1/30/2009:
Simple set up for those active to swing traders who trade across several markets and use other clues to trade by:
Gold is on a tear and wants to break 900 toward the 1000 level. Couple this with the Europeans holding the largest gold reserves in the world and the EUR/USD at strong support levels after several down days.
The Pound is showing some relative strength..for once!!!!!
So if your short the euro/usd, watch those stops.
If your trading it long based on short term lights, scale out as the trade works for you and make yourself up to 300 pips or so.
Nick P.
Today the market decided enough was enough and the DJI is down 200 + points near the close of the day. Tomorrows action (Friday 1/30/09) will be important for the bulls to hold, but if the trap door set up is in play, then the 8000 level in the DJI will get violated. We are currently at 8143 as of this post and falling. If we close below 8000 twice next week, then all bets are off for the Bulls for now.
I think the action in OIL was the key indicator to the direction of the market, unless the bulls are willing to set in and support the sell off.
Nick P.
Spend sometime today going through these ETFs...
Definitely make a few baskets so these don't fall off your radar...
Some are still a little light on volume, so be cautious...
As with any investment and/or trading vehicle, it is important that you understand how they work and the risks associated with trading them...
http://www.proshares.com/funds?products=&fundType
To follow up on my post from yesterday, the failed breakout is the perfect sign to a potential "Trap Door" scenario in stocks or currencies. The breakout tricks traders in the swing and day trading classes into getting long on the breakout for a quick momentum trade , or possible a longer term trade IF they think they caught the bottom or close to the bottom of a new trend. But the breakout fails intraday.
So the day trader keeps his position and it collapses on him intraday and convinces himself to hold it while the swing trader(s) are not too concerned because its a trade they will hold for a few days.
But the failed breakout is a powerful indication that can happen in one or two days as the sellers get aggressive and the stock or currency collapses. One simple action point I like to look for is if the currency or stock starts to trade below yesterdays close and/or close prices. And todays high is higher than yesterdays.
This type of pattern on the day will engulf the priors day action to where the high/low range for today is larger than yesterdays and it closes lower today.
look out below.....
nick p.
Traders..have you ever noticed how trades set up for a continuation in either direction. One very simple observation when your watching a stock or currency pair move to extremes in a trend, then snap back, contra-trend very fast and furious. This action is similar to a rubber band that is getting stretched beyond its limits for the time interval your measuring.
This reaction will bring out new traders and new risk or force exits in traders who have been riding the correct side of the trend. Once these traders are washed out, the snap back reaction fails very quickly (within a day or two usually) and new continuation of the trend evolves.
Why does evolve? well... new traders come into the market "thinking" the trend has shifted and its time to go in a new direction..In other words..the bottom or top is near..
The traders who have been on the correct side of the trade exit. Their bids or offers are gone now, these traders are no longer there to provide bids for support or offers for resistance. So the trap door is set for the new traders who thought the trend was changing and wanted to get in at a "cheap Price".
Hence, the door falls out from under them and the tends accelerates again. Trapping everyone on the wrong side!
Nick P.
In CT and CTFX, we have included a long list of "Predefined" Rules. These rules are templates to build strategies on, or simply add to your strategy to add a layer to your plan.
Go to the Rule Generator and look into the list of Basic, Light and Index (Majors for CTFX) predefined rules and read the descriptions. These are templates and guides and can lead you in the right direction when strategy building..or just adding to your plan.
Some of the simplest rules are the time blocks and spread limiters. But we get more in depth and specific with momentum rules and additional light rules that are pre-built to track a specific chart pattern for you.
Simply click on the Predefined Rules in the "Rule Generator", then read the descriptions of each set of rules so you can visualize how it might fit into your strategy!
Nick p.
