Why Trading Psychology is Crucial with the GBPJPY Monthly Breakout

The GBPJPY is well known in Forex for its large extended price movements. At times this currency pair moves like no other and it is able to fly up and down hundreds of pips. For other currency pairs, such as the EURUSD and AUDUSD, similar movements could only be achieved in a week or two of price action. Due to its lightening speed the GBPJPY is sometimes referred to as the Ferrari of the Forex.

THE SLOWDOWN

However, the once so speedy GBPJPY slowed down substantially in 2014. It seems like the US Dollar (partly) took over its role as this currency accelerated in its movements. Between March and August (6 months) the GBPJPY stayed confined within a range of less than 1,000 pips. The difference between these months and prior candles is easy to recognize when looking at this chart:

THE BREAK

That slowdown broke druing the last month of September: the GBPJPY closed the month with a 1150 pip candle (measured from high to low) and price managed to push above the range (blue lines). The month did end bullish but there was a bit of a wick on top (screenshot above). Lets zoom into the weekly chart to see more details.

THE WEEKLY

The following points are in my opinion the most interesting observations from the weekly chart:

1. Price is in an uptrend and has remained above the uptrend line (blue);


2. The orange trend lines represent the range;


3. Price managed to break above the range;


4. Price is now back at the top of the range;


5. Broken resistance can become support in the future.

Conclusion: this could be a hookback and a bounce spot for more bullishness. But I want to zoom into lower time time frames to look for confirmation that price could indeed be bouncing at this potential support.

THE CONFIRMATION BOUNCE

The 4 hour chart is not showing any strong bullish reversal candle stick patterns or other signals. There are no strong bullish engulfing twins, no bullish pinbars or inverted head and shoulders chart patterns to be found. In fact price is in a neat downtrend channel (blue) – although the lines only have 2 hits (read more here).

The dynamics do change once I start to place Fibonacci levels on the chart. With Fibs on both the bullish and bearish swing high and swing low, I can see that price is approaching a confluence of a 61.8 retracement (purple) and -61.8 (dark red) but that it did not hit the area as yet.

Conclusion: I am still interested in trading the potential weekly bounce off of broken resistance but only if I:

1. See a candle stick pattern at the 61.8/-61.8 Fibonacci confluence (purple) and/or


2. See the down trend channel (orange) break (blue) and/or


3. See price making a start of an up trend channel (green).

THE CONCLUSION

As we can see, not always must analysis lead to something that can or should be traded NOW. Sometimes its better to wait for confirmation and extra signals. Of course, its great if the analysis does lead up to an immediate entry or pending order, but I avoid taking trades just because I made analysis on this pair.

Sometimes traders do not want to waste time and therefore most of their analysis work will lead to an immediate trade setup. This is chasing the market (getting in too early) or jumping the gun (getting too late): a bad and costly hobby of a trader.

Do you agree?

Do you recognize yourself in the above profile?

Do you also tend to want to take a trade after analysis?

Let us know down below! Happy Trading.

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Forex, breakout, Crucial, gbpjpy, monthly, psychology, trading

Compression Continues as Breakout Beckons in Apple AAPL

Apple shares (AAPL) continue their triangle or “EMA Compression” pattern as we await an official breakout trade entry trigger.

Let’s update our “Triangle Trade” chart from last week and focus on the key trigger-entry levels along with the potential targets to paly for should an actual breakout occur soon.

We’ll start with the daily chart:

Again, see last week’s post as the Triangle was developing (the triangle pattern continues for shares).

The Daily Chart simply highlights a compression of price between the 20 and 50 EMA as price plays ping-pong between these two indicators.

Officially, the falling 20 day EMA intersects $ 100.30 while the rising 50 day EMA plays at $ 98.70. Note how buyers and sellers have used these levels as short-term pivots.

A simple breakdown impulse under the $ 98.00 per share level opens a “sell pathway” toward the prior lows at the $ 94.00 per share level.

The divergences and distribution volume hint that this outcome may be favored for shares.

