19
Apr

EURUSD 30min


Looks like I was too early on the calling an end to the euro’s correction so I had to relabel my wave count.  The rally is in choppy overlapping waves so I have little doubt this is a correction.  There is a confluence of resistance from the 61% Fibonacci level and the hasty channel I drew at 1.0837 that should cap the rally.  We might get some volatility tomorrow morning with CPI data coming out, so a nice shot higher and reversal lower would be a good sign a top is in.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.


Principle Analysis: Elliott Wave Principle and Automated Strategies

18
Apr

Yes Indeed the Trading Range Continues: What You Need to Know

Given that the S&P 500 remains in a broader trading range pattern, today’s sharp downside action is precisely what was expecting from a charting standpoint under the “Range Continuation” scenario.

Let’s update our levels – which are exactly the same – and put the price action in context as we plan the next target.

Start with the update earlier in the week which clearly defined the trading range and plans.

The pure price chart above highlights the range itself – 2,045/2,050 to 2,110 – and the midpoint at 2,080.

As simple as it sounds, playing “ping pong” reversal trades off these levels has been an effective short-term strategy.

Taking it one step further, we can see the positive and negative momentum divergences that assisted in forecasting a likely reversal away from these support or resistance boundary levels.

A lengthy negative divergence “undercut” the rally and mid-day Double Top into 2,110 and today showcases the aftermath as price once again falls sharply and decisively from this level.

The initial target – the Midpoint – has already been achieved so be sure to monitor this level for a bullish bounce.

Otherwise, a trigger-break down under 2,080 suggests sellers will dominate the market and thus price could fall once again toward the 2,050 level.

Here’s the bigger picture once again as seen on the Daily Chart:

Ultimately, we’re planning for another downside resolution and target play down toward 2,050 (which would be likely IF price breaks firmly now under 2,080).

The Alternate Plan would be the Breakout Scenario which could play out similarly to February.

Note two down days against the (then) upper resistance near 2,060 and then a bullish surge that created a breakout and triggered a Short-Squeeze.

Barring an ‘alternate’ breakout scenario, we’ll expect the power of the trading range to hold price within its gravitational pull (balance/equilibrium).

Whatever strategies you use, be sure to incorporate the simple Range Rectangle Levels into your plans.

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

15
Apr

Another Market Reversal Intraday Update Stock Scan April 14

If you followed Market Internals yesterday, you had a clear roadmap to trade today’s session as a Repeat Pattern – Divergences – suggested yet another morning market reversal.

Start with a read of yesterday’s mid-day report (more was detailed to Idealized Trades members) and compare that with today’s session that unfolded so far.

Let’s dive inside action and note key levels and the trending stocks of the day:

Just like the morning Bull Trap yesterday – on a clear and lengthy divergence – today’s session triggered a Bear Trap on yet another big divergence into a key support level just above 2,080.

The result was another, repetitive reversal which set the stage for the afternoon session.

We’re seeing another failure into 2,100 which is our pivot level and now focusing on the movement under 2,095.

Let’s see what our Breadth Chart reveals about current market strength (or weakness):

Unlike yesterday, Breadth actually paints a bearish message with Energy and Utilities the strongest sectors while all others – except defensive Consumer Staples – lag the 50% line.

We have potential bullish trend continuation plays in the following stocks from our scan:

Ciena (CIEN), JB Hunt (JBHT), Coty (COTY), and Fastenal (FAST)

Potential downtrending candidates exist in stocks showing relative weakness today:

Norfolk Southern (NSC), Wynn Resorts (WYNN), Packaging Corp (PKG), and Monster Beverage (MNST)

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

15
Apr

EURUSD 15min Tuesday



The euro is playing out as expected, more or less.  I count a nice 3 wave move, ending with an impulsive wave “c” and stalling at the 50% Fibonacci retracement level.  So the correction could easily be completed right now.  If so, the euro should be headed down immediately and not come near the 1.0812 level, which is the wave i) extreme.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.


