Week in FX Europe – Bank of Japan and Fed pressure ECB both ways

• ECB Bank Stress Tests results stress EUR


• German Confidence falls again in October


• BOJ and Fed in the driver seat of Global monetary policy

The results of the European Banking Authority (EBA) stress tests were published on Sunday and so began a hard week for the EUR. Twenty four banks failed the stress tests, with Italian banks on the spotlight as nine found themselves on the black list. There is a 25 billion capital hole for the European financial system.

EUR/USD continued to lose ground, as the pair trades in the mid–1.25 range after trading below 1.25 as a reaction to the Bank of Japan stimulus announcement. In the Eurozone, German Retail Sales posted a sharp decline of 3.2%. French Consumer Spending came in at –0.8%.

It’s been a rough week for German releases, as the Eurozone’s largest economy continues to struggle. The Ifo Institute Business Climate survey fell to a six month low. Germany depends on exports to grow and it is now under threat from geopolitical turmoil such as the situation in Ukraine and with monetary policy moves such as the ones announced this week by the Bank of Japan and the U.S. Fed.

On Friday, German Retail Sales were dismal, plunging by 3.5%. This marked the sharpest decline since October 2007. The markets had expected a decline of 0.8%. Consumer Climate and CPI softened in September, although Unemployment Change was better than expected. Meanwhile, Eurozone CPI edged upwards to 0.4%, matching the forecast. Core CPI and the Unemployment Rate remained unchanged, at 0.7% and 11.5% respectively.

The European Central Bank will release its minimum bid rate announcement next week where no change is expected followed by a press conference. ECB President Mario Draghi will continue to struggle as he has no answers for the market questions. He will redirect the attention to the EU governments who need to step up their commitment to growth by allowing sovereign debt to be part of the stimulus menu. Without that, the ECB has its hands tied as there is only so much that can be done. On the other hand it has left the market speculating about other options and even the rumours of corporate bond buying have trigged EUR negative moves.

The Bank of Japan was under pressure as Abenomics was running out of steam and the 2% inflation goal in a two year timeline was getting further away. In a surprise move the BOJ added to its current stimulus and gave the market the signal to take more risk. The flip-side of this action was the U.S. Federal Reserve which announced the end of quantitative easing and although giving no time commitments is on track to raise rates next year. The ECB by comparison stands alone as a Central Bank who needs to act, but it is prevented from doing anything meaningful by the European political quagmire. Both CBs put pressure on the ECB, that hopefully it can help to help unlock the EU’s divisions amongst nations regarding the much needed stimulus.

Next week in Europe

There are two major events during the week. The Bank of England and the European Central Bank will announce their benchmark rate. As with the RBA there are no changes expected as the BOJ seems to once again lead with example on the stimulus front as it did in 2013. The BOE could take a cue from the Fed and begin cutting back on its bond-buying program, but that seems unlikely given the dark clouds that have begun to appear above the UK economy and upcoming elections next year reward prudence over speedy action.

The U.S. Non-farm payrolls will be published on Friday. The biggest economic indicator in the forex market can further validate the Fed’s decision to end its quantitative easing program off the table and build more confidence in the growth of the U.S. economy. This in turn would boost the USD strength versus all pairs. Last month’s figures came in at 248,000 added jobs and while expectations are for a lower number as long as it is above 200,000 it can justify the strong USD position.

For more market moving events visit the MarketPulse Economic Calendar

WEEK AHEAD

* USD ISM Manufacturing

* AUD Reserve Bank of Australia Rate Decision

* NZD Unemployment Rate

* AUD Unemployment Rate

* GBP BOE Asset Purchase Target

* GBP Bank of England Rate Decision

* EUR European Central Bank Rate Decision

* USD Change in Non-farm Payrolls

* CAD Unemployment Rate

MarketPulse

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Has the Weakness in the Oil Market Fueled the Decline of UNG?

