Monday, 31 October 2011

Gold 'n EURUSD

Back to the 1708$ area ? EURUSD i have no doubt is due a small RT(upwards B4 testing these lows)...we are long(1.3835) but not on this platform but have a crash stop at 1.3803 ..goodnight!!! ( PS I make it a rule never to trade after i have drunk alcohol and i am opening bottle of red wine as i write and am its bibi for today 31 Oct and remember tomorrow is another day)

Gold, Dax, EURUSD

My objective ( short term)for EURUSD is the thick blue line

Gold trade failed but we had given it a fair chance and it ended up as a b/e trade rather than grasping at samll profits. However i suugest that price will continue sideways and the thin blue ML seems to be holding/supporting price and this is one line i will watch with interest. price is being chanelled along between two ML's (Agri value BC/67.4D and BB 81.7D) plus around the thick reaction line(AB 87.4/M).... perhaps a break in one or other direction tomorrow?

Dax to fill the gap? We were stopped out at b/e but it still looks likely and its always timing (rather than having the right idea) that makes a trade a success.

The market that i missed opportunities in today? EURGBP

Long Gold...continued

I am not happy with how this is turning out and we need to see further upside progress ( break above 1727) for this to be a runner rather than another sideways move. Stops to b/e.

Long Gold

Using my default 2.5$ stop. Look at the candles finding support on the RL and look at the convergence of RL's ( both the solid horizontal and dashed diagonal down sloping)...more to come.

Gold & EurUsd and DAX

It's not looking good for Gold but it's not over till the Fat Lady sings and this is a market that has more suprises in store...Does 1720 represent fair value? I am still not sure and am waiting for the big spike bar first

Dax closes the gap back to 6100.00 ( seen in Dec 11 CFD chart below).

Gold -crunch time ( technically speaking) & USDX & EURUSD

Gold is at a 'make or break' point for me. It either gets its act together or goes back to where it came from ( below 1700!)
The same can be said of EURUSD. I must confess is was stopped out last early last week on my short Eur position and then sat and watched all week the most unreal rally upto the mid 1.42 level. The same can be said of equity markets and the sad fact is that they now move in their own world which bears little refelction on the shocking fundamentals out there. Being somewhat of a cynic i have as much hope the in the Euro zone and Euro bailout and the possbility of fiscal prudency as a pig would have hope in a slaughterhouse. However i am a realist and realise there are huge quantities of cash piling up in various funds banks and institutions where those who work in these places have itchy fingers and are just waiting to pile back into equities as there is a limit to treasuries and cash held and they never have been good at diversification. This is one reason i would not be surprised to see higher levels in the indices however the Euro reminds me of the old phrase "you can polish a piece of sh*t until it shines and warap it up in a box and tie a bow on the box but it is still remains a piece of sh*t". Price behaviour has remained weak today and I am looking for a retracement back to 1.3850 but the reaction line in the chart below remains stubborn and we are moving sideways before a break either up or down. What i think is going to happen is that the whole Euro scenario will play out over months and years as opposed to days and weeks.
I will look to short any EURUSD rally but am unhappy going short at this level of approx 1.40
Watch and wait both Gold and EURUSD.

The USDX has bounced beautifully off reaction line support but is now struggling to get is head above 76.40....however i suggest that the price pattern looks bullish for at least a short term trade and will watch and breakout with care

Saturday, 29 October 2011

Tobruk 1941..and now for something completely different

As it's the weekend i thought i would post few old photos i have. This is my father in 1941 in N Africa in or around the harbour of Tobruk. I think the engine cowling is from a crashed Savoia Marchetti plane but am not sure.
One thing to mention is that the war in North Africa was different to the war fought in the East/Russia. My father who died in 1985 told me it was a war without hate and great respect was paid by both sides to each others prisoners/injured etc.

Friday, 28 October 2011

Back to basics..Tools of my trade...EURUSD

What do you do when you get a significant new low or a new high pivot? Often there is no classic fork to be drawn simply because there is no 'wave' but just a sharp decline or rally ending in a new pivot.
As an example i have pulled a new/clean Copper chart up.
It's easy to draw a fork that expresses price like this one below because there are suitable pivots. By 'expressing price' what do I mean personally? Simply that if the fork is bona fide it's reaction lines (and indeed it's median lines) will demonstrate influence over price and illustrate the relationship between these three pivots ONLY.

For this reason i choose FH as opposed to HH as the angle of the RL's will have a greater effect.
If i were to draw all the reaction lines that express these the pivots below i would need forks using both LL and SL as PO's and also FH and HH as P1.

and here with the four forks and their respective reaction lines in colour matching each fork.This is why the angle and choice of pivot is crucial. the gentler angles of the pink and blue RL's beat the sharper angled RL's and remember the angle changes with the time frame.

Not so easy with these three pivots ? No ,so how can we see whats going on?

So what do I do? Here below is a recent EURUSD chart showing exactly the problem that i have tried to explain above. This is a simple Schiff fork. It is not modified as that type of fork would give us such a steep angle as to be totally useless and please remember i am searching for reaction lines that are of a specific angle so will not always use pivots that many educators would suggest. Here is such an example. The original fork is seen in light grey and has a horizontal attitude. After i see a new pivot i always draw such a fork( even if a classic Andrews fork is possibble) because this fork will gauge the strength of a trend and a failure of this Schiff fork is governed by the same failure rules for any fork. In the current case of EURUSD we have a failure of one specific CL seen below.

Now below we add the fork into a reaction line grid template which shows selected median lines and reaction lines (all in brick red) all with high pivot value of over 75 ( calculated using a formula that expresses each set of 3 pivots/each fork as a numerical value between 1-100 and colour coded).

