And the Beat Goes On

The times when I set resistance points or support points if they are bracketed I already have them pre-set in advance, so its awesome to see price retreat from a long term and powerful resist point. I placed light blue arrows above each of the resistance lines as they show how fresh the sellers can act around those areas. I literally pulled the black dotted resistance zone from 2014 and for them I used the weekly chart, so the resistance appears above and its still a moving target, there are some news items coming out this week to affect the dollar too. The candles on this 2 hour chart acted well leading up to 1.18311 and supported the bullish trendline. The green rectangle was the where the Euro took off with some force - consolidation/break out, it also smashed through the prior two red resistance lines @ 1.17555 and 1.17773 The reset style means always adjust targets to higher levels of resistance and take the uptrend on to the next level as if there were no boundaries. The best algorithms are the right perceptions The expanse continues!

The Return of the Samurai

There is still plenty of downside but more to come, this post will be updated.

Consolidations Before Breakouts

This is the chart of the S&P 500 CBOE Vix index that is graphed on the weekly time frame and the goal of this post is to exhibit each of the breakouts that occur after a narrow range and tightly congested weekly candlestick. This case in point shows how the candlesticks condense or contract before breaking out and reaching a relative high. In each of the examples on the chart the highs that I point out have a white arrow above them and the lows are contained within the small candlestick in the ellipsis. For most of the "bullish move origins" there is a a small real body and a week above and a week below the tight formation of the candlestick has a yellow arrow below it. This psychological event noted by a yellow arrow points up, generally it takes a long time for the price to rocket higher after a breakout but on average its between 2 to 3 weeks. The key ingredient is the tightness of the candlestick formation when it is poised to break out. Although this case is more subjective it does point out six swings that have a pattern that repeats itself The other photos are examples of the high-wave and other forms of doji candlestick formation.

The Challenge for the Dollar

What I learned today. Look for more conformation, and scale back trades if there is no reason to be in them The first chart is three hour chart of the dollar at 11,901 which was where the hammer candlestick formation that was shaded in yellow occurred the break happened and the dollar continued to rally for nine hours or three long bullish candlesticks. to 11, 950 and then pulled back up and where it retraced back to its origin what we noticed from the Fed meeting was the doji candlestick 7.26.2017 which formed at 2:00 and the massive breakout to the downside which was fresh resistance for the dollar index because it traded in such a harsh way it could be the next stopping point if the dollar does decide to get bullish the downtrend is still intact even though price is at extremes this is a series of lower highs and lower lows. The second chart is the daily chart of the EUR/USD this view of the blue real body (today) almost engulfs the red real body of the prior day and it is still bullish, the 1.17750 level is so important now. A break above to newer highs would mean that the trade would be to locate areas of resistance above (like in the red zones I highlighted previously at 1.18, and that begs the question if the EUR/USD can eve get to 1.20 The two hour chart of the EUR/USD is acting well and the range is very well defined. The 1.17570 has a tendency of holding and so does one 1.625, from this point of view it seems that we are stuck. I included a trendline in the chart with the black baground which fits the highs of yesterday and it is a trendline that is in the middle; its not too tight and is not too loose. -Damian

Trading On Target 🎯

USD/CAD Daily chart Today marks the first day in a series of downward moves where there is a bushing engulfing candle. The downtrend noted by the black trendline is broken. In time I will set a tighter uptrend line going on a positive angle as the exchange rate higher levels if there is power behind today's support, and greater demand for US-Dollars or Canadian weakness. Three hour chart I thought by sending out orders in two batches that the second order would not get filled. But as it turns out the first order was filled to close the long position at 1.25 approximately and then at 1.2550 so I was planning on waiting for a pullback and then adding to my initial long position and raising the target far above like 1.26 or 1.27, the move was surprising but time will tell if there is a pattern that is forming like three moves up and one down. The supportive areas below price I plan on having them very tight and closer to price so that when orders get filled I can begin to do them more frequently, for now price can consolidate and move sideways before the presumption of it moving to 1.26. EUR/USD Daily chart Lately I have been considering having three levels above and three levels below so my approach is to create an algorithm that is more manual in nature. The algorithm seeks to get to the closest target that is conservative and risk and will be more likely to hit. It is not such a moon shot to think that with the damage that was done today that the pair will reach 1.16. As far as the two resistance areas above at 1.18 1.19 it is hard for me to believe that it is possible with in this week or even in the near-term future because of how stretched the dollar was, and may be the euro is vulnerable to a pullback that can possibly continue One day in my opinion does not a trend but it surely could be a start the idea of support levels being violated is something that we can consider if there is a persistent downtrend in the next 5 to 7 trading days Three hour chart the resistance above in the two red lines acted very well even though there was a puncture above 1.17501. The pair is tired. And to think that it is possible to reach 1.18442 is difficult here. So selling the rips and bounces along the way is good and I can start the pyramiding where I close 1/5 of the trade in 50 pip moves. The blue zone below is within reach.

What I did right...... What I did wrong......What I can do to improve.... What did I learn today?