The natural gas market cooled down as the natural gas ETF United States Natural Gas (UNG) plunged by 12.5% since the beginning of the month. The oil market also loosened up as crude oil prices tumbled down by 11% during…

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Best Home Security System for 2014

Home security is often not addressed until an intrusion has already occurred. According to the FBI, more than 2 million burglaries were reported in 2012. However, homes with alarm systems have shown to be 300% less likely to be broken into. It’s evident that the majority of us are not doing everything we can to proactively mitigate these risks.

Top home security systems have a proven track record in protecting homes and their valuable contents. Read on to begin exploring which best home security system is the right fit for you and your family.

The Simple Dollar’s Top Picks

Here are the five best home security systems:

1. Frontpoint® Home Security


2. LifeShield® Home Security


3. LiveWatch Security®


4. ADT® & ADT Pulse®


5. Vivint® Home Security

Frontpoint®

Frontpoint® is regularly ranked as the #1 home security system. They boast 100% wireless and cellular technology as well as top-rated GE security equipment, and simple DIY installation instructions.

Frontpoint® is one of the few home-security monitoring providers that goes beyond fire, flood, and carbon-monoxide detection by also including a service that can detect if there’s a break in your natural gas line. They also have the ability to connect up to 39 sensors and your mobile device at once, bringing the safety and security of your home right into the palm of your hand.

Frontpoint® continuously falls at the top of the list in all categories when it comes to monitoring, security devices, alerts, and customer service. The key here is that you don’t have to worry about their system falling short in any realm of your home’s security. Their Crash & Smash protection even allows your control panel to send alert signals in the event a burglar attempts to destroy it.

Frontpoint® has a working relationship with Alarm.com that allows them to have a variety of additional features, including Geo-Services. Geo-Services offers peace of mind for many of the imaginable mishaps or potentially intrusive feelings. You can set your system to automatically notify you if you leave a certain perimeter around your home and have not yet activated your alarm system. You also can pause the recording of specific cameras when the user is within the geo-fence. For example, when you get home from work, the security cameras within your home can pause their recording while your outdoor cameras remain on and continue to capture the scene.

You can try out Frontpoint® to ensure it’s a good fit for you and your family with their 30-day free trial. Start protecting your home and your belongings. Call (800)364-0823 for a free quote today.

LifeShield®

LifeShield® has one the fastest response times in the industry. They’ve partnered with DirecTV and are therefore connected to a monitoring station with broadband Internet connection. They offer DIY or professional installation depending on your needs, availability, or ability.

LifeShield® goes beyond other home security systems by providing additional layers of backup in the event that your power goes out or home phone line is disabled:

• Broadband Internet: In the event of an emergency, LifeShield connects to the monitoring center in seconds by using your broadband Internet connection.


• Cellular Network: You’re able to utilize a built-in cellular connection as an additional layer of protection.


• Land Line Phone: LifeShield also offers connection through a landline in the event that your Internet and/or cellular connection goes down.


• Battery Backup: Rest assured you’ll be alerted when your battery is low. Beyond that, the long-lasting battery will keep your alarm system online for up to 24 hours after the power goes out.

LifeShield® offers another unique feature that provides alerts of local crime data so you can make a more informed decision of the level of home security coverage you feel most comfortable with.

LiveWatch®

LiveWatch® was created in 2002 with the goal of making home security easy and affordable without sacrificing quality. They provide truly customizable home security and are able to keep their costs low by DIY installation and avoiding extra, unnecessary hardware.

If you’re worried about the DIY installation, don’t be. A LiveWatch® customer service technician will remain on the phone and talk you through the process. After the installation is complete, they will run live tests on the system to ensure it is working correctly.

LiveWatch® also has an excellent customer-service record and openly broadcasts that the majority of their business comes from customer referrals. After the first 12 months, your contract moves to a month-to-month agreement with no termination fee if you decide to move away from monitoring services. If you cancel within the first 12 months, you are eligible for a refund on any purchased equipment.

ADT® & ADT Pulse®

ADT® has been in existence for over 140 years, serves over 7 million customers, and has the most monitoring service centers in the industry. While length and existence don’t guarantee great service in today’s world, a known name can never hurt in deterring potential intruders.