Principle Analysis: Elliott Wave Principle and Automated Strategies

13
Apr

Intraday Reversal Market Update and Stock Scan April 13

Buyers pushed the market above the breakout but failed as they encountered thin air at the highs.

A big divergence preceded this reversal.

Let’s dive inside action and note key levels and the trending stocks of the day:

Buyers shot the market higher Friday, and attempted to bully the market to new highs this morning but so far they failed.

The breakthrough above 2,100 was a BULL TRAP, preceded by a lengthy negative Market Internal Divergence, and we now watch and trade the reaction as price breaks back under the 2,100 level.

We’ll use 2,100 as our critical intraday pivot where bullish plays will be favored above it and continuation bearish opportunities beneath it.

Let’s see what our Breadth Chart reveals about current market strength (or weakness):

At the moment, Energy, Materials, and Health Care are strongest with defensive Utilities weakest today.

That doesn’t give us much information as to broader money flow, especially when almost all sectors are near the 50% Breadth mark (which is the same as the sideways action in the S&P 500 as seen above).

You can’t create opportunities that aren’t there – markets and traders remain in a holding pattern now.

We have potential bullish trend continuation plays in the following stocks from our scan:

Barnes & Noble (BKS), Netflix (NFLX), Clovis (CLVS), Athena Health (ATHN)

Potential downtrending candidates exist in stocks showing relative weakness today:

BHP Billoton, Cinemark (CNK), 58.com (WUBA), and Tesoro (TSO)

I’m excited to announce that I’ll be joining six other great speakers at a Two-Day intensive boot camp in May!

Check out the details and start planning the trip today to join us in May.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

11
Apr

EURUSD 15min Chart


Let’s get to some good old fashioned wave counting.  The EURUSD is in a clear downtrend, however the 15min chart suggests modestly higher levels when the session starts Sunday afternoon (US).  This should bring about a good opportunity to sell.  Look for Fibonacci and wave iv resistance at 1.0690 for wave iv) to end.  It could carry higher, but the rally should be capped at 1.0800, however I doubt it will get that high at all.

Looking at the Elliott Wave channel we can see that it has held very well so far, so let’s also look for this channel to contain the EURUSD rally.  There is a confluence of Fibonacci and channel resistance at 1.0640 should this correction higher meander for several hours.  If it’s a sharp rise right at Sunday’s open, then I’ll be looking for 1.0670 to contain the rally.

Either way, don’t over think this one, the EURUSD remains in a strong downtrend.

PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.


Principle Analysis: Elliott Wave Principle and Automated Strategies

11
Apr

EURNZD 4hr



I found this strategy using StrategyQuant Pro v3.8, and I trade it in the Principle Analysis Portfolio.  I like using larger timeframes for cross pairs like this one since I believe they are more volatile and erratic pairs, and therefore harder to identify a long term pattern on short timeframes to trade from.  The larger timeframes you use, the more smoothed out that volatility and erratic behavior becomes.  I also feel it’s hard to find trending strategies in these pairs, so for this pair I looked for, and found, a range strategy that is fairly complex.

So here I found a nice 4hr timeframe strategy that captured 23,172 pips over the past 9 years.  Like all my strategies, I use .01 lots on MT4 and a $ 5,000 account balance to base this data on.  You can see that drawdown is minimal, only $ 126, or 2.5%.

I also like to make sure that a lot of trades have been executed because the more trades executed with proven success means the more likely it is that this strategy will work moving forward.  In the larger timeframes like the 4hr and daily, this can be difficult.  But here I have just over 500 trades over 9 years which works out to be about 55 trades a year, or about 1 trade a week.  For a 4hr strategy, this is perfect.  Also note the outstanding Return/Drawdown ratio of 18.38.  This means that this strategy makes $ 18.38 for $ 1 of drawdown.  This is excellent in my view.


This chart shows exactly what I’d expect when reading that initial data; a solid move from the bottom left to the top right of the chart with minimal drawdown.  The stagnation period was short and occurred at the start of the data period tested (shaded in red).  The blue line represents the optimized strategy that has a slightly better performance than the original strategy (gray line).