What I learned today was that it would have been a better alternative to have interest in price going higher even though I've made up my mind on the direction before the meeting. So I just closed two thirds of the position and kept my stop the same place. It saved me a lot of anguish but I wish the Bulls well on their big win today. This is a three-hour chart of the EUR/USD that shows historically the (Red Dotted Lines) 1.18444 level which was very important on August 24, 2015 that first area of resistance which is very close to the Globex highs. Just based on momentum it look like prices ready to break through and head towards 1.18. There is plenty of momentum from the FOMC meeting. The speed at which the pair has gone up so fast that it is traveling at a 100pip rate in the next logical level would be 1.18 and then 1.19. So I used weekly candles to come up with the potential resistance in the 1.19, and 1.18442 box above. Immediately below there is the blue rectangle which is the base of the jumping point and if I consider a short position it would to cover near there and let price settle: consolidation after retracing. The supportive areas from yesterday's post are still valid but they will need refining if the dollar gets stronger, because these currencies tend to move faster than what we anticipate.

Scaling in - Result of Stiff Resistance

I am scaling this trade in five areas, where I am increasingly adding to a winning position. The euro trades at 1.1648, the way that I have pieced in to the trade is in increments or layering. The next part of this set up includes adding to the short position at 1.16387, that is if the break does occur. I am looking at a possible supportive level at 1.6278 which is the area where price began bounce on July 24 in two different locations and on July 20th being the other. The chart from yesterday shows a possible breach of resistance above at 1.7006 but it was not able to get up to the second level at 1.17157. It fizzled. That tells me the sellers were intensely pounding the EUR/USD because it is at new highs for this phase of dollar weakness (August 22 of 2015 was the last time it treated this high on a weekly candlestick and then it quickly dropped off in the next few days) I was not stopped out. The selling intensity is so strong above 1.17 that I did not put up a display any further resistance levels at 1.18 or 1.19 because it does not seem likely that it will trade that high in the next day or so, in my opinion. Although it is possible for the Eurodollar to break 1.16278, the first lower line, I think it will buy some time for the bulls before going down to 1.1579 the shaded oval in yellow indicates another. Where a breakout occurred and could be a possible trigger for buying interest. I would also not rule out the possibility of price dropping through both supportive areas, 1.15614 and 1.14811. The dollar fell so much that it is a knee-jerk reaction to all of the buying activity going on in the euro. The second chart is of the dollar index sailed through the loose trendline in black I had above it. And because they were too positive closes above the trendline that leads me to believe that the dollar will trade back again at 12,000 and then 12,100 by next week. The rectangle that we can revisit from last week had to do with what I thought was but as the chart has shown it was quickly violated and what I learned was to project lower in bear markets find better opportunities.

Sideways Congestion - Scalping Price Targets

We are looking back at the plans that I made from last week . This plan shows some progress. When targets are hit, it makes the market easier to digest and bring some clarity to the price action. The pair acted well against the first series of resistance points at 1.1675 and five pips above. Supportive levels below were tested and price to the middle which is in my opinion a strong decline in this time frame. There was enough demand at the support levels to bring it higher and break above trendline. The dollar index is showing just a slight amount of strength. There was not much news to drive the market in either direction for the foreign currencies. But every time I entered a short position they were at increments slightly lower. I do have a protective stop above, but if 1.16216 gets violated cover and set lower targets. The range is between 35 to 40 pips on the highs and lows.

Leverage Cutting Both Ways

I found that I have the most buying power or leverage with the euro against the dollar .And often I have to rely on my intuition to determine which side to play............ the bullish side or bearish side . In this case we have current price at 1.6647 which is where it closed on Friday. Should I aim for the 1.17 continued to ride the trend or expect the pullback and begin to cover short positions at 1.16 and then down to 1.15? That is why references like this are so important. I can begin to show how I manage and the logic for applying leverage when in a winning position. The system is designed to have two areas above and two areas below price. And for today we have a potential resistance at 1.16756 and 1.16776 and that is a more immediate sense of where it can trade again on Sunday night into Monday morning that is well within reach but above that there are the price levels at or above 1.17. Historically price has not stayed there for very long before dropping down very quickly. Based on how this is trading it still looks bullish and the trend is intact, the hardest part of trading I think a bend at the end But price has moved far away from its moving averages, and it will have a tendency to mean revert. I have not seen the euro this quickly in a very long time The logic for today's short entry was based on the natural tendency for price to drift back to the figure which is 1.16. And in my view the long green candle created on July 20 is like a pocket of air which bring price down to its origin of the rally which happened between 1.1416 and 1.15046. The support and resistance levels I have marked on the short on our return lines but they are in reference to past behavior. The red ones are resistance and the green ones are support When we revisit this chart next week I would be able to tell the trading conditions and how to manage trades in between two extremes of price points. And if price does have a way of "gravitating" to certain levels like in our situation 1.15 I can examine the gap between the supply above and the willing buyers that want to get it at lower prices. Because this chart has the 3 hour interval point of view there is still some noise whereas the daily chart is much cleaner, but the system of trading off of support and resistance levels as more opportunities for higher frequency timeframe were four or five trades are taken in the day. Because I shoot for more trades in a day to reference the three-hour chart and one hour chart We can easily reach 1.15 or 1.17 based on the speed at which the euro is moving.