Aside from their security devices and monitoring services, ADT® provides guarantees to ensure you feel confident about your security investment, including:

• Theft Protection Guarantee: ADT® will pay up to $ 500 of your security deductible if your home is robbed while your security system is armed.


• Mover’s Security Guarantee: ADT® customers are entitled to a free security system in their new home.


• Money-Back Service Guarantee: If you are not satisfied within six months, ADT® offers a refund on the installation price and monitoring fees.


• Homeowner’s Insurance Certificate: With this certificate, you can save up to 20% on your homeowner’s insurance.

In 2010 ADT® launched ADT Pulse® – an upgraded service including home automation with Z-Wave™ technology. It has opened ADT® up to compete with the quickly emerging high tech security systems in accompaniment with it’s household name.

Vivint®

Vivint® is consistently one of the top-rated security providers. With their monitoring services, you get 24/7 coverage 365 days a year along with unique non-emergency alerts, severe weather alerts, and a key fob that allows you to turn your alarm system on or off or call the authorities directly from the device without ever having to enter your home.

Vivint® provides their own internal monitoring, so they’re able to work directly with you. This is a plus because you don’t have to worry about outsourcing of monitoring services and going through a middleman for any issues.

Vivint® also excels at home automation with a forward-thinking mindset. They provide two additional plans to help conserve energy and save you money. The Smart Energy plan is an integrated system that gives you control over your appliances, lights, and thermostat from anywhere. They have gone above and beyond to create savings with your home by establishing the Vivant Solar solution, which streamlines the generation, transmission, and distribution of energy processes by using solar panels installed on your rooftop to supply power to your home.

What’s Important in a Home Security System?

My methodology in determining the best home security system was based on four major components, ranked as follows:

1. Monitoring Services


2. Security Devices


3. Customer Service


4. Affordability

Monitoring services fell at the top of the list, as constant and effective monitoring is key to the protection of your home. Security devices allow you to safely and accurately monitor. Without appropriate customer service, the required action and assistance would fall short of your needs. Affordability, while it does not always limit the available services, is important when making your decision on the comprehensiveness of your home security monitoring.

As you can imagine, home automation often comes with a heftier price tag. However, with this feature, you’re often able to control your thermostat, appliances, and outlets which increases the potential savings that could easily exceed any expenses. Look into what home automation features are available with your home security system to take advantage of these opportunities.

All of the selected Simple Dollar’s Top Picks including the following services in various packages:

• 24-hour monitoring


• Wireless Internet or cellular system


• Internet/cellular monitoring


• Battery backup for power failure


• Online account access


• Door, window, garage door, glass break, and motion sensors


• Panic button


• Flood, carbon monoxide, and fire detection


• Security camera(s)


• Customer support available via email and phone


• Online tutorials


• Alarm history reports

Below you will find a comparison of other components that were not universal within the list:

Feature	Frontpoint®	LifeShield®	LiveWatch®	ADT®	Vivint®
Alert Response Time	30 Seconds	1 Second	18 Seconds	45 Seconds	9 Seconds
Security Equipment Manufacturer	GE	LifeShield®	Varies	Honeywell	Varies
Basic Monthly Monitoring Fee	$ 34.99	$ 29.99	$ 19.99	$ 36.99	$ 53.99
Contract Length	1 Year	3 Years	1 Year	3 Years	5 Years

Wired vs. Wireless Security Systems

Wired home-security systems are starting to be a thing of the past. While ADT® and some less tech-savvy systems still have wired options, they leave your home vulnerable to power outages or disabled phone lines.

They also require actual wiring in your home, which can often be a deterrent. I have a hard time putting a nail in my wall let alone a gaping hole. Wired systems can also be more difficult to take with you when you move and require reinstallation at the new location. ADT® actually leaves the system behind and gives you a credit for your new system if you’re still within the timeframe of your contract agreement.

Wireless Internet and cellular security systems are not only the direction of the future for any tech industry, but they also remove the vulnerability of your phone line being disabled. They use a battery for power and are able to keep coverage long after the power goes out.

