Offers 1.2750-60

Stops 1.2765

Offers 1.2780

Offers spread through the 1.2800-50 area, with 2810 – 20 mentioned specifically. This range is a common support area when price is working its way lower (bottom of the bucket).

Bids 1.2655-50 (50 option barrier)

Stops 1.2640

Option protection ahead of 1.2625

Stops 1.2620

Another option barrier 1.2600

Bids ahead of 2900

Support Zone 2860-50

Stops 2840

Option barrier 2800

Offers 2980

Offers 3000

Offers ahead of 3020

Stops 3025-40

Offers 3040-45

I use a crude rule of 38% on a short term basis as a meter of continuation vs. failure, 23% on immediate spikes. 50% tends to fade less than this level, and I generally never seek to trade it on smaller timeframes. In other words, if 38% is breached, I’m hands off, and will wait for a short term trendline break for entry if 50% does indeed fade. Inner trendline here has some significant buildup, and this last drive’s spike was significant enough. Cable’s recent high following the spike coincides with the backend of 23% of the last drive.

Chart Source: https://www.tradingview.com/v/rQqfMFCW/

I wrote something in a recent post  had me thinking about extending our old diagonal trendlines article, and adding one more crucial element to the list (in line with one of the concepts discussed within it), and that’s the simple fact of ways to draw them “properly”. First off, there is no “proper” method. Lines are created based on heavy levels of confluence, nothing more and nothing less. But naturally, there are different ways to perceive them.

Being aggressive in your analysis is crucial. If more people did this there would be a lot less horror stories out there. But people can be disorganized and sloppy – so c’est la vie. But for today’s purposes, this means drawing trendlines to the point where your “edge” is simply a matter of whether or not you have done your homework and you have a heads up on what lies in the future.

Not just in the FX market, but with any market, this concept applies heavily, and is nothing new. There are several books that cover the topic, and once again, Tom Bulkowski’s name enters the blog post. He has done a fair share of work on these in his books, and I’m just going to provide a rough brush stroke here of the concept itself, and major points I find with trading them.

Understanding Their Value Intra-day

Most people draw inner trendlines without even thinking about it, and today, I want you to take that thought process a step further. Everyone knows the outer trendline, and everyone is probably used to fanning them. But the inner trendline, particularly in this market, tends to hold a lot of weight while attracting less public attention. This market is very messy when it comes to order flow. The amount of liquidity turns “obvious” levels into sandtraps for amateurs that utterly lack patience.

The earlier you can get in the market and make a move before price, of course, the better. When inner trendlines break, you typically get a lot less “messy” reaction to a backwards reaction vs. that of a more public one (not to mention executed in advance). The explanation for the reasons behind this is better left to opinion, which I won’t waste any time discussing here.

Follow the Same Rules as with Anything Else / Common Sense Dictates

When it comes to drawing these, follow the cardinal rule of drawing any line on a chart that we have spoken about here from day one: look for heavy hits and confluence.  So in essence, this concept is no different than that of drawing horizontal lines. If those heavy hits are coming from the outer trendline, so be it, but many times, they are coming from the inner. Reaching down and looking at smaller timeframes is oftentimes also required in order to draw these properly.

Tom’s performance metrics on the stock market showed them to be more effective than outer trendlines when used in certain contexts, and logically, it makes sense. In the case of a breakout, your performance will better if you’re entering earlier. In the case of a fade, the logic isn’t so clean (though he did not cover this): you’ll get more opportunities presented in terms of trading them, but if your fade is done prematurely (price reached for the outer trendline or further), just the opposite occurs.

But in terms of those fades, this market is notorious for using them all day long.  I say that without flinching because I am so used to seeing buzzing reactions around them.  If you’re using them in conjunction with other entry strategies, then the awareness alone is well worth the consideration.

And briefly, the rule “the bigger they are, the harder they fall” applies significantly here. The greater the touches, the greater the spacing between hits, the longer the trendline, the flatter the angle, the longer the movement once broken. This concept is of course no different than the ones that apply to our horizontal support and resistance lines discussed heavily on this site, and why they become a swarm of activity once approached.

The charts below show some very basic examples, but the idea is clear. I could spend all day marking up charts with these (as I do), because they happen so often. Something for the consideration tank.

