSALS TO THE UPSIDE. SO DON'T GET ANTS IN YOUR PANTS. THIS WILL KEEP YOU OUT UNTIL THE TIME IS RIGHT OR ALTOGETHER IF NEED BE..

JERRY

USD/CHF UPDATE

OH YEAH...I DIDN'T GET A CHANCE TO MENTION YESTERDAY THAT THE CHF CALL I POSTED ON 5-11-2007 HIT THE PROFIT TARGET YESTERDAY FOR A 48 PIP PROFIT. REFER TO THAT POST FOR DETAILS.

SO, SINCE 5-4-2007 WE'RE 6 OUT OF 7 PROFITABLE WITH LCM. THE 21 PIP LOSS ON GBP YESTERDAY BEING THE 1 LOSER. AND EVEN THAT ONE TURNED AROUND TO HIT OUR TARGET ON THE SAME DAY, WHICH ILLUSTRATED A CLASSIC OPERATOR NEWS MANIPULATED SHAKEOUT.

JERRY
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CHART FROM WEBSITE

SOME OF YOU HAVE TOLD ME YOU'VE HAD TROUBLE VIEWING YESTERDAY'S GBP CHART ON THE WEB SITE.
TRY THIS ONE.

The pullback to test the pivot has begun. We are approaching 9820. Remember only go long on a pivot reversal. If you cannot watch the market place your limit orders and only scale in if you trade multiple contracts.

place half your position at 9806 and the other half at 9787. take profits at today's high on the first position and 9820 on the second. Yesterday's bullish range bar is the biggest risk as the market my want to test it.

The most conservative play of the day for daily chart players is to place your long entry around 9755 near the low of the 4hr range bar from yesterday and place your stop a few pips below yesterday's low. If you are playing say 5 contracts, place a limit to go long at each support level to spread out your risk.

When you scale in this way you will make a profit when the market falls below your entry level to the next support level then come back up to your level with 2 or 3 contracts instead of 1. It only has to come back 50% to you for you to break even instead of all the way. Also you will have at least 1 position if the 1st level holds so you don't risk missing the move.

Between 8:30 and 11:00am est the U.S. has 5 data announcements so be carefully as the talking heads have plenty of excuse to shake you out of your positions.

There is a G7 meeting this weekend and the markets have a tendency to do strange things before G7. Each county tries to manipulate their currency positions as bargaining chips the way China did yesterday.

See, some of your biggest adversaries are governments because they also play the currency game.

Jerry