Wireless Internet systems use wireless alarm sensors similar to radio waves to communicate with the control panel. The wireless frequency is typically proprietary and therefore will not interfere with other wireless equipment in your home or other wireless systems.

Cellular systems use a cellular device that is installed in the control panel and uses cellular towers to transmit the signal, similar to sending a text message. It’s the newest form of home security alarm-signal technology and is revered as the most reliable monitoring on the market.

With the exception of ADT®, which does provide a wireless option with ADT Pulse®, wireless systems comes standard with the other four top picks.

Home Security Camera Systems

In the past, home security cameras were all based on closed-circuit television technology, which required cabled connections in your home. With the ever-improvement of technology, most home security cameras are now wireless digital cameras that are easy and inexpensive to install, require no video cables, and have cloud-based storage.

With the combination of Internet and your home security camera, you have the ability to view live feed from anywhere including, in many instances, right on your smartphone. Frontpoint® is one of the best home-security camera providers with options for fixed, pan-and-tilt, and/or outdoor wireless cameras.

DIY Home Security Systems

DIY home-security systems are great. Though they may at times be less effective than those that are professionally installed, it is important to keep in mind that there are two different versions of DIY: one where you purchase the devices and services from a home security provider like Frontpoint® and LifeShield® and one where you purchase your own tools and do not pay for any type of monitoring services.

While deterrence from individually provided and installed solutions like motion detector lights, more secure locks, and home security cameras can be effective, it is critically important that you have a direct line to the authorities in the unfortunate event that you need them. For this, a monitoring service from an established home-security system provider is a must.

Home Safety Tips

There are simple measures you should take regardless of whether or not you own one of the best home-security systems. Preventative steps are necessary to minimize the chances of your home being targeted by burglars.

1. Keep your doors and windows locked — even when you’re at home.


2. Get deadbolt locks installed on your doors.


3. Don’t leave valuables in plain sight.


4. Keep your phone ringer volume on low.


5. Don’t post travel plans on social media sites.


6. Do alert your neighbors when you’ll be out of town so they can keep an eye on your home.


7. Lock up important documents.


8. Have a dog (not recommended if only for security purposes).


9. Put away your ladder when you’re done using it.


10. Don’t leave a key outside your home.


11. Do make it appear you are home even when you’re not by leaving a light, TV, or radio on.


12. Clear large bushes or items a burglar could hide behind away from your entryways.


13. Frost your garage windows so potential burglars don’t have clear sight of your car (or its absence).


14. Install motion detector lights outside your home.

Beyond the Obvious Benefits of Home Security Systems

Whether it’s from a burglar, fire, flood, or various other things that can be monitored by your security system, it’s clear that the main goal of a home security or alarm system is to protect your home. However, there are also many other benefits.

According to the Insurance Information Institute, some companies decrease your insurance premium by up to 20% if you install a comprehensive home-security system. Before investing, talk to your insurance provider to get a better idea of the savings vs. the cost depending on the plan you go with.

It also turns out that when you install a home security system, you are not only protecting yourself but also your neighbors. “Neighborhoods in which burglar alarms were densely installed have fewer incidents of residential burglaries than the neighborhoods with fewer burglar alarms,” a study by Rutgers University reported.

What You Should Be Asking Your Home Security Provider

Before you buy any home security devices or sign any contracts, there are many non-advertised answers you should have in regards to your provider and the services you’ll be paying for.

Many home security providers have various methods of response. Some send contracted security professionals to assess the situation prior to contacting the authorities. Every company has a different response time, and some provide additional resources like long-lasting batteries and additional monitoring service centers.

Below you will find a list of questions you can ask beyond what is readily available on all websites:

1. What is the typical response time when the alarm is set off?


2. What is the typical response?


3. If I cannot reach the established emergency contacts (if that’s part of the process), will you reach out to the authorities immediately?


