Jump to content

Mercury

Community Member
  • Content Count

    2,242
  • Joined

  • Last visited

  • Days Won

    7

Mercury last won the day on December 23 2018

Mercury had the most liked content!

Community Reputation

91 Excellent

About Mercury

  • Rank
    Mercury

Recent Profile Visitors

The recent visitors block is disabled and is not being shown to other users.

  1. Mercury

    US Indices Short - the big one!

    Yesterday the Dow rally was stopped at the Fib 50%. Is this a turn or just a brief retrace before a further leg up? Don't know. However the case for a turn is strong as follows: Turn at the Fib 50% - a typical retrace level only eclipsed by the 62% in commonality Just under the possible H&S neckline and in the associate resistance zone from the previous break of this neckline Plausible A-B-C, which could be the entire retrace of a wave A of a complex retrace pattern, I favour the latter but cannot rule out the former Potential NMD with Stochastic in over bought territory On the SP500 Daily chart we can see that the Fib 50% was not quite reached but the potential H&S neckline was plus there was a spinning top candle yesterday topping out with a test of that neckline There is a credible 1-5 form to the wave C on the hourly chart, with a possible narrowing triangle channel in play, a breakout of which ought to signal a bearish move. On the 1 hour chart, the current move down can be described as a 1-5. If we get a small A-B-C form retrace followed by a drop through the lower channel line then the turn will be confirmed for me. However we may yet see another leg up resulting in an actual test of the Fib 50% on SP500 (and Nasdaq) and a test of the neckline on the Dow before that Bearish move. Short opportunities for me are a turn on a small retrace at suitable resistance levels and a breakout of the Triangle. Note: at present my lead scenario is a complex retrace resulting is a lot of whiplash so caution is required with any trading during this period. However I cannot rule out an alternative scenario that the is the end of the retrace already (a credible scenario) so if confirmed the market could resume the big Bear move from here (red line on Dow daily chart).
  2. Mercury

    GBPUSD retrace trade

    Do nothing in general @cryptotrader since Christmas but on FX IF I see the market continuing to follow my road map scenario I will look to add to my Longs on a rally away from the current ST area of congestion as in this scenario I would expect a decent rally to either a wave A or all the way to the retrace turn, which could be a good skip of points. Obviously if the reverse happens I would need to reassess. US stocks are rapidly approach the Fib 50% area, which may offer a Shorting opportunity if we see appropriate price action. Because I cannot tell yet if this is just a Wave A or the end of the relief rally I have to consider taking a position early and then wait to see how the price action progresses, otherwise I would get left behind. So for me the time to do nothing may now be coming to an end IF we see a break down in the Stocks rally and a breakout rally on EURUSD and GBPUSD.
  3. Mercury

    Gold & Silver in a LT rally

    Nothing much going on with Gold/Silver, the anticipated consolidation period continues. The competing drivers of USD and Stocks/Bonds movements may be neutralising clear direction for now but in anycase, regardless of the cause, the price action is flat. I see 2 possible routes out, both ending in an upward trajectory: a simple breakout rally that takes us up towards the big picture H&S neckline a retrace to close the price gap before that same rally My longer term projects remains unchanged, once we complete a strong wave 1 we should see a retrace wave 2 to set up a big rally, which ought to coincide with the Stocks Bear resumption. In this I am supposing that the main driver for gold becomes firmly a safe haven value store rather than a USD currency cross.
  4. Mercury

    US Indices Short - the big one!

