FX Instructor Live Forex Trading Room Results | 10/25/2007Lets start with one of the trades we were following since yesterday's recap - the GBP/CHF on 30 min timeframe. The trigger was a Bearish Divergence. Price made higher highs, while stochastics were giving lower highs. We consider this an aggressive "Class A" divergence. The entry for this trade was determined by certain Fibonacci Retracements, and price did go down beyond our target of 2.3940. We also use the Andrew's Pitchfork in different ways to confirm the entry. In this case, the price broke through the midline of the APF, and came back to retest it as a resistance. This is another strong confirmation that a downtrend is in progress. In our room we do like to twist around the technical tools available to give us better results. Lets go over an intraday trade we ended up taking today. The GBP/JPY, one of the most popular pairs in our room, had a Long trade, though the extent was not too large. As I always say, its the technique and methodology which is always more important than the result. Initially a bullish 1-2-3 Formation gave us a trigger for the Long trade. We like to use use Fibonacci Expansions for 1-2-3 Formations. On a long term basis, we had some bearish bias on this pair, so we really were not sure how long this bullish move would go. To stay on the safe side, we generally keep a trigger - the FE level of 78 became the trigger. The break of this level became our entry, and FE 127 was our targets. There was one more thing that made us stop our trade. We plotted Fibonacci Fans, and we had fan resistance at FE 127, which corresponded with a fan level as well. As we always say in the room - "tell me the Fibonacci's don't work!" The magnitude of this move was not more than 125 points, which is not much at all for this pair. Its the assurance of a trade - you go in, and you are confident that it will work - which is the most important. I'll close the recap with a discussion we had on the JPY and JPY-based pairs. We discussed the close relationships and correlations between different markets, such as correlations between currencies, forex spot and dow jones, forex and oil, commodities and forex, and so on. It was a very interesting discussion. Just an example - we were trading USD/JPY in the NY Session. The Yen pairs have a very close relationship with the Dow Jones and the S&P. Any intraday movements of the Dow Jones do affect the Yen, so we were trying to devise the best possible strategy for how one trades an intraday Yen pair during the New York session. Even if you have fundamental correlations to your spot currencies, the technicals still rule. One must always look for technicals. On the 5 min timeframe we had a Bearish Divergence on the USD/JPY, and you can see how price respect the Fibonacci levels - support at 100%, and target down at 127% exactly. The point is - when you have a divergence, and the price comes down to your expected target of 161 projection, be happy with your profits, and end the trade. Enjoy the video! code pour embarquer la vidéo : >>> http://www.youtube.com/embed/tUJKKPB9KBk <<< |