Looking for my next Forex trade
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You'd be surprised how much price action can occur in a small TDI wave movement. As a matter of fact, some of the biggest moves occur during the smallest portion of the wave count, especially near the end of a run.
There's the spike to the 0.75 area I was looking for. Let's see what she does with it now.
I don't really count candles much anymore. I still look at them as a mild point of interest but overall, I've discovered the market will make just as many candles as it likes in a given direction...LOL!
Not yet...small waves have to wrap things up first.
I'm not really worried about the small wave counts at this point. I'm only looking at the bigger picture and it says AU will wrap up the final highs on the next 15 minute 5-wave series up. Within a day or so, we'll see some nice selling.
I'd still like to see AU make one more high above the highs so far. Theoretically, I'd like to see 0.7530 or so to really wrap it up tight.
The correlation across the board is setting up very nicely...it's not just AU...it's EA and ACAD and also UJ. They're all pointing to reversal finalization waves.
Basically, it looks like the US dollar is about to kick butt again with the exception of EU.
Remember the hourly chart I gave you the other day. I said then that it would wrap up the first 5 waves down and then move back up for a slight new high first...it's wrapping those up very quickly now.
Gotta let the small final waves play out before it tanks.
Nope...that EA chart is a Wave 4 pullback Heavy. She's gonna rocket north and AU is gonna tank as a result.
Hold on tight...LOL!
First generation operating systems are always a pain. I used to never let my customers upgrade until the second generation hit. By then, they had the first service packs available and the system was much more stable.
New hard drives in a lot of these over-the-counter computers have pretty high failure rates. It's been a problem for several years now. The quality of the hard drives coming in from overseas isn't nearly as good as it used to be. What we see more than anything else is a failure in the read-write head controller that results in an inability to read the hard drive sectors correctly.
The new solid-state drives have eliminated that problem but since the technology is new, they're small capacity and high priced, so we're still stuck with the older technology for now.
Time to reload the ole operating system there Heavy...either that or the hard drive went bad. Man, I must have seen thousands of computers do exactly the same thing over the years when I was a field tech. And it's never a good time when it happens.
Long UJ at 112.575. TP set at 114.50 but might have to adjust if there's a bit more downside.
Closed out my last GJ short for a few pips. There's some alternate wave counts showing up on the daily that suggests this drop may be a minor Wave 4 pullback. If so, GJ may move a bit higher before dropping again.
With GU being tied directly to a final decision this week about the UK membership in the Eurozone, it's better to stay free of any trades involving the pound for now anyway.
That's probably a good idea at this juncture. One thing is for sure...sooner or later, a trend has to show up out of this consolidation area. She'll pop or drop one way or another.
I have but it's been a while so it probably got lost in the shuffle somewhere.
What's really neat about that deal is that actually, there's absolutely no way to lose money Jav. As long as you keep small entries that are suitable for long time frames, you can get out with profits even if you happen to hit that one counter trend move that is larger than the rest because the price action will still come back one last time to make one more high or low in the series. And at the very, very least, it will retest that overall high or low before a real trend shift can occur. So again, you still come out with profits.
It's always been that way...it's one of the key components of identifying any potential trend shift.
That's why I'm not concerned at all with AU right now. It's matched up pretty closely with a prior counter trend move, it's done it in 3 waves and it's used up a ton of energy on the daily chart to get here. So even if it does break out and make that one, large counter trend move that signals a bottom may be near, it still has to come back and at the very least retest the lows and, more likely, make a new daily low.
Here's a simple formula for you Qui...
Find the larger trend on a large time frame. Measure the length of the counter trend moves...the ones that go "against the grain". Make notes of those moves on your chart.
Then, when price action makes a counter trend move back to those same movement lengths, take a small trade to go back in the larger direction, with expectations that, at the very least, you'll retest the lows or highs and, more likely, you'll see new lows or highs depending on what larger trend direction you're trading.
Only when you get a single larger counter trend move that's at least 40 to 50% larger than the others can you say that a bottom may be forming soon. And even then, price action will move in the larger direction one last time to make a final high or low in the larger direction before price can really reverse.
Check any chart you like, especially the larger time frames, and you'll see what I mean.
Now, with that in mind, here's the AU daily chart again...