    Nothing much to say on stocks except that price is still following my roadmap well. I will not try to trade the Wave B unless we get a nice double top. If I can spot the Wave B end I may go long for a while but for me the big one, the resumption of the Bear (the biggest of a generation, or maybe several), is worth waiting and conserving capital for.
  5. Mercury

    EUR/GBP/USD Triad

    Since my last post price did indeed rally (hourly chart), however it did so in a more protracted form causing me to reposition my EWT labels. The Fib 62% was hit with a nice ST double top and then the Brexit deal vote caused a bit of ST volatility and hit the Fib 50%, spike to almost the 62% before resuming its Bearish trajectory. If we look at the big picture, taking fundamentals aside (my overriding fundamental is that the Euro has way more headwinds than the Pound and outside the EU Britain will have its destiny in its own hands, investors will like that in troubled times - of course the USD will be king so GBPUSD will go down too) that large weekly chart consolidation dominates everything. The breakout from this formation, whichever way it goes, will be key. For me, if it was going to break north it ought to have done so at the last time of asking. Now that price has been firmly repulsed back down from this resistance zone I expect at least a retest of the lower line support zone, if not an actual break out. It is quite possible we may see a failed test and rally in EWT 1-2 form within the Triangle and if this turns back down without a retest of the upper resistance zone then a breakout bear market will be on the cards. I suspect this will play out over the course of the next 3-4 months to early Summer in line with the EURUSD and GBPUSD retrace rallies and the stocks and bonds retraces. I am currently targeting early Summer (sell in May and go away type of thing) for all of this to resolve into long term moves. Therefore my strategy is to be cautious and conserve my ammo for this big event. One watch out with this pair right now, I would NOT advocate taking a position in the middle of a consolidation range, I am Short from the Triangle resistance line and stop protected at break even. The only exception would be if we get that EWT 1-2 retrace I was talking about. Otherwise I am looking at trading a breakout of support (and/or a retest) BUT watch out for the fakeout...
  6. Mercury

    EURUSD Retrace rally then big drop

    As with GBP (see other thread) EURUSD dropped in the run up to the Brexit vote but unlike GBP EUR did not rally much. We have a bit more this morning, which may bode well for a more sustained rally in keeping with my ongoing larger retrace rally projection. However I am a bit more cautious with the Euro as there are other real economic and political headwinds that will, in my view, pull the Euro down long term, maybe even to oblivion. I am cautiously counter trend Long but less aggressively than with GBP. Otherwise the set up is very similar to GBP and remains as I have posted previously. If price remains above the Weekly Triangle line and then rallies away we should see a clear A-B-C retrace from the current period of consolidation. However I currently do not think the Euro will rally as hard as GBP. See my EURGBP Triad thread for more on this.
  7. Mercury

    GBPUSD retrace trade

    Ok that was weird @cryptotrader! I was just about to post this as I got your tag... I haven't had much to say because there hasn't been much change since Christmas. Across the patch things are proceeding as expected: USD down; Oil up; Gold/Silver flat; Stocks edging up to a wave A. As a long term trader rather than a day trader, often good trading is doing nothing, just letting your positions run; managing risk and watching for the next activation zone for exit and fresh entry. For the record, I am long GBP, EUR, Oil (counter trend) and Gold (long term) and still Short Stocks (from November long term not currently) and Short EURGBP (long term). Regarding GBPUSD, I am not really interested in lasts nights Westminster pantomime, those MPs are detached from the electorate in a way that we have not see such evidence of for a long long time. The deal was bad but that was to be expected when dealing with an organisation as Byzantine as the EU. The PM is in a no win situation: take the deal on offer or come back with no deal, either way she is painted as inept by the opposition. The panto will continue up to the point the UK leaves with no deal, which will not be the disaster people are making it out to be. Anyway so much for the back drop, in such situations, when it is impossible to tell how markets will react, I stick firmly to technical analysis. For me the vote yesterday didn't cause any change in my assessment. Sure there was a bit of nonsensical intraday volatility but GBP ended up almost exactly where it started. If fact yesterdays price action took price back down through my Daily chart Triangle channel line and back up above it in a bullish pin bar form. On the Weekly Chart you can see that the days movements are not special. So the board is still set fair for the retrace to proceed in my opinion. For the avoidance of doubt, my road map arrows are indicative as the counter trend rally could trace many different routes but the basic premise of my position is that the market will sketch out a significant retrace rally, in an A-B-C form until the Bear takes hold with a vengeance. As a swing trader I will seek to take advantage of this but as a long term trader my eye is firmly fixed on identifying when the Bear resumes as this is the bigger, and safer, bet.
  8. Mercury