Chart Source: https://www.tradingview.com/p/#published-charts

More: All About Diagonal Trendlines, Variations & How to Use Them

I’ve read a lot these past few days about this pattern, and most of it flat out bothers me. Ignorant articles seeking the demise of this pair based on very weak conclusions derived from the most basic concepts in trading price patterns. There is no doubt why so many are written in this way. Even a simple Google search for descending triangle brings up heaps of results labeling it as a continuation pattern. This is 100000000% incorrect and overall a very a naive and dangerous assumption.

Rule number one with trading price patterns is to never associate them with an immediate direction in terms of subsequent follow through. Every single one of them fails at some point, and these fail about 45 % of the time, if you follow the conventional wisdom that they “continue”.

Regardless, the underlying reasons to maintain the “sell”: is compelling, though I wanted to bring to light a couple of different things.

On a decisive downside breakout, I would set an initial target in the high 2800′s. This is a little more than half of the range and would stretch to fill gaps created on this last move higher. A secondary target wouldn’t be too far away in the high 2600′s (see chart for markup).

I like to see low volatility ahead of breaks on these. This usually allows enough time to pass and muster enough courage for traders to go ahead make the call, so to speak.

A pullback up into the range again will no doubt stir a mess. After (if we get it) a 50% pullback of the last leg (3110′s), watch your trendlines. This market has gone up, down, side, etc., for the past year. I’ve left little on the table in terms of longer term conviction and have been basically ready for anything.

The media seems to think we’re in a phase of disaster after last week. Damn you media, and everything you do to people.

This recording will (from what I understand) be up until the next event.

Recording is posted here: http://bit.ly/HNX81f

Currency markets went through 3 blow for blow rounds of varying market conditions within a window of only a few hours following today’s employment release. I can’t remember the last time I wasn’t in front of my computer watching this data, and today’s reaction was off the marker in terms of consistency.

I looked at EUR/USD and USD/JPY for the most part. In the land of the Japanese Yen, all was relatively “normal” with the exception of the initial jerk, take-back reaction in price. When that pair goes, it goes, so to speak. EUR/USD went into a trivial mess.

Typically, after the first half hour or 45 minutes, we see a direction get declared, and that’s essentially the “move” for the rest of the session, unless the data is a complete dud. Today, we had to wait until the US session was churning and burning for a half hour before this actually occurred, so a little “catch up” was necessary on the Euro. Everything started to tank. Equity markets opened significantly lower and other higher yielding assets did NOT appreciate the data and honored the headline number. Risk off, really off, for the remainder of the session (and the US market is continuing to bleed as I write).

I’ve got an annoying little rule that basically watches the 32% retracement for breaks in an underlying trend. When it’s gone, switch gears. 50% can and does fade, but protection is available on a 1hr. or greater. Yes, you can see the level get “splashed”, etc. etc., but once it breaks, that next level is the minimum you’re going to crawl to before anything happens, and most of the time, 50% (in a smaller context) doesn’t hold up.

As far as this top was concerned, we were once again in spike base territory, and has a triple tap at the highs quickly breached to the downside. If you follow me on Twitter I was pointing them out, but this was not an easy one to grab after the peak itself. You really had to just short it on the third thrust to get an ideal entry on this.

As far as the Euro’s move lower is concerned, sharp yet steady trends like this can only happen on rare days, and this is certainly one of them. Onto the next.

Chart Source: https://www.tradingview.com/v/XaPkd1lW/

http://www.nobrainertrades.com/events/month/

These events are hosted by friends of ours or myself only. Pretty much everything is free, with the exception of 4 of the 5 days week-long course in June (Monday, all day, is open to the public, the rest are for members).

My next event is going to take place on May 31st with my friend Aamar of PivotFarm, who has been a very good friend of mine for many years now. FX Evolve has a few more ahead of that, though.

These friends of ours all run services in different capacities, but I never want this site to turn into a commercial exploitation. Please be aware of the fact that these guys are on the calendar, and not others, because I know they will add value during these sessions.

There are still some small formatting issues I need to iron out, but everything else is rather self-explanatory. I will try to add more and what I can / when I can in time.

Offers ahead of 3300

Offers ahead of 3320 / stops

*Price*

3200-10 bids, expiry was touted, unknown roll off time

3180 bids

3170 stops

3140-30 bids

3110-00 bids