Technical Analysis of the Forex Spot Markets using Elliott Waves, Chart Patterns, Candlesticks and other tools. Disclaimer: None of the comments in this blog shall be construed as professional trading or investment advice.
1H Chart
Prices for EURUSD like the one for USDJPY has made a nice run down. I find the waves for EURUSD getting more difficult to count, but I suspect that the wave has not yet completed its 5 waves.
There’s a rounding bottom reversal, and price looks quite strong on the upside. I’ll be cautious and take partial profits, or exit all together and look for new opportunities.
Good luck with your trading!
I hope you had been happily riding the wave down after the past two entries on the USDJPY.
Price has made considerable move downwards, and I can count 5 waves of some degree completed. This may be a good area to lock in some profits and let the prices ride. If it it extends, that puts extra cash into the account. But it is prudent to expect some correction after the 5 waves down.
Hourly Chart
Based on the post-triangle thrust measurement (see the vertical white line on the chart), price still have a ways to go. The 5 waves down may below to an extended wave 3, which means there’s a possible correction for a wave 4, and then for prices to move back down to complete wave 5. Either way, it is good to preserve capital over being greedy for gains.
The Swiss National Bank (SNB) had set a price floor for EURCHF at 1.2000, and price is dangerously close at 1.2010 right now. Actually, it has been hovering at that price for a good many months! Take a look at the chart here:
Each vertical section represents 1 month, so we can see that prices have been stagnating for many months now. Now, EURCHF is not a currency pair that I usually trade, nor am I a fundamentals trader, so I didn’t even know about the price floor until a friend told me.
And since I know now, I thought you should know too!
If you are keen to take a position, you might want to consider going long (it’s a price floor after all). But remember, there are no guarantees in trading, so remember your risk management and position sizing too.
Here’s an April 2012 special report by DailyFX which I found:
Euro/Swiss Franc Nears 1.20, Swiss National Bank Hovers-Trade Setups?
Following up on my previous wave count, it does seem like wave .iv has completed, and it’s making its wave .v down. The only thing is, it seems to me like wave .v is sub-dividing, which means, more bearish potential.
Here’s an update on my quick and dirty forecast on USDJPY Yesterday:
Prices have broken the wave d low, that my entry, and my stop is above the wave e high. If it breaks the wave e high at this point, then the count is wrong.
If you are trading this, be cautious as I know many people who do not think USDJPY would sink much further. Be prudent by take partial profits along the way if the trade moves your way.
From BusinessInsider.com’s article on “61 Behavioral Biases That Screw Up The Way You Think”, I decided to take a look at it’s source: Tim Richard's Psy-Fi Blog. I found that these were actually expanded from a list of “slightly odd behaviours in the sphere of investment”.
As a part of trading psychology, and a way to better understand ourselves as traders. I think these articles are a good read. And it’s good to identify some of our own biases and guard against them.
For the full article, click on the links above, and here are my thoughts on some of these Biases.
Often times when we speak to traders, they will share their winning trades with you. It is important to get the full picture and see both winning and losing trades. And often times, there are more things to learn from losing trades than winning ones. The goal is, naturally, to learn from mistakes and not make them again.
The next time someone shares their winning trade with you, ask (nicely) about all the trades the person had for the week or month.
Some people think that trading many currency pairs in many timeframes using many trading strategies is the best way to be profitable. Contrary to that, successful trades often focus on a few pairs of currencies, using only a few profitable strategies. Having too many strategies (and too many indicators in one) will likely only confuse you.
Sometimes, Less is More.
Bias Blind Spot: we agree that everyone else is biased, but not ourselves
I’m guilty of this one, and it’s important to recognize that we always have a bias. In fact, when you trade, you always have a bullish or bearish bias, why else would you trade in that direction? But it’s important to recognize that it’s a bias, not a fact, that you are trading.
Every trader has done this before – Ignore contradictory signals because he has already entered a trade. And again, this bias often only becomes clear after the trade his a stop and becomes reality. Here is where an opportunity to have a smaller loss is ignored, in favor or hope that other evidence which supports your trade will prevail.
This is the thought process behind the Martingale Money Management Strategy. “I’ve lost 5 times in a row, the next one will be a win!” That’s the reason that gambles double their bets each time they lose in a bid to win back the losses. Give it an unlimited number of tries, and you will have a win simply due to randomness / probability. However, you must first have very deep pockets as doubling up each time will quickly bankrupt you.
If you risked 1% of your account for your first trade, and doubled up each time you made a loss. In a string of 5 losses, you would have lost 24% of your account! It gets worse! In your 7th string of losses, you would have lost 96% of your entire account, and a string of 7 losses is not uncommon in trading!
And there you are! Remember, Psychology is a key pillar in trading!