    Gold & Silver in a LT rally

    Looks like Silver and Gold (the latter more so) have finally hit the buffers and dropped down but how far will it go? Gold is showing a credible break through a rising, narrowing, channel and close below (see hourly chart below). Silver too but less convincingly just now. Gold has turned back from a zone of significant resistance of the Daily chart (see below). However my leading scenario is for Gold to go through a period of consolidation or a relatively shallow retrace aligned to stocks retrace rally, which would include fresh higher highs and then a much stronger retrace to set up the big rally coincidental with the big stocks Bear. In the short term I am looking for a retrace to the Fib 38%, coincident with the unclosed price gap around the 1255 area BUT it is equally possible that this gap will not be closed until the wave 2 blue retrace a few months from now. So the opportunity is to identify the next turn up and buy the dips for a short term Long trade and swing Short for the bigger retrace and then get long for the big one (or just wait for the big one...)
  9. Mercury

    EUR/GBP/USD Triad

    EURGBP has indeed turned well off the upper Triangle (Weekly Chart) resistance and put in a nice pair of 1-2 retraces before falling fairly hard on the back of EUR weakness and GBP relative strength after the flash spike low and US NFP price action. As mentioned in both my EUR and GBP posts, we would see a short term retrace on this pair coincident to a rally on EUR and retrace on GBP before the Bear gets going again. If this pans out on EURGBP then we could see a stronger rally on GBP than EUR. I am short from the 1-2 retraces and will seek to pyramid this pair when and if I see a breakout through the lower Triangle line. As mentioned before there is an unclosed gap on the Weekly chart around about the 8100 level, which is well below the Triangle support.
  10. Mercury

    EURUSD Retrace rally then big drop

    As mentioned in my GBPUSD post, EURUSD went Bearish after the USNFP but I held my Longs despite this as I didn't believe it was a trend change and sure enough an almost equal rally ensued. Bit of a shame it didn't quite put in a higher high before the weekend close but overall it looks to me like a 1-2 retrace is done followed by a smaller scale 1-2 preparatory to a faster wave 3 rally to come next week to finally breakout of the Triangle resistance line.
  11. Mercury

    GBPUSD retrace trade

    Friday was an interesting day for FX in that the EURUSD went into temporary Bearish mode post US NFP but GBP and AUD resisted this and CAD actually rallied against USD (divergence?). In the case of GBPUSD it continues to make another attempt to make a break out rally. We might see a retrace move on the hourly chart before a breakout but equally price could just continue to shoot up. Given that I think we have already seen this retrace on EURUSD and EURGBP could easily be due a relief rally I suspect we will see a retrace bearish move prior to any medium term breakout rally. My trading strategy: I am already Long and will hold these position stop protected against a short term bearish move in anticipation of a longer term rally I may add Longs on a retrace turn (maybe at a Fib 50%, as with EURUSD or possibly only the 38%) I may add Longs on a fast breakout of the overhead resistance channel line (Triangle)
  12. Mercury

    US Indices Short - the big one!

