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Trade of the Month


Guest DanC

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Hey Aviationforex,

 

I look for trades each day and GbpUsd is not a current trade.

I search through various charts each morning and don't have any favorites.

I just look for potential breakouts which suit my parameters.

 

Good luck out there.

 

Cheers,

 

JB.

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Are the US stock indices about to make a major turn?

 

I have been tracking and probing the Dow and S&P500 for some weeks from the 62% Fib on the latest rally.  The rally has been very strong leading to many commentators talking of new all time highs and sentiment indicators off the charts. With no significant pullback we must be due at least that soon and perhaps this could be the beginning of a major bear move to cement the notion that we are in fact in a Bear trend.

 

Looking a the Dow my analysis shows we are approaching the 76% Fib off the all time highs and also a coincidental 88% Fib retrace of the recent drop from 2 Dec 2015.  Add to that a strong tramline and negative momentum divergence and it all smells like major resistance.  If you look at the S&P and other majors you will see something similar.  My medium term roadmap is for a drop in EW wave 1 of big Wave 3 followed by a retrace back (could be to almost parity with predicted current turning point) before the big one down.

 

In the short term there could be a nice swing trade of the W1 and W2 but I'm holding out for the big one and getting in Short once I see what the US markets do.

 

Here are the daily charts (please let me know what you are thinking on stock indices and why):

 



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Mercury,

 

I'm still with you and in agreement (though I'm following different labelling structure) see previous response with Triangle scenario. Both counts call for a drop very soon.

 

I believe the other indices, FTSE, DAX will follow suit .

 

Good luck

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Re: EURGBP,

 

I cleared my short (7862) for a small profit as I was expecting a strong retrace rally, which is what we got (are getting). The question is whether this is a relief rally preparatory to a stronger drop or the start of a new higher high?  At present I am leaning towards the former with the GBP looking stronger against USD than EUR (despite the recent drop off on GBPUSD).  My analysis suggests EURGBP may top off at the 76% Fib before it heads south again.  The recent turn down was at the 88% Fib (on the Daily chart) completing an EW 1-2 and if it now turns at 76% (or falls short of retracing back to the 62% Fib) then we will have a 1-2 within the hourly chart and a strong W3 drop to come.  Negative Momentum Divergence on the Hourly with the 17 March high and bearish signs on Stochastic and RSI currently supports the hourly chart EW A-B-C formation with a wave 5 up yet to be completed.  the coming hours should tell the tale as to whether it will turn or power on.  My plan is to take a short at the 76% Fib (yellow line on the chart).

 

Here is the chart (Thoughts?):

 



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Hi Mate,

 

Here's my chart and labelling for what it's worth. I'm not overconfident I must say and have been expecting a large drop for sometime. That hasn't happened.

 

It's possible (probable?) that there's one final push up to align with the previous 4th wave (see dotted line on chart) before any drop and I'm waiting patiently to let price show its hand.

 

Currently short the Dow which is turning against me........................

 

GBP (DFB).png

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Hi Welshman,

 

Are we talking Dow or EURGBP here?  The Chart was EURGBP but you also mentioned a short on the Dow (for my take please see separate thread on US Indices, just posted an update there).

 

Re EURGBP, my EW count suggests we are in a 1-2 down off an A-B-C (24 Feb high).  Of course you could easily be right re another leg up and the W4 of the previous wave down is a likely truning point in that eventallity, also coincided with down trendline on weekly and daily.  I have my position stop protected at the 17 March High and we are currently getting resistance at the 88% Fib off that high so let's see which way it now goes...

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Now for something different:

 

As Indices keel over there seems to be a common order to things.  Often the commodities lead the way (Oil, Mining etc) followed by manufacturers then financial and finally consumer type companies.  This time the same seems to be happening (except for UK supermarkets who were loosing out to discounters early on - that in itself is a wake up call I think!).

 

Looking at the final "strong" companies like Unilever and the like I can see a lot still at all time highs and some making fresh highs (typical defensive stocks like tobacco - a fools play that one, tobacco is going down in the long term...)

 

I recently noticed WPP near all time highs but my EW count has this as a very strong retrace rally to in a W1-2 and about to turn for W3.  There is a nice Triangle on the hourly and a possible break and kiss back.  Sure it could run up for fresh all time highs but I'm banking on the former set up and so have gone with a Short and close stops in case the latter is right.

 

Here are the charts:

WPP PLC Daily220316.png

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Yep chart was of EURGBP, and whilst our labels are different I think we agree.... my question is whether or not there'll be on further push up before downside price action. However you could be right I've just been getting in too early recently.....

 

Sorry DOW was on my mind at the time of post, stopped out for a loss, entered too early again. We previously talked about DOW , check the thread

 

Good luck mate

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it's tough trading conditions in these markets, retraces are going much further than normal, where 50/62% is usual we are seeing 76% even 88% a lot of late.  Symptoms of a bloated market in need of a big fall?  Some say so.  Better to wait for a turn and take the 1-2 retrace.

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Guest BoracayJugs

I agree Mercury, no point trying to guess the turns (tops in ref to DOW) in these markets, best to wait for a 'clear' 5 wave structure down for a W1 (again with ref to DOW) then a 3 wave structure back for 2, then go in at say 62% if attained (aggressive) or wait for a break below B of W2 (conservative) knowing you have then left a 3-wave countertrend structure behind.

