110409 - The Week In Pictures

A nice relaxing weeks holiday, now back to work .....

I've been researching some new methods. Whilst Watcher provides many points of interest, grid trading is a bit like watching paint dry! Luckily, my fantastic customers keep supplying me with new areas of interest, and some of the spin-offs from this (outside of what they have paid me for, of course!) keep me going in more ways than one. I have the utmost admiration for those folks who have been in the same job for many years, I often think it's a matter of making the job interesting each day.

I am a big fan of ZigZag, but very conscious of the fact that this indicator (like almost all other indicators) can only tell you were the price has been. ZigZag needs to experience a user-definable point change before it can consider whether price has Zigged or Zagged. I was unaware (shame on me) until recently that the Fractal indicator supplied with MT4, and I guess widely used, is repainting. In my defense, m'lud, I have never used this indicator myself, so probably would never have known. It's particularly surprising then, given the highly simple nature of fractals, that any such indicator should repaint. So basing a trade entry on Fractals.ex4 would either get you in on the trade early (the attraction) or get you in early on a false signal.

Lets define what I mean by a fractal. In this context, a fractal is a low or high point, generally indicated by a bar with 2 higher or lower candles on each side. So a down (support) fractal is a low bar, with two higher lows on each side. An up (resistance) fractal, is a high bar, with two lower highs on each side. Terminology may differ depending on the author. These are a useful indication of turning points, and also handy indications of where to place stops.

An additional use for me is to identify gross trend. Funnily enough, Watcher is counter-trend, but that's another story! So I have reviewed this weeks chart using a non-repainting fractal histogram indicator, comparing that with the Smoothed RSI Inverse Fisher Transform indicator. I assess each chart's suitability for range (grid) trading or trend (swing) trading. My manual analysis is now nicely reduced to assessing whether the fractal histogram is "stepping" up or down in nice even chunks, or not. Easy, no?

AUDCAD showing some nice steps in midweek, ranging elsewhere

AUDCHF Mainly ranging

Lovely mid-week stepping action from AUDJPY

AUDUSD again stepping in mid-week, is there a pattern here?

Remember we are looking for a number of clear steps, absent in CADCHF

CADJPY showing nice mid-week profit opportunities

CHFJPY stepping nicely for almost the first half of the week

EURCHF ranging, with very "blocky" fractals on the histogram

EURGBP showing 2 periods of stepping following a range at the start of the week

GBPCHF largely ranging, a staple gridding pair

2 very nice selling opportunities seen here in USDCAD

Choppy USDCHF with some late week stepping

USDJPY showing some early to mid-week stepping

In summary, I can see this becoming a complimentary strategy to Watcher, which tends not to accrue during such price action. Switching watcher off early is an option, but the idea in gridding is to accrue profit to overcome the drawdown suffered when a significant trend emerges.

110326 - The Week In Pictures

Main observations this week have been the continuing uptrend of AUD, plus a little bit of volatility and uptrend in JPY at the end of the week. This is the most JPY has moved since the Sendai earthquake (has it already been a week?). As far as Watcher goes, now is the time to start monitoring JPY pairs more closely so we don't get any runaway trending. Circuit breakers are in place to limit losses if I happen to be asleep at the time! As for AUD, Watcher is not configured to sell AUD because of the negative swap implications, so looks like all 4 pairs that are set up will be dormant for a while. Once a limit is reached, however, I may consider switching sells back on (and I maybe will get burnt!).

Lots of TP lines evident this week. Its time for yours truly to take a break for a week. Whenever I move location, I turn off cloaking as a precaution. Once back in location, on it goes again.

AUDCAD

AUDCHF

AUDJPY

AUDUSD

The AUD family trending nicely, swing and SRIFT indicator showing lots of intra-day opportunities.

CADCHF

CADCHF reverting to nDay mid-point.

CADJPY

 CADJPY showing possible topping out, both Swing and SRIFT confirm trend move down.

CHFJPY

CHFJPY reverting to nDay mid-point.

EURCHF

EURCHF showing strong uptrend. Need to watch this one more closely.

EURGBP

EURGBP moving to new level range.

GBPCHF

GBPCHF showing some excellent ranging.

USDCAD

USDCAD showing some late bullish activity, but CAD remains strong.

USDCHF

USDCHF showing increasing trend with 5 day and 3 day regression channels. Excellent intra-day from swing and SRIFT.

