STOP HUNT TRAP IS SPRUNG

LOOK AT THIS 30 MIN CHART 15 MINUTES AFTER THE DATA RELEASE. THIS IS THE REASON I USUALLY SIT THEM OUT. THIS IS TOO MUCH LIKE A CASINO FOR ME. WHY GO THROUGH THIS WHEN THERE ARE SO MANY ORDERLY , PREDICTABLE MOVES FOR US TO TAKE ADVANTAGE OF. THIS IS GUT WRENCHING NO MATTER WHERE IT GOES FROM HERE...

JERRY

U.S. TRADE DATA

Well I guess I will sit this one out. I use the euro/usd and the gbp/usd as a barometer. The market seems to have it's poker face on.

There are a couple of subtle hints though that makes me lean towards a dollar bearish release.

the 4hr has formed an internal bear pivot on the gbp. Since this bear pivot is inside the range bar from yesterday's rise this pivot is questionable as the top of that range bar is the true swing bar.

Secondly, the last 4hr bar closed down on higher volume but did not close below the low of the prior bar. This is a volume divergence on the 4hr. This is an indication that selling volume has dried up before the release and supports yesterdays bullish volume divergence on the daily chart where we had an up close on lower volume to indicate selling volume had dried up on the daily.

The same profile is in effect with the Euro. So, I could be wrong but I smell a bear trap setup before the news release. But with so much data coming out today and the convergence of signals not being conclusive, I will sit this one out because I only trade based on high probability.

Jerry
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U.S. PAYROLL DATA

The market is waiting for the payroll data from the u.s. at 8:30 am est. but that's not all. there are a total of 11. yes 11 data reports coming out of the U.S. today.

That's a lot of opportunity to shake traders out of their cash. I don't see the market doing anything until then. We will see what the setup looks like 30 min before the release.

However, the daily charts on both the euro/usd and the gbp/usd shows that selling has ended and the momentum has switched from down to up on both of these pairs. But everything that has gone on for this week has just been positioning for this payroll report. As far as reports go, this is one that sets the tone for direction for the next couple of weeks so it is one of the monster reports.

The euro/usd formed a bull pivot at the close of yesterday's trading but did so on lower volume which makes it more suspect than usual because of the data coming out.

What should concern the trader is the amount of other data to go with it which will allow for stop hunts with news as the excuse throughout the day. The best advise I can give you now is to keep your bullets in the chamber until the report or just before the report when you can see how the market has positioned itself for the data.

But the inside operators always know in advance so based on the subtle change in the volume profiles my bias at the moment is against the dollar and I anticipate dollar negative news.

But all in all the picture is giving conflicting signals so I consider it a weak bias at this time because the weakness of the down volume could just be a byproduct of many traders waiting this week out for this big news data.

I won't know until 30 to 15 minutes before the data if I will take a position or sit this one out.

Jerry
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GBP/USD 5-30-2007

Until today all of the 4hr bars closed within the range of of the 12:00 GMT bar from May 24 until 12:00 GMT May 29, When we got a close below that bar. They were all inside bars until today.

This indicates that May 24 bar was S/R and May 29 went up to test the top of that bar. That May 24 bar is a range bar. It may not look like one at first but relative to the bars around it, it has to be considered a range bar.

In addition, that May 24 bar is a bear pivot bar of a complex pivot with the swing bar being the may 23 12:00 GMT bar. So, even if we didn't consider the action since may 24 a test of the range bar we would have to consider it a test of the bear pivot swing bar from the 23rd.

So, that's the two reasons price went where it did and because this situation represented double resistance that's why it stopped where it did. When you add this situation to the fact that there has been thin volume because of the U.S. holiday weekend none of the moves since the 23rd have been true moves anyway. That's why I made no blog posts until today.

What really happened today was that operators moved the market up on the 29th just high enough to take out the stops above the high of the 23rd, which was easy enough for them to do because of the thin volume. Most institutional traders won't be back until the 30th and once again true moves will begin. yesterdayday's action was just preparation for todays action.

As far as where we go from here, the GBP has formed a bear pivot on the 29th below the close of the long green range bar. I expect the GBP to go up and test the top of this range bar and bear pivot and then continue back down to test the bottom of this long green range bar.

On the daily chart this green range bar is a bull pivot bar and this pivot needs to be tested. The consider that the 29th on the daily bounced off the top of the upper trend line on higher volume and did bounce down hard. Combine this with the fact that GBP is in a down trend and the probabilities favor a continued test down toward the daily bull pivot point.

Then we throw in the weekly chart that formed a bull pivot outside bar last week by 1 pip, the open of this outside bar needs to be tested and just happens to be at the bottom of the daily and 4hr range bars.

Jerry

EARLY BIRD

EARLY BIRD HAS POSTED SOME INTERESTING COMMENTS ON THE FIRST 2 POSTS TODAY. BECAUSE OF HIM I WILL KEEP DOING IT THE WAY I'VE BEEN DOING IT.