The small time frame stuff doesn't really concern me, Qui. I'm looking at the larger time frames anyway so this hourly stuff is just fluff. I don't mind holding for the larger moves down later on.
Very nice Jav. I hadn't considered the contracting triangle possibility. It would substantiate the move back to the 158 area minimum that I'm expecting to see.
Very good.
Anything is possible, Heavy. When I'm faced with a situation like this though, what I do is fall back and size up the situation like this...
I'm currently short on AU expecting a nice pullback before any further bullish activity. But price action might be suggesting a move higher. So the main question is this...
Would I close out my shorts on AU and go long right here, expecting a move up?
So I try to imagine myself closing out the shorts or not even having short trades on the books at all and opening long positions where AU is now or in the general area at or above 0.74.
And the answer I keep getting is... No way would I go long in this area.
Me, myself, and I have discussions like this all the time...of course, the 3 of us disagree but that's just my split personality getting the better of me...LOL!
But since I seriously wouldn't even consider going long here, I have to follow the larger trend and stay short for now, even if I have to add again later.
LOL! Relax, Qui. I told you we needed a move back up to satisfy the Wave 4 retrace on the hourly chart here.
However, you need to keep in mind that this is the first confirmed 5 wave series that we're seeing back down after the big move up. So, when this 5 wave series on the hourly is complete, we can call that Wave 1 down on the 4 hour chart. So, for Wave 2 back up, we need to see 5 waves in the other direction...back topside.
So, right now, no new highs. But later, yes...one more possible new high.
The only exception is going to be if they drop the snot out of it in one big, bearish candle all off a sudden like they did after the last 5 wave series up on the hourly. That possibility exists as well.
The simplest explanation I can give you of it's bearish nature is 3's and 5's, Qui.
Bull runs and bear runs come in 5's with the trend and they come in 3's against the trend.
AU is running nothing but 3 wave counts counter trend to the larger downtrend, which is full of 5 wave counts.
That makes it a bear. And, since I don't like trading against the major trend, I'll continue to short it until I get a firm signal otherwise, like a major 5 wave count topside with only 3 waves back that serves to really confirm a breakout.
With 3 wave counts in a larger bear market, trend line breakouts and new high breakouts are of little if any consequence.
No doubt about that. I'd love to stand over his shoulder for a few days and watch him. Of course, I'd grill him to death with questions...LOL!
But, in the end, nothing compares to old fashioned, died in the wool experience. AU is a perfect example of that. I wish I could lend you guys my eyes to see what I see from a potential standpoint on the charts. All I can do is tell you, for example, that AU is nothing but a big, fat bear and that this move up is nothing more than a typical bear market rally and that it's not finished dropping. But, only time will suffice to determine if I'm right about that. I have been wrong before, you know...LOL!
It would definitely be beneficial. One problem with tapping the mind of an experienced trader like SG though is that there's so many things he's doing by instinct, he may not realize it because it's become automatic, like any mastered skill. But there would still be a world of information that could be gleaned from watching him trade.
I spent over 30 years in the computer industry as a field technician. I got to where I moved so fast when I was working on a system that anyone looking over my shoulder literally had no clue what I was doing because I was flipping back and forth between several screens at once. But most of it was just instinct...I had done it a million times and I didn't even think about it. And if I had to break it down and explain every detail, it would literally take months if not years.
It's all part of that "face time" I was telling you about. The more skilled your trading becomes, the more likely you are to develop "chart vision"...the ability to just look at a chart and know what it's doing and where it's headed. That's the goal for all of us.
I remember when I was trying to teach several of my friends to trade. I set them up with the online schooling, a demo account to start with, and I spent weekend upon weekend training them to trade, month after month.
You know what I found out? You can't open someone's head and pour in all that experience in a few months time and expect them to start trading. Almost all of them wanted a cut and dried list to trade from with no variation...not understanding at all that the market was dynamic and not static in nature. Needless to say, every single one of those folks gave up within a few months and none are trading today in any way, shape, or form.
It's a lot of work and a butt load of study time...there's really no way around it, no matter how good the system is that you're using or who you're watching.
You too, Kirby.
It can definitely be a pain in the rear, Kirby. AU is a commodity based pair, so it follows things like oil and gold. If either of those is moving up, AU will move up with it.