This is a simple tool which helps to guage market/trend strength.

Wednesday, 26 October 2011

A Joke....

No really a joke! here it is.
... "A greek, an Italian and an Irishman go into a bar. Who pays the bill"?
Answer..........................." A german" !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Firstly did you look at the DAX chart yesterday LINK 1 and LINK 2 and the reaction line i talked about? Today the same line works (on what i consider to be a greatly over extended rally) a treat and sends price lower.

The Gold market below.. ( please look especially at the Esignal chart and structure shown) which explains why price is making heavy weather of the 1720 level but i will watch to see if price finds support on the two thin parallel ML's that pass diagonally through the chart. If we see a touch back onto the reaction line we would see a failure to break out and get carried back to 1705 again.

EURUSD below...i have nothing to say except its about time that we saw lower pricces and we should be alot lower than this. We find price back on the 1974 centre line. Link
A brave man would sell here becuase in the short/medium term i suspect we will see 1.30 levels again.

possible Gold trade

see yesterdays charts
If you missed out on yesterdays spike and believe that Gold has a upside future then here is a potential entry. IF we see a shallow retracement of between .236 and .382 then it looks good anything deeper then that -say .5 or .618 would worry me and i would stand aside.
We have structure bang on 1700 in the form of a long term ML plus a reaction line. Under this is another horizontal reaction and yet another M-line at 1690 and 1691 respectively. All of these are previously tested and shown to be of good value. For me i usually use either 2.5$ stop which just isnt adequate for this type of trade as there are too many unknowns as eyt but it would be better and cheaper to pick the first retracement of an uptrend rather than try to pick the bottom, so no limit buy order yet. Watch the candles and a break above the downsloping reaction lines seen in the 5 min chart above and a 15 min bar close with a second higher bar above this down sloping RL would indicate an possible entry as well.

Tuesday, 25 October 2011

Gold- Bucks the trend

This looks bullish and the objective is the CL @ the 1775.00 area. Support was strong and retested so this is no surprise and a nice breakout /long range bar.


see previous post & chart. Why was i intersted in that particular reaction line you may ask?After all the whole chart is covered with them? The reason is the angle and confluence plus most importantly the value of the fork in the weekly time frame from which the reaction line originates. This value is calculated using a formula from the three pivots of the fork it belongs to and then is further identified as either a 50% or 100% interval reaction line.


We are seeing an increasing convergence of asset pricing with a great correlation now developing between EURUSD & equity indices- for obvious reasons but also many other markets. I am also aware of a 'truth or fantasy' dilema as we currently have with global fundamentals being bearish or lukewarm at best(not withstanding US company earnings/reports all coming in this week- 40% OF ALL s&p 500 COMPANIES REPORT THIS WEEK) and yet equity markets are surging past my expectations and I am loathe to enter any long equity Indices position at these levels. The DAX ( Z11) approaches major resistance at 6160 and i will also watch to see how the USDX behaves at 76.00 and EURUSD at 1.4000-1.4020 where I see opposing/resistance from reaction lines. We remain flat on all markets except grains.

Friday, 21 October 2011

EURUSD: If the fudamentals are so bad why is EURUSD at 1.38?

 --Stark: Europe needs political leadership to restore confidence --Stark: ECB gave advance warnings about imbalances, but politicians didn't  listen --Stark says risk "water damage" more significant than "fire damage" in euro  zone --Stark urges fiscal, financial union in the euro zone 
By Marcin Sobczyk and William Launder


WARSAW (Dow Jones)--Juergen Stark, executive board member for the European Central Bank, delivered a withering assessment of the euro-zone debt crisis Friday, placing the blame squarely on the region's politicians.

The ECB gave advance warnings about rising imbalances in the euro zone, but European politicians didn't listen, he said at a conference here.

"The ECB was the only [institution] to raise the issue many years ago, in 2005-2006. We know current account imbalances don't emerge overnight, it's a longer process...but there was no urgency" from politicians, he said.

"We are in charge of monetary policy. There were warnings. Maybe politicians heard, but didn't listen," he said.

Stark quit the ECB board earlier this year for personal reasons, but continues to serve until a replacement is appointed. His departure comes amid controversy over the ECB's program to purchase government bonds in the open market, a risky practice that has provoked strong criticism in Stark's native Germany.

Stark said the ECB needs to do all it can to tackle the euro-zone crisis, but political leadership will be needed.

"What we have in Europe is a confidence crisis and confidence can only be restored at the level of politicians," he said. "We have this significant and external imbalance within the euro area. We have a failure of policy making at national and at supranational level."

Increasingly large rescue packages for troubled euro-zone members may be more damaging than the sovereign debt problems they are designed to resolve, he said.

"With ever larger rescue packages, there's a risk that in the end water damage is much more significant than the damage done by the fire," Stark said. "What is needed is adjustment at the national level. This is exactly what has not happened."

Euro-zone members must respect the debt and deficit limits imposed by the Maastricht Treaty, which remains valid and correct, he said, adding that the euro zone needs more integration, including a fiscal and financial union.

The euro zone's budget office could be a step toward a euro-zone finance ministry, a move officials should consider, Stark said.

He said that other countries need to learn Germany's efforts to improve price competitiveness, which deteriorated following reunification.

"Germany ran current account deficits for many years and returned to positive territory at the end of the 1990s or in 2000," he said. "But 10 years ago the reform process started in bringing back price competitiveness which Germany had lost after reunification.

"It was a correction process and indirectly, not explicitly, also an adjustment to the conditions of the monetary union. In my view, other countries have to learn from that experience," he said.

PS: Groupon IPO/floatation? Do you see a profitable future for such a company.I would'nt touch it with a barge pole.

Thursday, 20 October 2011