This is the Trade Analysis and is something I like to see, which is a lot of green and blue.  You can see that every year this strategy made money; granted, 2006 was basically flat, the following years show solid and steady gains as reflected in the previous line chart. This strategy trades well in almost all hours of the day except in what appears to be the early hours of the European session.  However, since this is a 4hr strategy it is difficult for me to filter those two hours out without eliminating the profitable hours surrounding them as well.  So I’ll leave them in place.  Friday is the most traded and most profitable which tells me this strategy likes the Friday morning volatility of the US session, probably due to big data releases and positioning prior to the weekend from the EURUSD, which will effect this pair.  The fact it is a range strategy also makes sense why this day is a good day for this strategy to trade.

The main thing I look for here is to have profitable years every year.  I will tolerate one, or maybe 2 losing years, especially if the losing years were early in the sample period.  But I do not want to see that most of the overall profits were made in just a year or two as this probably just means that the strategy worked well in only a specific market condition that occurred during that period, but that it will not endure through all types of market conditions moving forward, and therefore it is not robust.  So far, this strategy looks good as it can profit over a long period of time consistently.  So let’s move this strategy forward.

Now on to the tough tests, the robustness tests.  Here are the results form the Monte Carlo analysis I performed on the strategy.  These are not fantastic results, but still overall pretty good as all of the runs went from the bottom left to the top right of the chart, and there is a 95% probability that the strategy will have resulted in a gain of $ 1,984 if the data was altered to simulate the strategy moving forward.

However, the Net Profit still dropped over $ 300 from the original strategy, and the Drawdown % more than doubled.  What’s most concerning here though is that the fantastic Return/Drawdown I talked about earlier declined from 18.38 to 5.45.  That is a huge drop and suggests more volatility and drawdown with less returns will occur moving forward.  Not what I wanted to see, but taken in the proper context, this is still a viable strategy.  But let’s see further test the robustness of this strategy with the Walk Forward Optimization results.

Walk Forward Matrix Optimization is a very rigorous optimization and robustness test for strategies.  Because of this, it is very difficult for many strategies to pass this test.  Walk Forward Matrix Optimization is a set of Walk Forward optimizations performed with a different set of optimization periods, parameters, and out-of-sample percentages (robustness tests).  The results will tell if your strategy will benefit from periodic optimizations, and if the strategy is robust enough to sustain a solid profit in the future.

You can see from the results that this strategy performed well during Walk Forward Matrix Optimization, and actually had a small increase in Net Profit from $ 2,317 to $ 2,510.  The report shows that 25 out of 30 parameter combinations passed, the best grouping of combinations passed 9 out of 9 times, and all runs produced solid in-sample and out of sample net profit results.  Lastly, the test tells me that this strategy is best reoptimized every 239 days with a history of 717 days on 11 runs with 25% out of sample.  Basically what this means is that every 8 months I will reoptimize the strategy on about 2 years’ worth of history data.

This strategy shows a steady profit with minimal drawdown over a 9 year period, the currency pair and timeframe along with the type of strategy make sense, and robustness tests show this strategy can do well moving forward.

Follow the performance of this strategy and others at Principle Analysis Portfolio.
Find and develop your own strategy: StrategyQuant Pro v3.8

PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.


Principle Analysis: A Forex Technical Analysis Blog

10
Apr

Triple Timeframing the Breakout in China FXI

Blink and you missed this week’s surge breakout higher in previously stable FXI, a popular ETF that tracksthe China 25 performance.

Let’s drill-down on the breakout from the Monthly Chart (open air) down to the Daily Levels to watch now:

The Monthly Chart above may give the clearest perspective of where the ETF has traded and where it may be headed in the future.

Namely, price (shares) found resistance into the $ 40.00/$ 42.50 key level from 2009 to present.

In 2015, price initially broke above this level and buyers continued fueling the price higher.

According to the chart above (StockCharts.com data), the prior high ahead of the 2008 Financial Crisis was above $ 60.00 per share, a possible reaction target should the buying pressure accelerate even faster (note 2007 for a historical precedent of skyrocketing prices).