However, a pro-trend continuation breakout trigger beyond the $ 101.00 level suggests that price can rally toward the $ 104.00 prior high and perhaps even beyond that on a true trend continuation movement.

We can see the price pattern (triangle) clearer on the lower frame:

The hourly chart – in this case a compressed two-hour chart – shows the dominant price pattern – that of a Symmetrical Triangle or compression pattern developing as drawn.

The lower support line intersects today’s low (where buyers defended) at the $ 98.00 per share level and shares trade directly in the middle of the pattern at the $ 100 per share “round number” reference.

The main idea is that we should continue to remain neutral on Apple shares as price plays “ping-pong” between these two converging price-based trendlines.

A breakdown under $ 98.00 triggers a potential liquidation breakdown (targeting $ 94.00) while a breakout above $ 101.50 continues the uptrend and suggests $ 103.50 to $ 104.00 may be in play as upside targets.

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://ift.tt/178Lhrq

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

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EMA Compression Breakout Trade Forming in Chipotle CMG

Chipotle shares (CMG) are forming an “EMA Compression” trade set-up which is a specific type of breakout pattern.

Let’s see the chart, note the trigger levels, and plan a strategy for those interested in this high-priced stock.

A few things jump off the chart at us at first glance.

First, there’s the price pivot point at the $ 600 per share level (yellow highlight) which serves as a downside target on a bearish breakdown.

The second factor is the retest of the gap near $ 645 and the current “EMA Compression” pattern.

The “EMA Compression” pattern refers to price holding support at the rising 50 day EMA (blue) but finding resistance slightly overhead from the declining 20 day EMA.

As the saying goes, “Something’s gotta give” which means that traders can use breakout strategies on a firm movement above the falling 20 day EMA or beneath the rising 50 day EMA.

The simple “Bullish Breakout” (and trend continuity) pathway suggests a rally toward or even above the prior high above $ 680 while a “Bearish Breakdown” (steeper retracement) pathway targets the $ 600 support confluence.

Treat breakout patterns as neutral and don’t assign a bull or bear bias until price “proves itself” and forces traders to act on the breakout (rather than trying to predict the breakout while price remains in consolidation).

We can see the picture clearer on the intraday chart:

A pure price plus Fibonacci Retracement grid shows the key inflection point now – along with the 50 day EMA – is the $ 650 level which is the 38.2% Fibonacci Level as drawn.

Again, it is also the “gap fill” price from August 22.

In sum, a bearish breakdown (that isn’t a bull trap) under $ 650 suggests an immediate downside play toward the $ 637 “halfway” point, then $ 622, and finally the $ 600 per share level.

And of course the upside breakout pathway with a trigger beyond $ 670 suggests a play to the highs near $ 690 per share.

Focus on these levels and the breakout/impulse trades that may benefit from a successful breakout and movement toward one of these targets.

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://ift.tt/178Lhrq

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

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Chinese E-Commerce Stock Goes for a Breakout

via StockCharts.com – Blogs:

Shares of Dangdang ($DANG) are making a big move this month with a triangle breakout on expanding volume. First, notice how the stock surged from ~4 to ~12. Second, the triangle consolidation worked off overbought conditions. Third, the high volume breakout signals a continuation of this advance. Careful with this one: low-price times internet-play times Chinese-stock equals risk cubed.

Click this image for a live chart

For more info: Chinese E-Commerce Stock Goes for a Breakout

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Chinese E-Commerce Stock Goes for a Breakout

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Trading, breakout, chinese, consolidation, continuation, dang, dangdang, internet, times, triangle

Altera Leads with New High for 2014

via StockCharts.com – Blogs:

Altera, which is part of the semiconductor group, is showing relative strength this year with a price breakout and new high for the year (2014). The stock established support from mid November to mid January and broke out with a gap in January. After some backing and filling, the stock continued higher with another big move the last three days. The indicator window shows the price relative (ALTR:$SPX ratio) moving to a three month high.

