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Hidden Divergence

November 1st, 2007 @ 12:48 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 30, 2007.

Today’s Summary, by Sunil Mangwani:

There were a couple of intraday trades today, which we will go over before following up on the long term trades which we are into up to now.

On the GBP/CHF  we identified a Bearish Divergence, which contributed to a Short trade, as pointed out by one of our members. The price made higher highs, stochastics made lower highs, and the lower high on the stochastic was quite below the overbought level of 80. This means the momentum has been decreasing in this rally of price which gave us the second high. This signifies a change of trend. This was a nice divergence, and we went in according to our divergence trading rules.

We plotted our Fibonacci Fans, and also used other fib projections to get our targets for a technically correct and profitable trade. Read the rest of this entry »

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October 19th, 2007 @ 1:04 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 18, 2007.

Today’s Summary, by Sunil Mangwani:

There were no trades taken today, as the market was really not conducive to any sort of situations we were comfortable trading in. Instead, lets follow up with some of our previous trades that were in the running.

Lets start with our long term USD/JPY, which has gone wrong for our trade. We had been Long on the daily timeframe, based on the breakout of a Triangle Formation. The price did give us a decent move initially, due to whatever fundamental factors were in place, but has since made a turnaround. It went down and took out our trade. Read the rest of this entry »

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October 14th, 2007 @ 12:29 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 12, 2007.

Today’s Summary, by Sunil Mangwani:

There are a couple of intraday trades which we will follow up today. As I have said before, the method of analysis is more important than the result of the trade. Mind you, the result better be good – we are here to make money after all. But if you know which techniques to apply to which situation, you are more than halfway through.

Every situation warrants a different tool and a different set of techniques, and traders must be aware of what is going on around them. That is what we practice here in the Live Trading Room – chart time, chart time, chart time! The more you do it, the more familiar you get with it, and results follow.

GBP/JPY on 30 minute timeframe gave us a Regular Bullish Divergence, with the price making lower lows, and stochastics (or any other oscillator) giving higher lows. According to our “Rules of Thumb”, this is a kind of divergence we label as a “Class A” divergence. This type of divergence warrants an aggressive trade. Read the rest of this entry »

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October 11th, 2007 @ 11:58 pm by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 11, 2007.

Today’s Summary, by Sunil Mangwani:

Lets go over a couple of situations demonstrating the use of the tools which we employ here in the FX Instructor Live Trading Room for our analysis. It is critical to know which of your trader tools to use in which situations. Getting a good result from your trade becomes secondary – if it is technically correct, you have done your job as a trader.

On the USD/CAD, 4h charts, we see a strong, consistent downtrend. For this situation – a strong existing trend – we look for Hidden Divergences. According to our “Rules of Thumb” for Divergences, we use Fibonacci Fans and Fibonacci Expansions to determine our entry points and targets, respectively.

So far prices are heading well into the range of our target and are still going strong. The point of this exercise is – we have been taking decent trades in the Live Trading Room, because we have been applying the right strategy for the right situation, according to our methodology. Any upwards pullback in such cases would be seen as simply an excuse for a better position.

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October 11th, 2007 @ 12:04 pm by Hendra Wijaya

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Many scoff at the idea of “Forex for a Living”.

The disbelief in this idea is further encouraged by tales of trauma received by many an unfortunate trader. We have all heard the horror stories, the tragic accounts of so-called “newbies”, and are tempted to dismiss the idea of trading for a living right off.

On the other hand, we have success stories.

Traders come forward to say – “Yes, it’s very possible! Look at me, I live off my trading.” Some people who read or hear such talk say, “I think he’s a dirty liar!”. They think, “If he has money, its because he was rich before – it wasn’t trading that made him so!”, or “I don’t know how much he lost before he made a profit.”

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October 10th, 2007 @ 12:54 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 8, 2007.

Today’s Summary, by Sunil Mangwani:

Besides the trades that we execute, these recaps are becoming more and more important for the procedures which we use to analyze the trade, and the different tools we have in our toolbox to correctly assess the situation and make a good trade. Lets go over the different procedures we follow which hopefully culminate in a profit.

On the GBP/JPY, 1h charts, what we were looking for is a Hidden Bullish Divergence – waiting for price to come and find support at a Fibonacci Fan level. When it did so, we went Long on this pair, and managed to capture some profit on the upmove. This was a decent trade, but he point is that we identify a situation and use our tools to let price give us a confirmation.

