EUR/USD 6-13-08

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We did get the 4hr bull pivot in the Eur/Usd off of professional buying but it did not come with the required volume I spoke of in the last insertion. We did However; reach the 50% Fibonacci level to 5477 off the insider buying which again shows the influence of professional buying.

So, once again we see the importance of volume to our trade setups. I did not trade this pivot because the pivot bar formed on lower volume and while this does not mean that price will not continue up but any move on low volume is suspect and thus the risk increases substantially for the setup to fail.

Insiders were buying on the pivot bar but could not get the public to join in on the move. But the public was in on the last 4hr bar which closed down on higher volume than the previous bar. I’m going to wait and see what shakes out because operators like to fade the public. I’m sorry; many traders don’t know the terminology of fading. That just means going the other way against the prevailing direction of the moment.

But understand with all that being said we won’t know if the market has reversed until the close of this current 4hr bar. Even though the bull pivot reversal came on low volume we still must consider that those who took price up in the first place (professionals) still have positions to protect at the low and we won’t know if we have a bear pivot back down until the close of this current bar.

Keep in mind that price is currently in the process of pulling back to test the pivot zone which is the range of bar 1 on the chart. So, let’s summarize the picture of the moment.

What is showing in favor of a downmove…?

The trend is down
Professionals have not yet shown up on this 4hr down turn. They however showed up as sellers on the 1hr at the 50% fib level but not in enough volume to negate the positions they are holding at the bottom

What is showing in favor of a continued move upward?

1. The market is testing the pivot zone which is where price is likely to bounce up from if it going to bounce
2. Professionals still have positions to support in the pivot zone.
3. Even though this bull pivot formed on low volume this downturn has yet to show the higher volume to negate it

If the bulls have low volume up and then the bears test the range with even lower volume down, then the bull have won the battle for volume supremacy. But we won’t know the outcome until the close of this 4hr bar.

So, this is the current picture…I will wait to see the outcome of the current bull/bear battle to see which side has the advantage.

Right now the biggest factor is the trend and the support line at 5440. If we close below 23% Fibonacci the downtrend has kicked back in. As I write this price is currently bouncing up off 23% fib level and we will look for a close above this level on low volume at the close of this bar to keep alive chances for a continued up move from here.
Especially since this fib level is at the support line to form double support of Fibonacci and price support.

Oh, by the way, support 2 has moved up to the last low before this current up swing at 5378.

But I hope you are starting to get an idea that volume analysis is critical to your long term trading success.

The way I see it at the moment we have a draw in the Euro Usd battle…

Cheers, Jerry
Tradingmajic1@gmail.com
jerry@forextradingmajic.com

3rd update 6-12-08

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The last 4hr bar closed up above 5400 the upper range of support. But just as important that bar was supported by operator accumulation and accumulation at this support level is also evidenced by operator/professional buying on the 1hr whenever we touch this support level.

A close above next resistance on higher volume would signal a 4hr bull pivot above support. If this happens a long trade should be your bias as you will have the pivot support as well as operator support beneath longs in that area.

Bar 1 on the chart was a volume divergence at support to signal that the bears lost control there. It was a high volume battle to a draw between bulls and bears, so this is our key bar on the way up especially since the high of that bar coincides with overhead resistance. If we break above the high of this bar price should continue up to 62% Fibonacci drawn from the top of the last down move to the last bottom.

If you want to try to get in early and lower your stop level you can enter long on a pullback to the close of bar 1 on the chart 5432 with your stop 6 pips below the low of bar 1. But be advised that this is a higher risk strategy because no pivot support has been developed yet. If you want to try it only take half of your normal position here and add to your position on the formation of the possible bull pivot spoken about above.

That’s all for now, I’ve been up all night so I gotta take a little nap.

Jerry
tradingmajic1@gmail.com
jerry@forextradingmajic.com

2nd update -eur/usd 6-12-08

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For my students who probably knew better than I did and spotted the 4hr bear pivot on the 4hr let’s talk about that bear pivot reversal bar. Now, you are saying that the pivot bar formed on lower volume so why did price continue down.

And that question allows me to segue into the new videos I have been producing to augment the principles outlined in your book, Volume-The Archimedes principle.

I’m going to mention the market facilitator index (MFI). The MFI tells you who is doing the buying and selling. For example on the pivot bar the MFI is blue. When the bar is blue it means that professionals moved that bar. A.K.A. Operators.

So even though this pivot bar had lower volume it is more important who generated the volume. If operators move the market in a given direction they are going to protect their position. So here they are going to protect their shorts down to the next support level.
And you want to trade with them not against them.

When the next bar after the pivot bar closed lower on higher volume the momentum was sealed and the herd then jumped in as evidenced by the green MFI BAR. When you see a green MFI bar,that means public participation is moving that bar A.K.A. THE HERD… operators fade the herd.

I know this stuff is in the book but volume can be kind of tricky and hence the new videos to compliment the book. Anyone who has ever bought THE ARCHIMEDES PRINCIPLE will get the videos free.

I have sent to your mailbox a free ebook about volume. No I did not write it but, it will help you understand why volume is so important. They give free downloads of the book to introduce you to a software program that they say will interpret volume for you automatically. I have no affiliation to them whatsoever. A friend directed me to their book I thought, “Wow, they are selling this software for $1100 dollars to do the very same things I teach in The Archimedes principle. I don’t know if their software works but I know that I actually teach you how to use volume and with plenty of chat examples and now the videos.

