Whipsaw
How to filter noise out of Technicals and Fundamentals part 2
Part 2 Fundamental noise filtering
I place far more weight on fundamental analysis then technical. At first I thought it was useless as half the news or analysts would say one thing and the other half would say the opposite. the trick is to only look at sources that can reliably and logically be shown to have a impact on the market.
Who has an impact on the market:
1: Speculators (yep just speculators not the news or the actual state of an economy)
while that statement is not exactly true it seems to be a reliable self fulfilling prophecy
lets take a look at large speculators positions from 2002 until 2018 compared to a bar chart.
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this picture shows the weekly CFTC commitment of traders reports from 2002 to 2018 correlated into a line chart under a corresponding bar chart.
The arrow in the picture points to a turning point where the speculators (green line) went from net short to net long. what happened?
The market shot up like a rocket. outside of consolidation periods the market just about always drops or gains right after this happens just looking at the EUR it ALWAYS marks the end of a trend without fail. Its almost eerie how accurate the CFTC comittment of traders reports are at predicting trend changes.
where do we get the COT report and how do we use it?
Step 1:
go to www.cftc.gov
step 2:
click on the Chicago Mercantile Exchange and scroll past the butter, cows and logs to the EURO FX
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step 3:
look at the important parts of the EURO FX data.
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1: the date of reported positions
2:Non-Commercials (people investing to make money. These are the people who have so much money in positions they have to report it to the CFTC weekly. people and company's with that kind of money have far more resources to base their decisions off of then me and if most of them think in one direction then odds are most of them are right. As we can see on the chart in the picture most of them went net short not during but before the euro crashed in 2014.)
3: On the left long positions on the right short positions. (far more long then short this is a definite uptrend.)
4: changes from last week.
very very important for positioning in immediate furtue. For example on the 9th we got this report
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what happened directly after was an uptrend. look for changes in net long and short positions. An increase in net long from last week or a decrease in net short from last week will likely predict an uptrend in a day or 2. sometimes the trend already happened by the time you get the report.
The COT report is the only fundamental analysis I use.
Why:
1. conflict of interest.
most of the large news company's are owned by banks ergo any information I gather based on news is biased.
2. Education
I grew up on fishing boats in Alaska and currently drive a forklift all day. forming a accurate opinion based on economic data on my own is beyond my level of education. Lets recognize our weak points and not pretend we can be on par with someone who has spent years in college for economics.
3. Retail traders are 90% wrong and I am a retail trader
lets take a quick look at how Retail traders net positions look.
www.oanda.com
as we can see with the EUR/USD 63% of retail traders are trying to short a market that has been going up for months non-stop and they have been for months its usually worse then 63% too lul.
Whipsaw trend and momentum oscillator “Rate of Change”Today I’ve learned how to use the momentum oscillator “Rate of Change” or ROC in whipsaw stock movements. You need to pay attention when it becomes positive and crosses the zero line and then you need to watch if the price crossed its MA. The key point is to use the same time period as for the MA as for ROC. I am not a day-trader and my strategy is short-term (up to 1 month), so since there are approximately 250 trading days in a year/15 days in 6 months/63 days in a quarter/21 day in a month - I used 21 day as a setting. (Number of days are taken from Internet)
I think this tactic will work the best with penny stocks, as you can increase your trading volume in order to mitigate broker’s fees since the cycles are very short in their nature.
ITW: Sort opportunityAn intraday high potential, Back Tested Sort Analysis.
We ll try to enter into the correction of the uptrend movement tracking ABC correction levels of Elliot wave.
Price is likely to move within the parallel channel having the potential to breaking it down.
ADX slopes down pointing a bearish decline.
CCI diverges the price as shown in the chart.
Market is currently closed. No market activity presented so far. We ll try to find an entry price between 164.91 - 166.49 just after the opening bell.
Furthermore, a complimentary "If Done" analysis that maximizes exposure to risk, but at the same time exchanges acquired profit to zero losses in order to double initial profit.
DETAILS ON THE CHART
NOTE: Entry range area above the entry point, is calculated upon 80% of the recorded pullback back tested past performances
NOTE: "IF DONE" analysis, when presented, refers to 80% of the recorded back tested past succeeded performances.
DISCLAIMER: This is a technical analysis study, not an advice or recommendation to invest money on.
Gold:XAUUSD Full of whipsaw until DXY straightens outGOLD: XAUUSD Update It's quite complicated and full of whipsaw - and there's likely to be more in store until DXY straightens itself out...
Was waiting around a long time to get long at 1274 which looked like a good trade to begin with after an intraday low at
1273.25 as Wall Street joined the session...just hope you were smart enough and fast enough to exit, though (unlike me,
busy with other incoming, der).
