#1911 (permalink)  
Old 08-01-2011, 12:00 AM
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Media outlets are reporting that a tentative U.S debt deal has been reach. The Republicans are not announcing the same yet. If the compromise is confirmed, it will go for ratification vote, likely on Monday.

Apparently there is concern that the proposed amount of cuts to the budget may not be enough to satisfy the credit agencies.

We are seeing a slow initial reaction pro-USD, such as in EUR/USD just ahead of the Asian open.

Last edited by fxbaja; 08-01-2011 at 12:09 AM. Reason: cuts
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EUR/USD 4-Hour HAS Template
  #1912 (permalink)  
Old 08-01-2011, 06:29 AM
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Default EUR/USD 4-Hour HAS Template

Here is the template for the 4-hour EUR/USD with period separators and HAS candles, as shown on last pic. You can flip regular candles back on to plot fibs.

We plotted wide fibs on this, but you can add intra-day.

Breakout of Sunday candle High is now +35 pips and meeting resistance from previous high of 1.44120 (July 29th). Wick probed to Moon 0-degree.

Sunday candle High = 1.4376 and Low = 1.4345
Attached Files
File Type: tpl eur-usd 4-hour weekly pic has.tpl (16.9 KB, 16 views)

Last edited by fxbaja; 08-01-2011 at 06:33 AM.
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EUR/USD Aug 1st
  #1913 (permalink)  
Old 08-01-2011, 04:41 PM
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Default EUR/USD Aug 1st

Let's follow up on the last posted chart on EUR/USD, where we highlighted the Sunday High/Low for breakout.

Attached is a zoom-in after we reduced the interval to 1-hour, for better viewing. Plot (blue):

High = July 27th 00:00 1.45350
Low = July 28th 02:00 1.43264

We had spoken about the Low level recently. The plot was confirmed by its 127.2 and double touch at the 138.2 extension to the downside, prior to rising at the end of the week.

The illuminated area at the double vertical lines is the transition into the new week. and Sunday price candles. The 2nd line of the 2 lines in the 00:00 GMT period that denotes start of the Asian session.

The breakout technique we mentioned starts anytime after 00:00 Monday, when price breaks above or below the Sunday price range.

The market's initial euphoria with the U.S. Debt Ceiling tentative agreement lasted until the white 138.2 fib, which is the same area as the blue 61.8 fib, and the 10:00 hour.

The market later realized that a rating downgrade might still occur, at some point.

Edit-Add: The European stock market earnings period reportedly starting out very negative, which triggered a plunge at the start of the European session. These events can also help drag down EUR/USD. Attached is CFD GER30, which tries to mimic the DAX.

1.44528 was the high, and made that a +76 gross pip gain above the Sunday High of 1.43767.

The pair reversed, breaking the Sunday Low at the U.S. open 13:30. The move down was further powered by negative U.S. data, released at 14:00.

Price settled at the blue 161.8 of 1.41975, first touching the level during the 14:45 candle period (15-min chart). Bounce up off this support level was to 1.42243.

The vote to ratify the debt agreement is reported to be after the U.S. session closes.
Attached Images
File Type: jpg EUR-USD Aug 1st.JPG (143.8 KB, 17 views)
File Type: jpg GER30 Aug 1st.JPG (97.6 KB, 12 views)

Last edited by fxbaja; 08-01-2011 at 05:33 PM.
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P.I.I.G.S. Debt Diagram
  #1914 (permalink)  
Old 08-01-2011, 05:29 PM
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Default P.I.I.G.S. Debt Diagram

We've been meaning to post this pic for several months, for dinner conversation. At some point, the focus will return to the sovereign debt issues in Europe.

Portugal
Ireland
Italy
Greece
Spain

This pic shows how the countries are inter-connected with its debt, not only to themselves, but also to the dominant countries Germany and France.

The concern is a possible domino effect if one country defaults, or undergoes a selective default that triggers a run on their banks, etc.
Attached Images
File Type: jpg PIIGS DEBT DIAGRAM.jpg (121.7 KB, 11 views)
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XAU_USD Aug 1st
  #1915 (permalink)  
Old 08-01-2011, 05:44 PM
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Default XAU_USD Aug 1st

...and what is a day with fear or uncertainty, without taking a look at gold and/or related instruments.

Attached is gold CFD XAU_USD. The 1-hour chart had a previously posted wide fib plot:

Low = 1477.99 High = 1573.50

The chart zooms in on the revist to the 161.8 extension level of 1632.53, which was first touched on Friday July 29th.

We have illustrated this kind of bounce trade for one year throughout this thread.

Although there are other basic things you need to do, such as money management, this is a relatively simple technique.

Plot retracement fibs (not shown) using Low = July 31st (Sunday) 22:00 1607.32. The 50% level 1619.55 just hit for +12.00 gross from top. Excellent Reward/Risk ratio.
Attached Images
File Type: jpg XAU_USD Aug 1st.JPG (106.0 KB, 8 views)
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EUR/CHF SQ9(Price) to Aug 1st
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Old 08-02-2011, 05:36 AM
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Default EUR/CHF SQ9(Price) to Aug 1st

Subsequent to our last plot using the SQ9(Price), the attached re-plots the start price based on the sharp pullback on July 22nd.