We’ll monitor lower frames for risk and position management in an overheated swing:

Similarly, shares initially traded through the $ 40.00 barrier in mid-2014 only to retest the midpoint.

The second breakout- December 2014 – led to a continuation move albeit on lower volume and momentum into 2015.

However, buyers are currently propelling the ETF value higher with the gap and breakthrough of $ 44.00.

The Daily Chart shows the short-term resistance target at $ 44.00 – following the $ 40.00 breakout – and the one-sided (unidirectional) surge that’s both a short-squeeze and a power-buy outcome.

For most traders, this move is too mature/late to join in now – the risk of a pullback is high – but aggressive traders can press their luck above $ 50.00 per share, using it as a stop-loss pivot.

China’s ETF may yet strengthen but if you miss an initial breakout, it’s often a better decision to wait for the first pullback to put on a bullish position.

Whether you’re trading this name or just watching it out of curiosity, focus on this surge and the immediate action over the next couple of weeks.

I’m excited to announce that I’ll be joining six other great speakers at a Two-Day intensive boot camp in May!

Check out the details and start planning the trip today to join us in May.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

7
Apr

Learning the Whale Trade from Doc Severson

Apr 7, 2015: 10:13 AM CST

What’s a “Whale Trade” you ask?  And what is the set-up and outcome?

Doc Severson of Trading Concepts just released a video this morning that details the trade and how you can add it to your ever-growing trading toolbox.

You see a stock explode out of a consolidation pattern (such as a triangle or rectangle), as if fired from slingshot – only you’re too late to get in on the action.  It happens.

So by the time you notice the move, everyone else has made their money and you’re left to figure out how to make sure you don’t make the same mistake again.

Doc tackles this concept head-on with this educational video (it just requires an email address to view).

In this free tutorial, Doc Severson shares a new strategy that allows you to take advantage of early opportunities and profit with relative ease – before most other traders even know what’s going on.

He calls it the Whale Trade Strategy – an interesting name but memorable and simple nonetheless.

I’m an affiliate of Trading Concepts and have worked with Doc in the past and support his educational outreach to the trading community.

While Doc tailors the video to options – especially to those with small accounts – the same “explosive move setting up” logic can be applied to swing traders.

Check it out! My thanks to Doc for sharing this video with the trading community.

Corey


Afraid to Trade.com Blog

5
Apr

Join Me Live in Las Vegas! Trader Bootcamp Invitation

Apr 3, 2015: 1:08 PM CST

Start planning your travel now!

I’m excited to present live in Las Vegas May 11 and 12th and I wanted to invite you personally to join us.

I’ll be revealing how I use Sector Rotation and ETF Strength/Weakness to pinpoint the best stocks in the best sectors – and of course how to avoid losses from sidestepping the worst stocks in the worst sectors and how you can put this knowledge to work right now.

Sector Rotation – how “Big Money” allocates capital in good times and bad – also has the distinct advantage of highlighting potential market turns ahead of other methods (always Follow the Money – Sector Rotation tactics show you how to do this).

But I’m not the only one presenting – I’m joining an all-star roster of top traders who will be teaching you…

• Vince’s $ 100,00 easy to use and easy to follow system

• Peter’s Credit Spread system that you can use to make over $ 10,000 in income

• Josh’s FOREX strategies to help you leverage and profit on $ 40,000 while using only $ 100 of your own money

• Steve`s powerful S&P E-Mini strategy that`s been consistently profitable over the last few years

• Corey’s money flow and sector rotation system that you can use on ETFs and individual stock

• John’s strategies to reduce your overall tax expense

• 2 Month subscription to Meta Stock Pro, which is $ 500 value in itself

• Bring a friend for half-price!

This is a two-day intensive boot-camp where you’ll be encouraged to interact with the speakers and your fellow traders.

Learn more today by visiting Trading Wins and watching a quick introduction video from Vince.

Go beyond the webinars and learn effective trading strategies without the hype – then put what you’ve learned to work as you return to your trading desk or office.

I can’t wait to see you there!

Corey


Afraid to Trade.com Blog

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