4. When can I expect someone to be at my home after the alarm has been set off?


5. How many monitoring centers service the provider?


6. In the event of a power loss, how long should my battery last?


7. Will I be provided a sign to advertise that I am using security services?


8. Am I able to take the security system with me when I move?

Home Security Summary

Home security is a topic that should not be ignored. A quantitative analysis of the impact of home alarm systems was conducted by Rutgers University and showed that home security systems are effective in deterring and protecting one’s residency from unwanted entry. The study found that burglaries are not concentrated to specific age composition, economic, or metropolitan areas. Burglary affects the masses on a regular basis.

I recently attended a neighborhood watch meeting at the local library near my home. I was blown away by the number of incidents in what I believed to be a safe neighborhood, but the passion and creativity the community had to ensure the safety of their homes and, more importantly, their families was comforting. Very few, however, mentioned home security systems.

Home security systems are proven to be the most effective solution to protect your home, your valuables, and your family. Make sure you maintain your confidence and peace of mind that your home is safe by installing a system sooner than later.

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Tools for Tomorrow’s Lawyers CLE and Webcast

Jim Calloway’s Law Practice Tips Blog

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Fed Aftermath Market Update and Stock Scan for October 30

At the end of QE3, stocks continued higher on the reported GDP growth and the S&P 500 tagged the underside of the 2,000 index target.

Let’s update our levels and note the top trending stocks so far in today’s post-Fed session:

After a logical sell-off from a knee-jerk reaction to yesterday’s “End of QE3″ announcement (see yesterday’s post), stocks traded higher and broke sharply higher on a Bull Flag pattern earlier this morning.

The result was a short-squeezed impulse toward the 2,000 index target, at which point the S&P 500 turned lower and traded into the 1,990 support confluence.

For now, we’re monitoring the neutral zone between 1,990 and 2,000 with a breakout above 2,000 setting the stage for a future rally to new all-time highs… or a move under 1,990 targeting the 1,980 or even 1,975 downside targets.

Sector Breadth (after the Fed) revealed another bullish picture:

The Defensive Sectors took the lead today with Energy – yesterday’s leader – becoming today’s laggard.

Still, we see relative strength across the board with almost all sectors reporting more than 70% of stocks positive.

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

Bristol-Myers SQUIBB (BMY), AmeriSourceBergen (ABC), MasterCard (MA), and the big-winner Visa (V).

Potential downtrending candidates exist in stocks showing relative weakness today:

Avon Products (AVP), Intel (INTC), Ball Corp (BLL), and Trip Advisor (TRIP).

Corey Rosenbloom, CMT

Afraid to Trade.com

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Motion to Dismiss Denied Regarding Insureds’ Claim For Collapse

Insurance Law Hawaii

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Predictions on the Major Currency Pairs for November

Only a couple of trading days are remaining in the month of October. Whereas the month of September was strongly bearish for the EURUSD, GBPUSD, AUDUSD and NZDUSD, the October month is not showing any resemblance to the previous month. The USD strength, so far, was not able to push further. For a review of the EURUSD and USDCAD click here and for the AUDUSD here.

NZDUSD CONTEST: BEARS WIN

Nathan talked about the Kiwi in his article more than a month ago: the NZDUSD Decision Point (Comment Contest). Those Forex traders that chose the bearish side won the contest – congrats to the bears! And for the bulls: better luck next time– it was only a contest anyhow.

Back to the Kiwi: this pair was an excellent example of the USD strength. The currency pair posted 3 bearish candles in a row but had the largest one in September. The October trading month, however, has so far been incapable of breaking the September low and the odds of that changing are slim.

NZDUSD BEAR-BULL LINES

An impressive 1,100 pip fall stopped at a heartbeat when it reached the weekly bottom (green circle). Price then bounced up 300+ pips but was unable to break above the broken support trend lines because it turned into resistance.

The most eye catching question at the moment is:

1. Will the NZDUSD use the resistance as a bouncing spot for a continuation of the down trend;


2. OR will the NZDUSD bearish break turn out to be ‘false’ and can price fight itself back above the support trend lines?

Personally I am expecting a bigger bullish retracement in November to occur before bearish momentum continues. However, to remove bias from trading, I will use the resistance spots (trend lines and top) and the support level as the decision spots or the ‘lines in the sand’.

