Analys från DailyFX
Look Before You Jump
Talking Points
-Plan the trade and trade the plan
-Do not chase price
-Wanting to get into a trade is better than wanting to get out of one
19th century cotton operator Dickson Watts said (among other things) “look before you jump, not when you jump”. In other words, exercise caution in analysis but do not hesitate in execution. Most, if not all, of my mistakes stem from either not being methodical enough in my analysis or hesitating in execution.
I employ a technical approach. Price patterns and/or ‘technical events’ at important price levels (this is a subject for a different article) ‘alert’ me to an opportunity. Whether or not the opportunity becomes a trade is based on several factors, including risk parameters and sentiment (is it a ‘popular’ idea or out of favor…better if the latter). I don’t interpret news events but I am not blind. News releases move markets. I have no issue taking a trade in front of news if the trade is ‘there’, sometimes it moves in your favor and sometimes it doesn’t. There are times when one can take advantage by fading the initial price spike (this needs to be part of a plan that is worked out beforehand). It’s usually not a good idea to chase a news spike though. I did just that on August 7th in GBPUSD.
My analysis of the situation was not an issue. GBPUSD had broken down from a 4 year triangle pattern in February. A lower top formed in June and the advance off of the July low topped at June congestion (rectangle). The market was back for more in early August and I had identified a 2 day topping pattern (circle) around trendline resistance. I failed to act and waited for the BoE quarterly inflation report, after which Carney was expected to speak. The initial reaction was lower and I chased, worrying that I was going to miss a great trade. The trade stopped out in less than hour at 1.5395.
The postmortem reveals that I did indeed look before I jumped (analysis was fluid), but I also looked when I jumped (hesitated in execution). I would have been stopped out either way but the loss would have been half of what it was had I executed when the 2 day topping pattern completed at 1.5320. Instead, I panicked on the initial move down and got short into 1.5250. The experience reinforces another trading truth: wishing you were in a trade is a better position than wishing you were out of a trade.
Written by Jamie Saettele, Senior Technical Strategist for Dailyfx.com
Contact and follow Jamie via Twitter: https://www.twitter.com/JamieSaettele
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
-
Analys från DailyFX8 år ago
EUR/USD Flirts with Monthly Close Under 30 Year Trendline
-
Marknadsnyheter1 år agoUpptäck de bästa verktygen för att analysera Bitcoin!
-
Marknadsnyheter4 år ago
BrainCool AB (publ): erhåller bidrag (grant) om 0,9 MSEK från Vinnova för bolagets projekt inom behandling av covid-19 patienter med hög feber
-
Analys från DailyFX11 år ago
Japanese Yen Breakout or Fakeout? ZAR/JPY May Provide the Answer
-
Analys från DailyFX11 år ago
Price & Time: Key Levels to Watch in the Aftermath of NFP
-
Analys från DailyFX7 år ago
Gold Prices Falter at Resistance: Is the Bullish Run Finished?
-
Nyheter5 år agoTeknisk analys med Martin Hallström och Nils Brobacke
-
Marknadsnyheter6 år ago
Tudorza reduces exacerbations and demonstrates cardiovascular safety in COPD patients