Click this image for a live chart

For more info: Altera Leads with New High for 2014

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Altera Leads with New High for 2014

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Find something that is structural

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.The member site is one of the most recommended site for learning to trade by other traders and bloggers. No advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site and no tall claims, every member comes through word of mouth recommendation.As a member you will learn the basics of swing trading, momentum investing, growth investing and …

via stockbee:

Find something that is structural in nature of the market.

As a trader your task is to find some structural phenomenon to build your edge around.

It should exists in the market and not figment of imagination.

If you find structural edge it will last decades.

What are some of the structural things in the market:

1 Market moves in momentum bursts

2 Momentum stocks outperform non momentum stocks

3 longer term momentum is mean reverting

4 Surprisingly good earnings leads to rallies

5 News leads to immediate moves

6 small cap/small float outperform larger stocks

7 lower priced stocks outperform higher priced stocks

Now if you know any of these you can build your trading around it.

Structural edge is something that has been tested thousands of time and has been around for hundeds of years.

www.stockbee.biz If you are serious about your trading and want to build an enduring edge the Stockbee Member site might be for you. One of the most recommended site for learning to trade. 2200 members and growing everyday… www.stockbee.biz

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Find something that is structural

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During this earnings season become an extremist

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.The member site is one of the most recommended site for learning to trade by other traders and bloggers. No advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site and no tall claims, every member comes through word of mouth recommendation.As a member you will learn the basics of swing trading, momentum investing, growth investing and …

via stockbee:

The earnings season is just starting and that offers an opportunity to find some big multi month, multi quarter, or multi year moves. For the Working People Portfolio I look for growth stock just starting their move.

If you want to profit from the earnings trade, during this earnings season become an extremist

Look for extreme earnings growth (just starting out to grow). Look for first major earnings acceleration.

Look for extreme sales growth (just starting out and of magnitude likely to make the company a billion dollar company in a year). If that happens stock price explodes.

Look for extreme price strength ( just starting young trend with explosive first leg). Look for stock up 80% plus from their 52 week low and find out why they are going up. There must be some catalyst.

Look for extreme neglect (multi year , low float, low volume, no analyst, low number of funds ownership). Neglect+surprise= big move

You have to be first to find them as early as possible and not when everyone knows about it… . Find growth as it just starts.

That is where big opportunity is in earnings season….

For that in process term look at every stock up 5% plus on with high volume on earnings day and ask yourself these questions:

is this a game changing earnings

is this first or second major earnings acceleration

is this earnings right at the beginning of a new trend for this stock

is this earnings growth likely to continue for 2 to 3 quarters

You do not need to be analyst to do it. Just use simple public knowledge to make these decisions.

You can use free sites like Finviz to do this.

The key is to develop a process for doing this daily during earnings season.

2 or3 good earnings idea in a quarter can do wonders for your returns.

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. The most recommended site for learning to trade. www.stockbee.biz 2100 members and growing everyday…

For more info: During this earnings season become an extremist

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During this earnings season become an extremist

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Trading, breakout, breakouts, intensity, jesse-livermore, market, range-breakout, stockbee, stockbee-dollar, stockbee-member, stockbee-trend, strategy

A bounce but will it follow through

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.The member site is one of the most recommended site for learning to trade by other traders and bloggers. No advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site and no tall claims, every member comes through word of mouth recommendation.As a member you will learn the basics of swing trading, momentum investing, growth investing and …

via stockbee:

The few days of oversold reading on index resulted in a bounce on Friday. That has been the pattern in this market . V shaped recovering after few days of selling.

However underlying stock action in momentum stock does not show high probability of continuation. Most of the momentum leaders are in retreat or range bound. There are very few orderly pullbacks.

That means one need to look at the new leaders. Banks were clearly the new leaders yesterday with several of them having breakouts on Friday. If they follow through then they will offer swing opportunities.

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. The most recommended site for learning to trade. www.stockbee.biz 2100 members and growing everyday…

For more info: A bounce but will it follow through

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A bounce but will it follow through

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Trading, breakout, jesse-livermore, king, market, member, range, stockbee, stockbee-dollar, stockbee-member, strategy, them-the-most, trading