    Interesting times on the Stock indices! But interesting times brings opportunity as well as risk, that is the game after all. After I cashed out all my Shorts over Christmas, bar a few above the Fib 62% from the top of the market, I switched from full Bearish trading to swing trading as I was/am anticipating a period of consolidation retrace. If we do see this I think it is likely to be manifest as a so-called complex retrace with many volatile reversals and lots of whipsaw risk. We have seen a bit of this already since Boxing day and the price action overall is following my road map almost perfectly with a sharp rally off the LT Bearish wave 1 (purple) followed by a shallow retrace (only to the Fib 38%, bullish) followed by a sharp rally away to make a higher high. Of course I am mindful of 2 alternative scenarios to my lead one (as posted previously on this thread) as follows: The Wave 1 Purple isn't Bearish but yet another massive buy the dip preparatory to a long haul up to fresh all time highs 1.5 years or so from now. This is the Economists consensus, which is one reason I don't buy it but can't say 100% it will not happen. Even in this scenario I would not expect a massive fast rally at this point but a long drawn out grind. The retrace is a simple A-B-C rather than a complex one and happens faster. I think this is more likely than the scenario that the Bull is back on but less likely than the complex retrace because I suspect there are sufficient traders who are still buying the dips and want to believe the Bull ride isn't over yet, want to believe that a 20% drop is a "healthy correction" (talk about an oxymoron!). My approach, as always, is to watch price action against my road maps and trade accordingly. I am currently Long off the Fib 38% turn (also on Nasdaq) but if this is a complex retrace it will run in a series of A-B-C waves with some serious whipsaw reversals so I am mindful that we may get a whip back down soon prior to a fast run up to the Fib 50% resistance zone where we should see a large scale wave A (Pink) turn back down. Any Shorts here need to remain stop protected above the high as a whipsaw back to a near double top is quite likely on what could be a chaotic wave B (I definitely would avoid any notion of pyramiding this wave B, which is likely to end like the Wave 1 (purple) with a strong pin bar spike and reversal. After that we should see a rally that will take a few months to make a higher high Wave C (I am targeting the Fib 62% for now). Again this move is likely to contain a lot of whipsaw as the Bull/Bear prize fight reaches the final rounds. I predict that the Bears will win and precipitate the biggest Shorting opportunity I am likely to see in my lifetime... Admittedly this is one I have been chasing for a few years now but as someone once said, say it enough times and you are bound to be right eventually... If not this time then maybe next time. If this time I plan to make out like a bandit!
  13. Mercury