Even worse, there was another buy trigger (which I hope you never traded because you got in at 1274 lows early in the NY
session) on a rough 50 pip break above 1283, so at 1283.51 ish by the book - well if you traded long here I'm very sorry - my
bad, in fact really bad...this is not a bad or unlucky trade, fooled by the chart - it's worse. It's just lazy, stupid
writing...because there's clear resistance at 1283.5 already there on the chart so it should have been 'only go long on a 50
pip or more break above here, which would be 1284 +.' And so if I'd been a little more diligent it would and should have
been technically perfect (high at 1283.98) - so this is my fault and not a fault or false reading from the chart. I feel a need
to own up to that. My bad. Charts rock. Most of the time. It was a really dumb, lazy call that should have been written
with more care. I feel deep guilt and responsibility if you got caught near the top because of that.
If, like me you're still stuck in this trade from 1274, well at least we're still a couple of bucks to the good, not bad.
Am raising stop to 1275.30 so this trade makes 1.7 points if it goes wrong or makes 7 points to 1281 upside target if right...
But it's clear - that pinbar on the hourly chart looks serious - big reistance lies from 1281 through to 1284 (and not to 1283.5 as
erroneously previously stated). So will close out long at just below 1281 if rally continues and not wait for better...just cannot
trust rallies with DXY whipsawing right now the way it's doing - but believe that DXY is getting close to finishing its consolidation
before the rally resumes, so it's difficult to trust any rally in gold for more than 5 minutes...therefore need to set limit
just under 1281 for this long trade. If price is then met, no way can we consider going long again until 1284 is broken on
updside by 50 pips+ (wait for next pull-back and with reasonably tight stop just below 1283 if trade triggers, for a maximum
1.7 point loss if wrong) and an upside target at 1290, a small 5.6 point win if right. A 3/1 risk/reward isn't great but just about
acceptable. But gold looks more likely to fall away again from 1281-4 range if tested - hence looking to close out long just
under 1281 and probably short from 1284 if touched with a stop just above 1285
EURUSD Trading HALTED in lieu of Non Farm Payrolls?Since price topped off at 1.09 the bears have been relentless in their pursuit of driving the price back down to previous lows. In the first week of April the EURUSD retraced over 40% with almost no resistance and just in the last 72 hours price has taken another 15% dive. Currently, price is consolidating between 1.07 and 1.065 or in Fibb terms .50 and .618.
As we approach tomorrow mornings (Friday @ 8:30am EST) news release of Non Farm Payrolls , it seems that the major players have either reduced position sizes and/or exited their positions completely. These actions/precautions appear to be creating the dreaded barb wire consolidation that we see being produced since March 31st.
What should you do?
This type of movement is not terrible for scalpers as price has created VERY significant support and resistance at both 1.065 and 1.07. Due to the nature of this pattern I would suggest sitting it out until after the news releases and inevitable breakout that will occur, but if you HAD to enter for the sake of having an open position I would place orders to sell in the 1.068 area and orders to BUY in the 1.065 area, with profit target being set at the opposing price side of the range.
You like breakouts - great, I do too and I'm anticipating a big one! We may see the classic NFP release where price moves hard in one direction then totally reverses direction leaving a BIG UGLY wick candle and half your account behind. So, in order to avoid that last part I said, wait for price to move and CLOSE past either 1.07 to BUY or 1.064 to SELL.
Good Luck!
SPX500Now this looks much more bullisch than a week ago. I am posting an opinion that is contrary to my own from last week.
I was more bearish then. But expiration week has come and gone and the SPX500 is simply bullish. it might be _somewhat_ bullish, it could also get _very_ bullish. Because what you see is a sidewise-to-down history that followed the tremendous bull market. This "consolidation pattern" lasted a full 15 months and seems to be left on the upside (breaking thru those blu lines.
As a premium seller, I sold premium on the upside last week, but reversed course on Friday already. The market is the master. I cannot go delta-short this market at this time. I sold premium on the downside as well, and am now removing the rest of the premium trades on the upside. They were call spreads (short 1 call out-of-the-money and long 1 call further otm) and this is done at a loss; typically some $5 to $7, multiplied x multiplyer 50 for the e-minis.
Experience has it, that typically there is no immediate crash out of a bullish pattern. If this is a bull trap here (who knows - I do not believe it but that does not matter), than an outright crash is still not likely, but consolidating sidewise is, again.
Therefore, Premium selling on the downside is my way to go. Sell wide put spreads; your short put 2000 or below; expiration May-31 or June or even September. Strike distance 100+ points. Sell fewer of them than you would on the upside. This is because of the skewed implied volatility distribution across strikes with that index put. Collect at least $10. You might choose much lower strikes, wide strike distance and go to September.
Good thing is, the downside premium trades are well "rollable" - roll to lower strikes and more DTE if need be.
I am closing now in stating that I am fully aware that I could make myself into a fool if I get whipsawed with the pair of my trading ideas last week and today.
But as a premium seller you have much more "fuzzy room" where you maneuever about, before the market really tortures you. That is the case right now with these trades. You need not be that precise with predicting markets as with pure long/short, let along long options plays.
That's it. Good trading everyboday