1. As long as price stays in between the S&R, it could easily continue with a drawn out consolidation but the playing field changes when a break occurs;


2. The NZDUSD is bullish upon an upside break and bearish upon a downside break;


3. Upon a breakout Forex traders are always vulnerable to pullbacks and false breakouts so it could best to have patience before trading the break. But price certainly has entered a bearish or bullish zone.

Personally I would not be surprised to see price action unfold as mentioned in the screenshot below but I am using confirmation levels and events before any actual trading is implemented.

YOUR DECISION TIME

How do you see the month of November? Will the November candle close bullish or bearish or as a doji? (A candle will be counted as a Doji if the candle close is within 10% of the candle open in comparison to the entire candle measured from high to low.) I personally will choose the Doji for November and a bearish candle for December.

Those that lost the previous contest have a chance to take ‘revenge’; whereas the winners of the contest have an opportunity to confirm their winning streak. Join us and write in the comments whether you expect a bearish, bullish or Doji month of November!

Thank you for sharing this article on the web and wish you Happy Hunting!

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Many Factors Behind Oil’s Decline

The reasons oil prices started sliding in June were hiding in plain sight: growth in U.S. production, sputtering demand from Europe and China, Mideast violence that threatened to disrupt supplies and never did.

After three-and-a-half months of slow decline, the tipping point for a steeper drop came on Oct. 1, said Ray Carbone, president of broker Paramount Options Inc. That’s when Saudi Arabia cut prices for its biggest customers. The move signaled that the world’s largest exporter would rather defend its market share than prop up prices.

“That, for me, was the giveaway,” Carbone said in an Oct. 28 phone interview from his New York office. “Once it started going, it was relentless.”

Bloomberg

MarketPulse

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Professional Liability Insurance – Reporting Claims

Reporting claims in a timely manner is critical for any professional liability insurance coverage – E&O, D&O, EPL and Cyber Risk. What constitutes a claim varies by policy and can, in some instances, be construed broadly. (See our Prior Posts: here, here, here, here, here) A recent article discusses claim reporting and failure to report. Entitled Malpractice: Failure to Report Client’s Claim at Professional Liability Matters, the article makes some excellent points on claim reporting, and then focuses on an attorney’s sometimes obligation to report a claim on behalf of a client. Key points: In the first line of the article: There is no upside in failing to report a claim Taking a wait and see approach to a claim…

Specialty Insurance Blog

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The Number One Handbook on Trend Lines in Forex Part 5

Our series on TREND LINES (TL) in the Forex market continues with part 5! Today we focus on solving potential problems that could occur when using trend lines (TL) in real live Forex trading. There is a difference between the “perfect theory” and “actual implementation” and this part tries to bridge the gap.

If you would like review the previous parts of the series on trend lines, please click on these links:

• Part 1


• Part 2


• Part 3


• Part 4

In this post problems and answers will be compiled to help traders with solving practical issues.

PROBLEM 1 SHALLOW TREND LINES (TL)

Is it possible to trade very shallow trend lines? Yes but with caution. The danger of very shallow trend lines is the fact that a horizontal support and resistance (S&R) is close by. When price breaks through one layer of S&R, the horizontal level could stop price from continuing. There are a few ways to handle it:

1. Take the TL break and ignore the horizontal level;
   
   
   
   1. Good for small pauses in overall big trend;
   
   
   2. In strong trends price keeps pushing and previous S&R was only a short stopping point for further trend continuation;
   
   
   
   

• Wait for a strong candle close (near high or low) to break TL and/or horizontal level;

1. Good if there is doubt about S&R strength;


2. Most useful if trend line correction is relatively big compared to trend;

• Wait for the horizontal level to break;

1. With strong S&R levels it could be better to wait for an actual break of that level;


2. A risk of a false break out is always present, which can be partially countered by waiting for candle stick confirmations (see B);

• Skip the setup and move on to new currency pairs.

Method A is the most “aggressive” and D the best “conservative.”