    Adding to Positions

    Good questions @Nelsy-Boy, the answers are both simple and complex, as with all things in trading (and life really) nothing is as simple as we would like it to be. It is simple in concept in that adding to positions in a trend is what all successful traders do and at the superficial level the concepts are straight forward: "buy the dips"; "sell the rallies"; "buy low, sell high"; "buy weakness, sell strength" etc. It is complex in that there are many ways to execute and each time you take an add-on it is a new trade that must stand on its own merits. In some ways it can be harder to add positions than take that first one, for many of the reasons you have noted. Also there are psychological factors with adding and getting it wrong that may drive you to cash your initial position too early to cover losses (a critical error perhaps only eclipsed by not taking profits that then turn into losses!). It is also harder to buy or sell the further the market moves from the original turning point, for obvious reasons, chiefly getting caught in a trend change. Therefore it is a legitimate strategy NOT to take add-ons, especially early in your trading career, until you have a good feel for the market in questions and trust in your methodology. You need to be clear on whether you are in a long term trend or a counter trend move or a period of consolidation (I assume the same is true for day traders within the day or few days time period but I am talking from a long term perspective only). If you try to take add-on in the consolidation phase you will most likely get killed and markets spend more time in consolidation than in trends on balance. So it vital to know what kind of move you are in and where in that move you are. Once you know where in the move you are it is just trading really. The concept of adding positions must be an integral part of your trading methodology and strategy for a specific market move (i.e. with the trend or counter trend or range trading). In terms of methodology, in my case, the criteria are the same as for the initial trade with one exception. Due to the nature of the way I trade the first trade is on the trend change so I have a number of indicators and criteria specific to identifying that change. These will not be present in subsequent add-ons but many of the criteria I use will be present in both (indeed must be). The add-on trade must make sense in the context of the overall move. For this I use channels, and other charting techniques, and Elliot Waves to help figure out where in the trend we may be, although it is not always easy to pin point a wave 1 turn for example, as you can see from my FX and Brent Oil posts over the past few months, also to a lesser extent Gold/Silver (watch these markets closely over the coming month and you may get a live example of what we are talking about in terms of counter trend moves). If you like to swing trade then the approach is a bit different. You need a mechanism to tell you when the waves of a move will switch direction from motive (with the trend) to counter trend and back again. Again EWT is crucial to me for this but to execute a trade (whether closing a previous swing or opening a reversal) the price action must confirm what my methodology is telling me. So let's take a recent example to make this real, the Dow since October highs (see daily chart below). I wont reprise my assessment of why I believe October was the end of the Bull, see other posts, but the salient point is that I switched my bias back to Bearish and was actively searching for Shorts from early Nov. My first opportunity came at Pink 2 with a turn at the Fib 76%, very similar to the 2007 Credit crunch set up, which I was using as a path finder. I added at the halfway Pennant and closed when it hit the strong support area (wave 1 blue) on strong Pos Mom Div and a clear EWT 1-5 wave form (ripe for a reversal). At this point I took a Long but did not add because my bias was Bearish and I felt this was a counter trend rally (I don't do much pyramiding on counter trend moves as I switch from a trend following to swing trading strategy). I exited the Long at the FIb 62% but the rally went on and gapped up to the Fib 88% (Blue 2). At this point a took a low exposure Short (stops just above the pink 2 turn) and the market dropped (Nice!). Now I was into some serious pyramiding (note this doesn't just mean add-ons but leveraging the profitable trades for margin so care is needed to manage margin carefully as the move proceeds (I will look at this move more closely later on the 4 hour chart). At the end of the move (Christmas), while resisting the psychology of the "Santa Claus Rally", I exited all my Shorts below the Fib 62% once I realised the wave 1 was likely to have completed. Alas, owing to the Christmas break, and not expecting a Boxing day rally, I did not do this nearly as well as I would have liked but C'est la Guerre... I have now switched to a temporary Bullish bias but only insofar as I believe this to be a counter trend wave 2 to set up the Really Big Short! I am in swing trade mode but with extreme caution and retain long term Short around the Blue 2 area. Ok so lets look at that wave 2 blue move on the 4 hourly chart then: Actually first the Pink 2: I had a turn with a small pin bar at the Fib 76% off the all time high and Neg Mom Div on the hourly chart. I waited for a small 1-2 reversal and went Short with stops just above the Pink 2 top (very low exposure). There was a fairly fast drop after that and not yet being fully confident of the Bearish set up I did not add at this point. The next opportunity came with a small pennant consolidation (usually roughly at half way in a move) and I went short on the breakout of the lower line of this Triangle with stops above the highest point of the consolidation (again very low exposure). Again we got a fast drop (this is the great thing about Short trading, when it works it works fast) and I did not add on the EWT 3-4 retrace as I felt it was too close to the strong support and potential neckline just below. Sure enough that support zone ended the wave at Blue 1 on strong Pos Mom Div and a clear 1-5 (motive - the next move would be counter trend). I exited all shorts as I was not yet sure of the Bear and preferred to bank and leverage fresh Shorts higher up. I entered a cheeky Long but only 1 and exited at the Fib 62% to prepare for the next Short (psychologically). With profits in the bank to leverage I waited for price action to give me a signal. I got this with the large gap to the Fib 88%. On the basis that gaps are usually filled quickly and the the Fib 88% was the last turning point I went Short with stops just above the Pink 2 high (again very low exposure). The market dropped fast again (bearish encouragement) and I had a nice channel on the blue 1-2 move so when I saw a small break and retest of that lower channel line I went Short on the failed retest with stops just above the Blue 2. Very strong drop the day I took my first add-on (which is really great encouragement) so now I could move my stops to break even on all Shorts (note I was trading the Nasdaq in parallel). Baring a crazy flash spike I was net no loss risk at this point. There was a small period of consolidation followed by another fast drop. I didn't trade this, I remember kicking myself at the time but the market then offered another opportunity with a retest in A-B-C form so I went Short on the one hour reversal pin bar. The market then put in another retrace with Pos Mm Div at Green 1. This, together with my EWT labeling suggested a 1-2 so I cashed that last Short and waited. Note I was fully Bearish on this move so not swing trading. Sure enough the retrace was in a pennant form and when this was broken to the downside I went short again, leveraging my no loss trades from higher up. I let this move run through the next support line, coincident with wave 1 Pink and did not add further until I saw a retest of that support (now resistance) and went Short again on the failure of this retest, with stops above the previous high on 17 Dec (again very low exposure). After that it was just daily sell the rallies until the overall move completed. As I noted earlier I was not alive to the reversal over Christmas, unusual to get so much action during the Christmas break but then this is not a usual market. I took a small Long on the first major retrace as the Fib 50% was breached and then price returned above it, stops below the spike. I exited when I saw the rally breakdown into consolidation at over head resistance and reversed into another Short on Wednesday of this week with stops just above the Top of the recent rally. I exited these Shorts last night on a reversal in the Nikkei with a bounce off its long term supporting Trend line and with US NFP today I prefer to wait and see but if the market follows my previously posted road map, which it is so far, then we will see a rally to the Fib 50% off the all time high, which I believe will be a wave A or a counter trend retrace. Note that such a wave 1 is actually quite hard to pyramid as there is still a lot of Bull/Bear tension around. If the current move is a counter trend move I think it could reach the Fib 62% but it is likely to contain a lot of whipsaw action so pyramiding is off the table, this is swing trading territory but highly dangerous. I may very well ease off stocks and wait for a while, conserve my account to support the next Bear move. The Wave 3 to come (I believe) will be much more Bearish so it is likely to be pure sell the rallies once it gets going. Not for the fainthearted...
  14. Mercury