AU has moved up primarily because of the big pop in oil. But there are multiple signs now that it's been too much too soon and needs to cool off now.
You'll find that AU also relies heavily on China. China is a major importer of their mining goods so if China is struggling, AU isn't happy. There's been headlines popping up the last few days about China's debt problem and that may be the nail in the coffin for AU and for commodities in general.
I can go one better than that...I'd like to see SG do live trading videos of what he looks for when he trades. It would be like looking over his shoulder.
One thing you have to remember about Simple...he is, bottom line, one of the most advanced traders I've ever seen. He can literally trade just about any chart setup. Out of all the indicators, tunnels, etc. that he's come up with through the years, you can bet he relies on what the candles are doing more than anything.
The only real danger in using the tunnel is as I mentioned before. A lot of folks look at it and simply try to take a trade just because price is hitting a certain level. It's definitely not one of those "blind trade" entry systems. Carefull analysis of multiple time frames is absolutely necessary to see where price is on the larger time frame before trading the tunnel on the lower time frame.
I know that one thing Simple used to do is mark the tunnel levels on the upper time frame with horizontal lines and then drop to the lower time frames to trade. Since the tunnel on the upper time frames moves very slowly, you can set those lines and use them as a guide once price on the lower time frame gets back to those levels.
There's also a multi-time frame MA I found that basically does the same thing all on one chart without having to flip time frames. You can literally see the placement of the quad tunnel from the daily chart, for example, on any time frame, even the 1 minute. But it does get a bit crowded on a single chart for that type of setup so I abandoned the idea.
I've used the tunnel in the past but I don't use it now simply because I prefer to trade as much from pure price action as possible along with the TDI waves and Elliott Wave theory.
For me, less is more.
I can't rule out a quick pop to the actual 50 fib level right at .75 but if it does get there, it should be very short lived.
The daily candle here is starting to pin nicely and the 4 hour has a couple of nice bear candles as well.
For right now, I'm still sticking with the idea of an expanded flat configuration with a trip down to the bottom trendline coming here on the daily chart.
Even if this were some type of bullish breakout new high, the price still needs to retrace back below 0.71 to set up for a larger run. It's simply used up too much energy getting to this level.
Here's an example of the tunnel in play, Qui. After looking at this, I may very well go back to it on my charts as well. I'd forgotten how good this thing really is.
Notice that since the big drop, this is only the second test of the quad tunnel during the bearish run. The first time it hit it, it made it all the way up to just above the quad tunnel in the 175 area. That white moving average is my own addition...the EMA 240. I've found it to be very valuable in trading over the years.
This time, GJ only made it to the EMA 144 (the yellow MA) before pulling back again. Notice how far apart the EMA's are here. And notice that except for a bit of a sideways movement during these pullbacks, the downtrend is firmly intact.
Normally, a tunnel has to be tested at least 3 times before any real chance of a breakthrough occurs.
I would also add that Simple found out the addition of an EMA 62 is quite important as well. I have mine colored dark purple on this chart.
Those are little tidbits that you pick up as you work with the tunnel.
GJ 4 Hour Chart...
The tunnel is quite good, Qui. The basic premise is that it uses a couple of the EMA's that are basically fib numbers squared. 11 x 11 for the EMA 121 and 13 x 13 for the EMA 169. The other two, the EMA 144 and the EMA 196 are fill ins to catch the in-between moves.
Like the TDI, there's a lot more to the tunnel than meets the eye. It's not simply a grouping of moving averages. It takes a lot of practice to get good with the tunnel, like anything else. For example, not only do you have to take the actual levels into account but you also have to take into account things like angle, how far apart the EMA's are, how many times price has visited a particular level, etc.
If you use the tunnel, I'd recommend practicing with it in the simulator for a good while until you get the hang of it. Too often, new users of the tunnel think they have it down only to get surprised by a move that blows right past the tunnel in one direction or another.
Simple developed the quad tunnel and is by far our resident expert on it. See if you can talk him into a training course with some chart examples.
Here's the count I have so far on the hourly AU chart, Qui. We retested the broken wedge successfully and pulled back in a new 5 wave series.
So far, we have a 1-2-3 count with a bounce back for 4 yet to come. I'll likely add back on the Wave 4 retrace for the next drop. We'll see where it goes from there.