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October 4th, 2007 @ 2:35 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 3, 2007.

Today’s Summary, by Sunil Mangwani:

Two trades today worth mentioning, taken in the Live Trading Room by ourselves and our subscribers. Both based on Divergences.

I want to go over the procedures we follow in the room, and the different methods we use to confirm the price action. As I mentioned before, we do not lay too much emphasis on the indicators – we concentrate on price action. Price action is never random – it always leaves its clues, and its up to YOU to decipher them.

We noticed a Hidden Bullish Divergence on GBP/JPY 30 min charts – price was forming higher lows, and stochastics lower lows. A classical example of a Hidden Bullish Divergence. We can use a lot of different tools to confirm our trade. In this case we used an Andrew’s Pitchfork plotted in a different way. When price came down and found support at the lower line of the pitchfork, this was the signal for our entry.

For this Hidden Divergence trade, where do our targets lie? We used Fibonaci Expansions to find out. The 127% level was the area where the price stopped exactly. Many ways to skin a cat, as they say, but all of them very effective. 150 points of profit on GBP/JPY when the trade completed. An excellent trade.

The other trade which we are still in the process of observing is the CAD/USD. We have been looking at it with a Bullish bias for some time now, waiting for price to give us a confirmation. The trigger for our trade was a similar Hidden Bullish Divergence – higher lows in price, lower lows in stochastics. In this case, we used Fibonacci Fans to confirm the support level for our Hidden Divergence. It is an excellent trigger for the trade.

One of the supports for the fans was also created by a Regular Bullish Divergence. This is one of the situations where you have a lot of odds going in your favor. We advocate aggressive trades in this case – enter as soon as you get a confirmation, jump into the trade, and start taking profits. This does not mean you are not confident about your system – with an aggressive trade, you are jumping in the market, and taking your profits because you KNOW the trade is going to be good. Lock in your profits and wait for price to move further. We remain confident on this trade and expect the market to go higher, with two different Fibonacci tools giving good targets.

One thing I want to touch on before I close – on USD/JPY, we have been looking at a breakout from a Symmetrical Triangle on the daily charts. We are expecting longish moves on this pair, and were waiting for confirmations to enter into a Long trade. We will follow this pair in our subsequent recaps.
Enjoy the video!

[youtube]http://www.youtube.com/watch?v=cI6cS3fLPwc[/youtube]

Click here to view higher quality versions of our past Live Trading Room summaries on our forums.

Click here to read the full article.

October 3rd, 2007 @ 2:09 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 2, 2007.

Today’s Summary, by Sunil Mangwani:

One excellent trade, one wrong trade, and one non-conforming trade today.

Lets have a look at GBP/JPY, on the intraday charts. This is our “excellent” trade. This is the kind of Bullish Divergence on which one can take aggressive entries – its a so-called Class A Divergence, giving very strong signals with a higher low on Stochastics, starting in the oversold region, and lower lows on Price. This is an excellent confirmation that momentum has definitely changed towards the upside.

We use a double confirmation in Divergence-based trading – Fibonacci Retracement projections to give us an estimate of the targets, with a target at 161% level at 236.25. This was an excellent trade of about 95 points of profit. More importantly, this was followed up step-by-step with our money management strategies.

There are more than one ways to skin a cat, as they say – and more than one way of following money management principles, which ever methods are most comfortable for the trader. We went with the ones most comfortable with us. Profits may be less than the trade’s full potential, but we can feel confident that we are protecting ourselves from losses at every moment of the trade, and are totally in control of our equity.

The advantage of the Live Trading Room is that trades in progress are observed and managed together with our students – everyone sees what we do and hears what we think. Nobody trades alone.

Next lets go over the one trade that went wrong. On the USD/CAD, we identified a Bearish Wolfe Wave. It is a 5 point chart pattern, and the market fit the setup perfectly. We expected prices to drop to the line 1-4′s target, but it did not, and went up to stop us out. You win some, you lose some. Losses are just a part of trading, and are to be expected.

We were also looking at the USD/JPY to go Long, and on the 30 minute charts we saw a Bullish Hidden Divergence. We were expecting price to go up, but it did not yet confirm our entry of a trendline break on the upside. We expect the entry should materialize some time during the Asian or early London session on Wednesday.Enjoy the video!

[youtube]http://www.youtube.com/watch?v=wOKIii9wN5U[/youtube]

Click here to view higher quality versions of our past Live Trading Room summaries on our forums.

Click here to read the full article.
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