    GBPUSD retrace trade

    I have been tracking GBPUSD along with EURUSD and the EURGBP Triad for some time now and maybe, just maybe, we have seen the bottom of the current Bearish wave. If I am right about EURGBP (see Triad post) then GBP could well rally faster and further than EUR. If we see a breakout rally then I am targeting the 14,000 level (current Fib 76/78%) as the counter trend rally wave termination area, but miles to go on that one. For now the Technical analysis is showing me Pos Mom Div on Weekly and Daily chart with a nice bounce off the lower Daily Triangle line at a point of significant LT support. The bounce was strong after the semi flash crash (I say semi because it is clearly dwarfed by the previous one) and could put in a nice pin bar reversal price action on the Weekly (still a day to go on that of course!). I have a strong 1-5 wave down, although I had that before but the thing about this is each move lower actually strengthens the Technical case for the retrace rally while key support remains intact. It is all about trial and error based on price discovery when trying to catch a turn, which is why close stops and constant monitoring for reversals against your positions are crucial. Alternatively wait for a breakout from the Triangle resistance level but watch out for retests. I would expect some ST retrace down but may not be significant so, having caught a Long on the first retrace I will be looking to buy the dips once I see the rally take hold.
  15. Mercury

    EUR/GBP/USD Triad

    Looks like my upper Weekly Chart Triangle line was drawn too aggressively initially but now looks better with the latest top, courtesy of the Flash move last night. It seems to me that GBP, having fallen harder than EUR, is now poised to rebound faster. The third leg of the Triad is certainly indicating this to me. IF my Triangle formation holds resistance then price should travel back down to the lower line and then we will see if we get a breakout. It probably will not travel straight down however and the breakout may not come until the retraces on the 2 major pairs is done with. At this point I anticipate the Euros goose will be cooked and it will fall harder and faster than GBP, for a number of fundamentals reasons previously discussed elsewhere. From a Technicals perspective I have a good pair of Triangle lines with 3+ touches (the lower line having a so-called prior pivot - the pink circle - and bisecting a price gap that is not closed at present). @elleshould enjoy that one... I also have very strong Neg Mom Div at the most recent top after an A-B-C retrace form with Stochastic over bought. On the Hourly chart we can see the flash move spike and drop, followed by a pair of 1-2 retraces and now a lower low. I will want to see 9000 broken and eventually 8900 to be fully confident that price ought to retest the lower Triangle line but anticipate a few swings between then and now as both EUR and GBP rally.
×