PROBLEM 2 STEEP TREND LINES (TL)

Steep trend lines are often viewed as more difficult to trade. It is true that steep trend lines tend to break quickly but without necessarily moving much to the opposite direction. Steep trend lines are most useful to trade when price is going against the bigger trend. In these cases, a break of steep trend line could equal to a completed retracement and a bigger trend continuation. Trading breaks of steeper trend lines against the trend is extremely dangerous and only very seasoned traders might attempt it. Steep trend lines however could be a good method to trail stop a trade (locking more profit along the way).

PROBLEM 3 HORIZONTAL TREND LINES (TL)

Trading the break of a horizontal support or resistance line can especially be troubling because price often encounters volatility upon the break. Price breaks a bottom or top but then quickly reverts to the opposite direction, which can be a very frustrating and painful experience. I see this particular pattern occur often on the GBPUSD.

Any breakout is vulnerable to a pullback – immediately (dark green example) or later on (light green example). Only in some cases does price continue flawlessly (blue). As a Forex trader our options are limited but we can use:

• Candle closes and wicks to measure strength of break;


• Divergence to determine if there is any weakness;


• Multiple time frame analysis to zoom in and out and see the break from various angles.

EXERCISE: practice the above by finding a trend and drawing shallow and steep trend lines on it. Post the chart down below.

PROBLEM 4 HOW TO MEASURE DEGREES

In various parts of this series on trend lines I mentioned that trend lines have various angles. It is important to emphasize that the measurements are rough approximations and certainly not a precise figure. When I write that shallow trend lines have 0-10 degree angle, this is just used as a rough indication. The most important is to realize that there are shallow (outer), normal (trend), and steep (inner) lines.

PROBLEM 5 HOW MANY TREND LINES TO DRAW

I like to draw many trend lines in all directions: the more the better because extra information is available. It really does not matter if the trend line is angled up or down and whether there is a range or up/down trend. BUT… Forex traders must keep a balance and ensure that the chart does not become overcrowded; otherwise this could lead to paralysis of analysis during trading.

Basically, I am happy to keep as many trend lines on the chart as long as the trend line is relevant and I can keep a clear vision of the charts with each trend line. Here are some extra pointers:

• Drawing multiple trend lines is a great benefit because the lines provide a zone of support and resistance rather than just a single point of reference (like a fan).


• Using the same top or bottom twice or three times for different trend lines is perfectly fine.


• The trend line does not have to start at a top or bottom but could be from the middle of a swing as well, as long as it adds values, has sufficient hits and is near price.

Ultimately if I do need to remove trend lines to make the charts more readable, I make decisions based on how many price hits the trend line has, how close it is till price, and how neat (wicks/candle outside) the trend line is. In the screenshot below I drew a ton of trend lines but not all of them need to be on the chart. The orange ones can be easily removed either because current price is far from the trend line or the information is too duplicated. The purple trend lines could be the ones that are left on the chart after the orange ones are gone. This is just an example; some traders might add or remove more trend lines depending on their personal preference.

EXERCISE: practice the above by drawing multiple trend lines and show which charts are ok (purple) and which ones are irrelevant (orange). Post the chart down below.

NEXT WEEK’S GOAL

Next week’s article (part 6) will continue with more problem solving of trend lines and also dive into the real practical side of trend lines. What are the best ways of using trend lines? What trade setups are possible with trend lines? That and more can be found in part 6.

Don’t forget to post the exercises down below. Thanks for sharing this article and wish you Happy Trading and a nice weekend.

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SMBU’s Options Tribe Webinar: Dave Stewart: The Caspian Sea Monster Options Strategy

On Tuesday, Dave Stewart presents, for the first time, his signature “Caspian Sea Monster Trade”. It should be a fascinating meeting and you won’t want to miss it! SMBU’s Options Tribe is an online community of options traders dedicated to sharing successful options trading ideas with all of our members worldwide. Each Tuesday, SMBU hosts an options webinar — the Options Tribe — during which veteran options traders and experts in the world of options trading share live presentations. Options Tribe meetings are generally free to the public and are held every Tuesday at 5:00PM ET. If you wish to register to this Read more [...]