The Beat up US Dollar - Revive Balboa?

The Canadian dollar may be at a very good selling point. It should be time look at how this is trading through the lens of seller: higher lows and lower highs The selloff in this pair USD/CAD, was 979 pips in magnitude and that is from where the big red arrow indicated the origin of this plunge. I felt like I had to post something because I was stopped out of long positions in recent weeks to attempt to play a bounce or a fade the decline, but I have found that the trade did not work. Now on the other hand things are working and I am getting better feedback, the long positions are working. I put up a trendline recently of a downward sloping trendline and it seems as though price is able to break through it more often (stay tuned) Other technical conditions like closing in a series of higher highs and higher lows, I will start showing how this shapes out using 4 Hour candlesticks. Is the CAD expensive here at this price today? My goal was to point out how strong the move was on the longer term view, the weekly candlesticks really demonstrate how powerful the decline was from the week of June 3 of this year! I like to use consolidation phases before breakouts to indicate where significant levels (breakouts turning into continuations) I believe happened during the week of June 3 of this year. After that in the following seven weeks the US dollar was clobbered against the Canadian dollar. Based on how extreme I perceive it to be, the CAD is a bit overpriced and the rally in the dollar could happen again with falling oil prices or whatever other narrative the press attaches to this and news based triggers occur which shock price. The green supportive zone on the left side shows where there is plenty of pent up buying pressure and for the time when price traded in that zone, but then made a fast exit. There is also a thin and tight trendline I drew in black which points downward I think with a full retracement currency pair can make its way back up to 1.34645, and that is ONLY if there is a 100% full retracement. 50% is of course more likely. The rate today up against the dollar went as low as 1.25590 which on my chart touches the solid green line at 1.25553. Off to the left side of the chart I drew a yellow oval to indicate the blastoff point which led to a series of green weekly candles that closed upward. Unfortunately the rallies do not behave the same way the selloffs do and there were intermittent periods of drop-offs, they look messy, and the USD/CAD hit its final objective of 1.3750. which happened on April 29 of this year. I will repost gains and developments as they yield better success. Never stop improving.

Dangerous Complacency

I placed the white horizontal line at the last time where the Vix traded at its lowest point in 2007. For the data that we have from Think or Swim chart software, it is as low as it will ever get from the information that we have. That means that the market is at its highest risk that it has ever been. The trendline from the month of December in 2007 rises to the high of 69.4 from the low of approximately 10.09 the dialog box in the picture shows a growth of 539% in the fear index, known as the Vix. This happened over a little less than the two years or 23 candlesticks, for this chart every bar is one month. There are many reasons to be in stocks right now, but the one key take away in this chart is that options are not being used to protect against any downside PUT OPTIONS should any of that occur within the next year or so. It is a high risk environment, but trends go longer than most people think they can, myself including. Shout out to Robert Prechter and Harry Dent. "Drops Microphone"

When typical resistance does not get respected

This is a three-hour chart of the euro against the dollar initially I thought I would go short in the pink zone where I would faded into the two green lines below at 1.1437, that was my first short target then I adjusted my target again where my entry was at 1 .15352. The phenomenal strength in the euro was something I did not consider but I thought my levels were sound. I took less wear at first I lost 40.9 and then I lost 24 now my entry is at the red downward pointing arrow. I am looking to cover at 1.1550 and then I will show you how I am going to scale the position where I add to a winning trade. As far as reference when resistance is no longer respected it has to be adjusted and projected higher.

To Stand Corrected and Still Make Money

On yesterday's post, I mentioned a possible turn in AUD/JPY, well it never happened, on the other hand the AUD/JPY just powered up another 86 pips above my entry. It was an entry on principle, if just buying pullbacks was all I needed to do, it would seem that scaling in was the right decision and overall my entries average to 85. I found that the colored circle from 7-11 to 7-12 was not a turning point, but another base in a series of higher lows. Every month from one of the bottoms on 5/19 (gain of 468) June 26th (gain of 284) July 10th (gain of 111.5) and on July 12th (gain of 86) they get smaller as the trend ages. I thought I would be talking about protecting this holding with shorts in NZD/JPY and AUD/USD but in time I will have more about the AUD/JPY and NZD/JPY relationship and how to protect against "giving up gains"

Holding Back and Watching

This 8 hour chart features spots where I added to gains in the AUD/JPY "Aussie against the Yen" there was a gap that filled after an April 23rd gap which was where I continued to add to the position. It is a type of trade that pays everyday the position is held, its what I have called daily roll. I collect as I am paid to wait. I did not fully believe it can get that high, I thought we as a collective would take risk off, and the Yen would get strong, but even though my theory was proven wrong, it was a good idea to add to gains. Each of the points with green arrows is a place where I continued to scale it, it makes it easier to manage the positions risk when I have something else to hedge against any potential downside. As of right now, it seems the last add is slightly negative. But I think NZD/JPY and USD/JPY make great hedges in the event of something happening to bring out the Samurai in the next few weeks.

Trade Plans and Perspective for the Week