 

Talking of an alternative wave count for the DOW, even those at EWI (Elliott Wave International) are open to possible new highs. We are currently at a critical juncture, and there is still the possibility that a large degree 4th wave triangle is unfolding from the all time high, with just 'wave e' (down) to complete immediately from here!  So even the next move down may not be the BIG one we are all waiting for.  The one thing that makes me think we could possibly still be in a 4th wave triangle is that there are no clear 5 wave structures down, it is so much easier to count everything since the all time high as a series of 3-waves up and down - classic triangle formation, and even more so in the 4th wave position!!

 

All said, I'll still be looking to short 'wave e' (5-3-5, or 3-3-5) at the pullback with a tight stop/early breakeven incase this wave too becomes a traingle (quite common), but with the hope of something much bigger!

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Yes, if only I could stop myself!  It is sooo seductive to hit that top but experience tells me I'd be happier, and richer, if I had more patience.  A work in progress I am!

 

Understand the higher high take but at present I see that as the more unlikely scenario.  At present my analysis is showing a lot of resistance out there so at a minimum I expect a pullback.  The nature of this pullback may shed more light onto the situation and help us decide on new all time highs vs big drop.

 

There is of course one addition scenario, that we are only at the Wa of an A-B-C that will plunge very low before rising strongly again but just failing to beat the highs before beginning the big drop.  A lot to watch out for, I really want this Bear to be done so we can get back to normal (whatever that will be in a future after a massive recession, or even a depression...)

 

Let's see.

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Guest BoracayJugs

From the 22nd March high (c. 5pm GMT) we have now in place a complete 5-wave structure down, with no overlapping 4th waves entering the territory of the main W1 or subdivided wave 1's within W(i), W(iii) & W(v).......this is evident on the 60min chart, though you will have to go to the 15min chart to see some of the sub-divided waves more clearly......there is a volatile (large) 4th wave within W(iii) which looks to complicate the pattern, but it is there and works within the EW rules.

 

Let's waiting for a 3-wave countertrend structure from here then look to go South big time :smileyhappy: or at least for C of Wave 'e' of the larger triangle :smileyfrustrated:

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You are talking about the Dow?  I have 1-3 count only at present so am expecting a small retrace to 4 then 1-5 completion.  This would only be a "small" W1 or a larger W1.  I'll do a more detailed post on my US markets post in a bit to show you my chart route map.

 

Cheers,

 

M

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  • 2 weeks later...

JB,

 

A short could work on Gold but it would be, in my view, a very temporary trade.  I'm targeting 1190 area for a turn back to the bullish side and not doscounting that this turn may already have occured.  I'm preferring Gold for Long trades at present and have a working order above 1230 for a Long and would look to go Long at the 1190 ish area if price drops back in the next few days.

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Dont have time to post the chart set ups at the moment but with best month for stocks underway interesting inflections on the following :

Ambarella

Twitter

goPro

hedged with an index short

Worth a look.

The fundamentals are still a challenge for all 3 but if April is positive there could be short term profits to be made.

Will update with charts later - I would hate to be accused of `showboating` or actually posting successful trades up here - but lets be honest thats why we do this no ?

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Hey Mercury,

 

Appreciate your thoughts.

Trade never triggered as it never hit 1214 which would have seen a breakdown imo.

 

Moving the stop on EurJpy to 126.50 and the limit down a touch to 124.95

 

What do you think of AudNzd? Under 1.1070 I can see it retracing.

 

Any thoughts?

 

Cheers,

 

JB.

 

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Thanks Oilfxpro. Appreciate your comment.

 

The limit was reached at 124.95 last night so I am out.

 

Please note any recommendations I write are DAY ONLY orders.

 

Looking at Gold again today.

 

Break of 1214 I'm short with a 10point stop and 27 point limit.

 

Good luck out there traders.

 

Cheers,

 

JB.

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  • 2 weeks later...
Guest ChrisW

Hi all, sure others have been active on this trade (no harm in posting twice) and while the RSI is <30 this is sign of the strong trend and rate of change in price. This ticks all the boxes, but the move looks as though it has legs to 1.4050 and the clearly defined stop is 1.4410..good risk reward and while we are seeing some selling in crude today, price action in oil looks positive.

 

A preference to sell into 1.4300 myself...thoughts?EURCAD.JPG

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Not answering for Chris, but I am guessing it is the Cable (GBPUSD).  Technically it looks like a short - and with the current action, seems like it wants to. 

 

Technically, that chart is one to frame!  If currencies are all so precise I should be trading them.  Nice TA Chris 

 

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Been watching the GBPAUD cross for a while, since I exited my medium term short prematurely a while back.  It's a big call to spot the turn on this one.  I'd need to see a definitive turn down on AUDUSD first and we are near one I think but not quite maybe.  GBPUSD is less certain and could go either way but if both go down then you will need AUD to fall much harder to get a big turn on GBPAUD.  And this could happen soon.

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Guest ChrisW

Sorry all, forgot to actually write the currency pair. It was EUR/CAD. Stop was hit on ECB statement, and the fact oil was a slave to a stronger USD. Still if we look at the daily we can see the real body of the candle is still below the horizontal resistance and importantly had a daily close below 1.4400 (waiting for session closes above/below key levels is generally best)...

 

Draghi has kept focus on credit channels rather than cutting neg deposits further, but he has opened the door (hence EUR drop). Guess we have to wait for 2 June when we get economic projections through to 2018. But if inflation expectations dont pick up then they will focus on weakening the EUR, which at currenct levels is starting to concern. EURCAD1.JPG

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Ahh.  Thanks Chris - amazing how I could make the GBPUSD fit that chart.  Wonder what that says...?

 

Makes sense too why the overnight "action"/data didn't seem to correlate with the chart (looking at the Pound) :)

 

The spike in the Euro was a cracker.  Hit a high right where someone needed it to too.  Funny that.

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