Jerry

eur/usd

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Okay, for those who did not take the 21 pip stop on the eur/usd alert I think I was able to stuble upon the right chart this time...

we have broken through the support low of 5440 and if we close below that level on this 4hr bar on higher volume than the last bar the trend is still down. After the close of this bar price should pull back up to 5440 and then you should switch your long to short.

The next support low is at 5365. exit your long on a pullback to 5440 and switch your position to short and ride it down to 5365. Any time you enter a trade you want to get out if price falls below the most recent low for a long trade or most recent high for a short trade.

Most short sellers have their entry limit orders just below the low and this selling volume there accelerates a downward move. When price comes back up to the broken low, all those longs who are in the red start selling out to break even and thats why you should too because that selling volume waiting there will cause price to at least bounce back down before price will continue up. if price does not close below 5440 you are still in business.

tradingmajic1@gmail.com

jerry@forextradingmajic.com

Cheers, or should I say, FEARS...

Jerry

USD/CHF 6-11-08

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On the usd/chf we have a bear pivot on the 4hr. I have noted the swing bar (S) and the pivot reversal bar (P) on higher volume.

Okay, our pivot point is the low of our swing bar at 1.0409 and this is our trigger (entry) point for the short trade here.

But I also want you to look at the blue line that price is currently bouncing up off of at 1.0389. Why is price bouncing up off of this level? That is because bar (x) is first level of psychological support below the most recent high.

Thus we undoubtedly should expect those short sellers to be buying back to close out. After all when price went above this bar (x) they are then in the position of waiting for price to come back to their entry point to break even.

The entire length of bar x is support to stall any continued down move. Now, look at bar (z). Bar z is a range bar so those of you who have lcm know what to expect. The bottom range of the range bar is support.

To summarize we have a directional signal, and once again those with lcm know the difference between a directional signal and an entry signal. The directional signal is down but we don’t have an entry signal until price rises to the pivot point and gives us our short signal in that area on our 5 or 15 min chart.

You see, when you have a directional signal that only give you direction but what about the timing of your entry. Direction is easy timing is not. Your timing determines whether you can stay in a trade if you’re right because your stop level can be in line with your risk/reward parameters.

So anytime you have a level where you plan to enter, just because price touches that level doesn’t mean it’s time to enter. Price must hit you level and then meet certain conditions. If your conditions are not met at your entry level then you must ignore the entry.

So, now lcm-ers, anytime you have a pivot and that pivot bar also hits s/r to bounce back towards the pivot caution is advised especially if the pivot is counter trend as we do here.

Therefore this is the way I am playing this pivot. I will look to enter on a 5 or 15 min signal somewhere within the range of the pivot bar (p) between1.0409 and 1.0423. Getting that signal I will enter and place my mental stop above the swing bar (s) above 1.0446. I will look to take profit at 1.0366 which is the open of the range bar.

Remember no 5 or 15 min signal within the entry zone means no trade is signaled. For those who can’t watch the 5 and 15 you can just place your limit order with the numbers above. There is nothing you can do about it. There is nothing wrong with it, but the technique above will help keep us out those rare times we are off base.

With all that being said the market may fool around until the crude oil inventories report comes out at 10:30 est. Oil is considered the new gold and has attached itself to the dollar as far as correlation. So, baring any surprise news announcements between now and then we may not see much action because I don’t see any catalyst (news) to get the herd in motion except for news coming out of Canada and the usd/cad seems to trade within it’s own world but since nothing else is on the horizon until the oil inventories the market may make due with that in the interim.

Cheers, Jerry
Tradingmajic1@gmail.com
jerry@forextradingmajic.com

gbp/usd update 6-10-08

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This post is a reprint of the email sent out yesterday, Mon, June 9, 2008 1:20 pm.

okay, on the gbp/usd 4hr we are closing with a bear pivot below friday's high, with the necessary higher volume.Now, what we must consider first is the intraday trend and that trend iscurrently up. so our bias must still be up based on the current chartpattern even though price is falling. Any healty move will pullback beforeattempting to continue unless it is news related and that is more emotionthan true move, the news that is.

The last bar reached the support bar which is bar 1. The low of bar z isthe pivot point and this is where we can enter short with a stop above thehigh of bar z and our target the low of bar combining our outside barguidelines with our footstep guidelines. To be safe I would take profitat the open price of bar 1 just to avoid potential operater intervention.

Also, even though the low of bar z is the pivot point i would enter at theclosing price of bar z because this would be a counter trend trade.Counter trend trades are always riskerier and we really should not betrading against the trend but if we're going to do it this is how you doit.

I would enter short at 9767 with a mental stop above 9800 and a target of9698. That's if I was going to execute a counter trend trade. Since it iscounter trend I would drop down to my 5 min when price reached my entryprice and only enter there if i get a 5 min confirming signal.

The really great signal for a short is a 4hr close below the low of bar 1because then there will be plenty of overhead resistance to knock priceback down if it should attempt to move back up.

cheers, jerry

tradingmajic1@gmail.com