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Is SLV A Better Buying Opportunity Over GLD?

Shares Silver Trust (SLV) resumed its downward trend and shed 0.5% off its value. Considering the ratio between SPDR Gold (GLD) and SLV picked up in the past few weeks, does this make SLV a better buying opportunity over GLD?…

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Trading NRG

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Quick Color Structure V-Spike Update Oct 28

Let’s take a quick glance at the “Color Structure” of the S&P 500 on the V-Spike Reversal into Resistance and chart possible price pathways from here.

We’ll start with the V-Spike Reversal Pattern on the intraday color chart:

We’re seeing the Color Structure grid which quantifies swings in the market (and impulsive phases like the purple area).

We have a green upswing into the prior resistance price cluster near 1,980 and we’re watching this level extremely closely.

In simplest terms, the market should be traded cautiously/bearishly on a swing down against 1,980 and otherwise continuously bullish for yet another breakout and short-squeeze trigger above 1,980 (it would target 2,000 on a breakout).

The bigger picture reveals the larger trend structure:

The same swing logic applies to the Daily Chart in a persistent uptrend.

We do note the first clear “Lower High” into October and we’re on guard against a sudden reversal and formation of a “Lower High.”

A Lower Low followed by a Lower High would be two steps in a larger Trend Reversal… but we’re not there yet.

For now, we note the potential turn-down into 1,980 and if price continues to break resistance levels as its been doing, then 2,000 is the next target followed by 2,020 and beyond as the uptrend continues.

Corey Rosenbloom, CMT

Afraid to Trade.com

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Why Forex Traders must Embrace the Road Map

Occasionally you will see a post referring to my prediction of potential big price movements. I did this with the USD strength (here), the Gold weakness (here), the Aussie weakness (here) and the Yen weakness (here). As an analyst and writer it makes sense to provide our readers with a heads-up of potential major trends in the future. But the information itself does not generate profits – only trading can.

REACT; DON’T PREDICT

Forex traders want to let the market move wherever it wants to, then they should base their reaction (plan) on that price action. Never do we want to solely trade a prediction and ‘hope’ that the market confirms our analysis. This sets up Forex traders with tons of emotions and quickly imbalances their execution of a(ny) plan. We have to accept the fact that we, as traders, cannot ‘control’ the market, which means that we are always unsure about our trade developing (but we don’t have to be unsure about our trade!).

The best way to generate consistent Forex profits is by setting up a trading plan and following that plan. End of story -regardless of whether your entry and exit plan is built on a discretionary or non-discretionary method.

ROAD MAP READERS

Forex traders are more like road map readers: they are trying to find the quickest and safest way on the map from point A to point B. The graph is a trader’s compass and candles, patterns, trends, support and resistance are clues that traders find along the way. The way we use those clues depends on our plan. There is no need and time for second guessing and second doubting.

Of course, all of our readers do not share a common trading plan, but let us take an example of the AUDUSD. As a discretionary trader, I have biased for shorts because of the strong downtrend and bearish momentum prior to the diamond chart pattern consolidation.

AUDUSD CHARTS

The trend itself is not sufficient to justify a short – especially if price itself is reacting bullishly. I might want price to go down or think it ‘certainly’ will, but this does not justify taking a trade and hoping for the best. As a road map reader (discretionary one in this article), I am waiting for confirmation clues that price is indeed turning back into a bearish mode or already in it. And until those confirmations are seen on the chart, I need to stay disciplined and patient so I can avoid unneeded pain or losses by jumping in the market too early.

There are many different types of confirmation clues such as break or bounce of trend lines, extremes in oscillators, divergence, price action, chart patterns, candle sticks and just plain candles. In this case I will be waiting for false bullish break out and wait for a 4-hour or daily rejection candle stick or candlestick pattern as price moves up. The other signal could be the bearish break of the consolidation.

Do you agree with the map reader philosophy? If yes, why? If not, why not? Share your views with the WET community! What tools and indicators do you use to keep your focus on map reading?

Thanks for sharing and Happy Hunting!

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