JERRY

LCM TO PERFECTION

LCM TO PERFECTION

Earlier today I gave you the intraday analysis. Now let’s look at the daily chart.

Looking at the chart we can see that we had a bullish pivot form at yesterday’s daily close, on higher volume.

Today we pulled back to test the range of the swing bar and went up to where…? Yep, 3 bar. I have once again numbered the 3 bar count for you and illustrated 3 bar resistance at the red line. Drop down to your intra-day charts and you will see price reversing exactly off 3 bar to the very pip.

This may be just a temporary bounce off of 3 bar but as I teach in LCM, when price hits S/R you should at least expect a bounce.

What is our conjunction/convergence? Well, the same bar that is the 3rd bar in out 3 bar count is a range bar therefore the top of this bar also represents resistance.

Then we see that the top of this range bar is just above Fibonacci 50% from the down move (bear pivot) that began on 5-15. (BAR Z)

Then we see that this same level is at the low of the swing bar of the bear pivot that started the down move on 5-15. (BAR Z)

Summary: We have a bull pivot point at 3446 to define our entry point. We had an intra-day 4hr bull pivot point that formed at 3451 that I illustrated on today’s earlier post. We had a bull pivot on the 1hr at 3427 and 3 bar for this 1hr pivot was 3451. We closed above this 1hr 3 bar target on higher volume to confirm/flow with the daily and 4hr bull pivots. We had two bull pivots on the 30 minute to confirm our other time frame pivots. Thus, all systems were go. These presented a multitude of converging buy signals all supporting each other.

The supports for the targets have already been outlined above and there are others intraday but you get the point.

Question: On the daily 3 bar count I did not count the bar preceding the swing bar. Email me and tell me why you think that is… hint, it was not because it was an inside bar because it fell 1 pip lower than bar 3. But since it was so close I did consider it as an inside bar but the reason I did so was because I had additional, a more important reason not to count it. Do you know what it is? If you are not sure it means that you don’t understand one of the most important requirements for a valid swing bar.

SPECIAL NOTE: AT SOME POINT THIS WEEK I WILL BE CLOSING THIS BLOG TO THE PUBLIC. IT WILL ONLY BE AVAILABLE TO REGISTERED SUBSCRIBERS OF THE LAWS OF CHARTS AND MEN.

I WILL OPEN A SEPARATE BLOG FOR THOSE WHO PREFER FREE INFORMATION THAT IS NOT AS DETAILED AND WITHOUT TRADE CALLS.

THE RESULTS OF THE REAL TIME TRADE CALLS WILL BE POSTED THERE AND GENERAL INFORMATION THAT IS NOT PROPRIATARY TO THE LAWS OF CHARTS AND MEN.

JERRY

EURO/USD TUE 5-29-07

DURING THE TIME IT TOOK ME TO PUT TOGETHER THIS ANALYSIS FOR YOU THE MARKET IS ALREADY MAKING THE MOVE SIGNALED BY THE BULLISH 4HR PIVOT.

SEE ATTACHED 4HR CHART;

Notice how all the bars between bars 1 and 4 are all inside the range of bar 1. The red lines illustrate the high low range of bar 1, the swing bar.

Bar 4 is the pivot bar on this complex bear pivot. LCM explains complex pivots.

Even though bar 4 closed on higher volume and appears to be a valid complex bear pivot, but when you compare it to the volume of the swing bar the volume is much lower. Since we already know that an invalid pivot will meet S/R at 3 bar, we would expect this complex pivot swing to stop down at 3bar support.

When you look at the 3 bar count I have illustrated on the chart we can see that is exactly what happened. Bar 4 formed a bear pivot bar and hit 3 bar resistance on the same bar. Now, I have taught you that when this happens, that pivot has fulfilled its objective and you should look for a reversal or bounce from there.

Bar 4 closed with a strong bounce back up off 3bar and bar 5 formed a bullish pivot reversal bar on higher volume confirming it as a valid pivot reversal.

So, now we have a bull pivot with bar 4 as the new swing bar and bar 5 the pivot bar.

Bar 6 pulled back and tested the pivot point, which is where an entry would be signaled on this bull pivot. We want to enter at the pivot point right?

This analysis is further supported by the range bar. Bar 4 bounced off bearish 3 bar support and this 3 bar support was also the bottom of the range bar. That two levels of support and I often tell you to look for conjunctions of S/R levels to confirm your pivot analysis.

So then, while trying to determine a target for this current bull pivot we know that if the bottom of the range bar has provided support then the market is most likely going to test resistance at the top of the range bar. The top of the range bar also happens to be at 3 bar resistance from this bull pivot. Now, if you can’t see how 3 bar is at the top of the range bar then you can’t expect me to keep repeating the importance of inside bars.

I have marked the top and bottom of the range bar with yellow lines to make it easier for you but I’m not going to make 3 bar because your job is to think and practice.

Lately I’ve been doing everything short of trading your account for you, with great accuracy I might add, yet the only time I hear from most of you is to complain about this or that.

So, since making accurate market calls is not good enough for you then there is no purpose for me to make them is there?

JERRY