USDJPY

110319 - The Week In Pictures

No prizes for guessing the theme of this weeks round-up. Harmonic enthusiasts may even invent new names for the .... (is it a rat/crocodile/peacock/dragon?) pattern which was the result of the frantic buying of yen last week. Luckily, the Watcher circuit breaker prevented a potential disaster, and also allowed a massive US$3K recovery the following few hours. The only other point of interest to me was those pairs that I trade that were NOT correlated (or were inversely correlated) with USDJPY:

Seems the event passed EURGBP right on by ...

USDCAD was inversely correlated.

110312 - The Week In Pictures (Sendai Tsunami effects)

Continuing strength of CAD and CHF, plus the dramatic events in Japan, were responsible for some interesting happenings this week. It is sometimes easy to take a position, however right or wrong, on the major currency pairs, but the crosses remain a little more inscrutable. Yen for instance, started to fall as soon as the news of the 7 metre high tsunami was broadcast. The market then surprised with a huge rally, which continued for another 8 hours. The initial position is usually negative on bad news, with astute traders knowing that any dip or rally, once overdone, usually retraces. So the question is how do events like this effect, say, AUDJPY, CADJPY or CHFJPY? The fortunes of Australia, being a major trading partner with both Japan and China, are inextricably linked to both number 2 and 3 economies, but what about another commodity currency like CAD, how will that react? Read on ....

AUDCAD showing an initial dip, followed by a strong rally starting at 0700 on the chart (the 8.9 magnitude quake that hit Japan started at 02:46 local time).

AUDCHF exhibiting similar effect, great signals from Swing indicator.



AUDJPY zoomed in to show the multiple take profits executed by Watcher.



AUDUSD chart showing high correlation with AUDCAD.

Tsunami effect on CADCHF shows less of a retracement after an initial fall, indicating the bigger detrimental effect on CAD.

This is backed up by the greater downward swing effect seen here in CADJPY. A 38.2% retracement upwards is then exhibited.

CHFJPY showing an almost, but slightly lower retracement.

USDCAD remains in the doldrums (Google it!) after reaching a new nDay low on Wednesday of 0.9677.

USDCHF similarly bound to the lower end of the allowed grid, after rising significantly off recent lows. For both these latter pairs, the decision has to be made daily as to whether to cut older out of the money trades in order to allow the take profits from new trades to happen. Generally, if there are less than the maximum number of trades, and at least one trade looks like it has a chance of making a profit, then I leave it until the next day. USDCHF has recovered well enough, now I am only watching USDCAD closely each day.

110306 - This Week In Pictures

This week continues the risk-off mood of the market, and provides further opportunity to study the grid strategy, with some aside notes on the excellent manual opportunities presented this week. Again, I only discuss those currencies of interest to my strategy, but would love to hear from anyone who has spotted something I have missed.

With both USDCAD and USDCHF being the main pairs of interest this week, as they both are peaking right now, some of the other crosses are showing that they can continue to provide PL whilst the majors are making up their minds which way they will go next. Here we can see at least 7 TPs from AUDCAD as it moves virtually sideways for the whole week.

AUDCHF also is moving in a slightly bearish channel. Note how the 3 day regression channel backs up the 5 day, whereas the 24 hour regression channel shows the price completing the latest downward leg. Ideal grid trading opportunities.

Whilst CADCHF doesn't show many gridding TPs, note how the swing indicator highlights some pretty profitable manual trade entry points, as the slightly bullish 5 day channel exhibits some sinusoidal movement. These entry points are all confirmed with the Smoothed RSI Inverse Fisher Transform Indicator, the 2 indicators working extremely well here.

I started a couple of new cross-pairs this week, CADJPY being one of them. Actually I already had this pair running on the small account, and it was proving a good PL provider, so I decided to put it on the big account where I can trade with bigger volume. Sometimes I feel that looking at the small account is a bit like watching paint dry, forgetting that the percentage increase on it is far more than I could make on any other investment I know of.

CHFJPY here showing another example of how the smaller crosses hedge the effect on margin drawdown of the bigger pairs.

EURCHF seen here in a bullish 5day channel, adding to the hedging effect, and also showing some pretty accurate manual trading opportunities from the Swing Indicator confirmed by the Smoothed Fisher RSI Inverse Fisher Transform Indicator.

Again, EURGBP shows massive manual trading opportunities indicated, as EUR strengthens across the board.

GBPCHF again exhibiting good opportunities for manual trades.

USDCAD again breaking nDay lows. Both indicators show good manual trading opportunities. All 3 regression channels agreeing on the trend, with the 24 hour channel showing the decrease in volatility exhibited here.

USDCHF completing another downward leg of the almost horizontal channel. Will it bounce or won't it?

USDJPY showing exactly why I like it as a gridding pair (except when BOJ starts throwing its weight around!). Also some great manual trading opportunities here.