Start price = 1.18910
Direction = down

ABC plot (a 4-hour chart can see swings better):

A = July 22nd 1.18910
B = July 25th 1.15170
C = July 26th 1.16617

Point B was near the 315-degree line.
We can see the fight between shorts and longs July 27th-28th, at this level. Break occurred on July 28th 09:00, driven by negative EU Consumer Confidence data.

If trading the Break of Point B, one needs to decide on the location of the stop-loss. The SQ9 levels can be S/L options. In this example, the 293-degree held.

The spike down bounced off of the FE 61.8 and back up to the 315-degree.

The next spurt down went to the FE 100 and 495-degree. Pullback/bounce hit resistance at the FE 61.8 and 383-degree.

And of course, the next level down was reached due to aforementioned delayed reaction on U.S. debt deal, and European stocks.

The bottom was the 161.8 as well as the 720-degree (2 cycles of 360). The bounce up hit the FE 127.2, and headed back down.

When plotting from the high from July 4th 1.23444, and pivot low on July 18th 1.14101, the 138.2 extension is the same as the ABC's FE 161.8.

A smaller ABC plot (not shown) just before the bottom, also resulted in a FE 161.8 there. Look at the 4-hour to see the obvious swings.

In summation, whether the trader was trading in the direction of the expansion or not, there was strong evidence that a nice bounce would occur at this bottom/pivot level.
Attached Images
File Type: jpg EUR-CHF SQ9(Price) to Aug 1st.JPG (205.2 KB, 10 views)
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  #1917 (permalink)  
Old 08-02-2011, 08:01 AM
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BAJA bullish divergence on 1-hour EUR/USD and EUR/CHF after close of 07:00 candle.

Also imperfect Bullish Gartley on EUR/USD 1-hour.

Last edited by fxbaja; 08-02-2011 at 08:10 AM. Reason: gartley
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EURo Pairs
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Old 08-02-2011, 04:23 PM
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Default EURo Pairs

The pullback off bullish divergence formation was brief ahead of Euro Zone economic data at 09:00.

One piece of data came out worse than projected and helped pairs have a down candle period, ahead of anticipated passage of the U.S. debt bill. House of Rep. passed yesterday, Senate vote scheduled to start at 16:00 GMT.

The 1st chart is EUR/CHF 1-hour with MurreyMath1.0. White fibs are from a wide ABC on the 4-hour.

The brief pullback occurred at the red 2/8th MML and has just made its way down to the white FE 100 of 1.09503. A tight ABC has this level as its FE 61.8 (not shown). Net about 18-20 pips.

The 2nd chart is EUR/USD with SQ9(Price) using the May 4th High of 1.49388 as the Start price. Labels have Low 1 and Low 2 for fib plot. Fibo Fan off 4-hour.

Moving the Low of wide plot (High = 1.45350) produced 127.2 and 138.2 extension levels (blue) that were respected, along with the yellow 585-degree line.

Tight fib plot (not shown): Low = 1.41869 High = 1.42815.

This pair had a larger pullback, provided trader survived the small probe below the 07:00 candle's pivot low. That was to the tight plot's 138.2.

Gains to the upside were to 1.42820, and near the yellow 495-degree. This level was previous resistance from early Asian, and High of tight plot.

The gain based solely on the 08:00 period was about 30 pips. Traders staying through 9:00 data (or entered shortly thereafter) and 12:30 U.S. data saw gross movement, from 07:00 pivot, of 126 gross pips.

The 30-min chart has BAJA bullish divergence formation with 2nd dip at the 12:00 candle.
Attached Images
File Type: jpg EUR-CHF MML to Aug 2nd.JPG (113.2 KB, 10 views)
File Type: jpg EUR-USD SQ9(Price) to Aug 2nd.JPG (162.4 KB, 10 views)

Last edited by fxbaja; 08-02-2011 at 04:49 PM. Reason: chart 2
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  #1919 (permalink)  
Old 08-02-2011, 04:46 PM
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Quite a bit of conversation and debate with regards to the floundering U.S. economy. Speculation of QE3 and criticism of the ineffectiveness of QE2.

Here's one article from bloomberg:

Fed May Weigh More Stimulus on Slow Recovery - Bloomberg

Guest on Tom Keane's show correctly emphasizes problem with forclosure inventory and shear number of homes behind on their mortgages AND valued at below their purchase prices. 15 million homes are "underwater".


We've read one opinion that most economist don't really understand cycles.

The U.S. economy is driven by consumer spending. The double-bubble created by policy makers, and specifically the FED, interrupted the normal cycle-down. Together with government spending, it created a hole so large, it will take years to recover.

Magic consumer spending based on inflated home values and equity fed the last bubble. Easy money perpetuated by fraud on Wall Street with MBS and CDO. Rating agencies stamped these risky derivatives as AAA investment grade.

Someone had to pull former FED Chairman Greenspan aside to point out that 25% of all U.S. mortgages were sub-prime. Some people made a fortune shorting this ponzi scheme.
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  #1920 (permalink)  
Old 08-03-2011, 06:48 AM
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Gold bolted up again. At the 127.2 1666.99
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