Posts by "montmorency"

And of course Zerohedge has its own particular take:
http://www.zerohedge.com/article/eu-pulls-out-nuclear-option-proposed-500-billion-euro-bail-out-package-largest-history

"Germany proposed on Sunday evening the establishment of a comprehensive plan of financial aid can be used for countries in the euro area, totaling 500 billion euros and involves the IMF, told AFP European diplomatic source. "Germany has put on the table a proposal of 500 billion euros," she said. It would include 60 billion euros in loans from the European Commission, he was in the last day, and 440 billion would accrue if necessary, the euro zone countries and the International Monetary Fund. This envelope would be established "bilateral loans, collateral for loans and lines of credit from the IMF," the source said. It would be in scale, if the subject of an agreement, an assistance plan is unprecedented in history.
Uhm, we have one simple question - where will the money come from? The EUR is surging currently on the kneejerk, although for all those who realize that the next step in this now entirely Federal Reserve mandated playbook is debt monetization, it provides just a good re-shorting opportunity. Of course, before our own Maestro Junior finds a new and improved way to pummel the greenback."

Speaking with my technical (or really price action) hat on again:
The bullish daily pin bar for gold the other day "correctly predicted" the subsequent rise above 1200.
Friday's daily bar is a little ambiguous I think, but I expect at most a small pullback or retrace, before another sharp rise, perhaps to 1226-1227, before any significant fall. The foregoing is all without any fundamentals thoughts whatsoever, but if the rush to safe havens is still on, that is also supportive.

Perhaps it is true that no one has any cash to buy it at the moment, but if they really want to, they will somehow :-)

Well I tried a quick short from 1196.5, but it didn't seem to be going anywhere, so I got out for nominal profit. Maybe it will fall now I'm out, but I didn't feel secure leaving it. I think It's going to 1226+ (again).

Getting serious again:
http://news.bbc.co.uk/1/hi/business/10089494.stm

"Could the UK face the same problems as Greece?"

Oh, it seems that the "Trading" thread has disappeared, so I will put this in here. After Radu mentioned hammers on a 1H chart in another thread, I got to thinking further about this, and revisited some threads on another forum written by someone who has written and taught a great deal about price action in general, often (not always) featuring hammers, or pin bars as he calls them (so do I), even if we both actually use candle charts, not bar charts. BTW, I am not talking about "James16" on FF, although he is perhaps the most famous exponent of this form of trading. The trader I am thinking about was taught by J16, but has evolved the method somewhat.

The name pin pars comes from "Pinocchio" the fictional character whose nose grew when he lied. The idea is that the "nose" of the pin bar is lying - it is pointing in the direction _away_ from where price is likely to go next. It is a reversal signal. However, in the way that this trader teaches it:-

- It's not to much the pin bar itself, but _where_ it occurs that is significant.
- It should be at a swing high or swing low
- It should be at a significant level - e.g. calculated pivot, or de-facto previous turning point (pivot point) ("it" usually being the tip of the nose of the pin, but this can vary).
- The longer the time-frame, the more reliable the signal, i.e. weekly more reliable than daily; daily more reliable than hourly.
- Ideally, it should be supported by the confluence of one or more Fibonacci levels; if more than one, so much the better.

There may be other provisos, but I think those are the main ones. It should be said that in this method, other price action (PA) candle patterns are also used in a similar way, but I will stick to pins here.

As I have said elsewhere, after I started taking more notice of fundamentals, I began to trade less and less on pure PA (including pins and other patterns). However, I was just looking at the daily gold chart, and noticed a few interesting things. I've put up the chart from this site, but the chart I am really looking at goes back further. Also mine is GMT, so it won't be identical anyway.

I'm just scanning the last 6 months or so from left to right on my daily chart, looking for pin bars, which I will number:-

1. 27 Nov 2009, there is a massive bullish pin - does not quite conform to type since it is not indicating reversal of trend, but continuation

2. 22 Dec 2009 - not quite a pin in his definition (nose too small), but it did signal a trend reversal, at least a short one.

3. 11 Jan 2010 - a trend reversal - and is that a bearish pin? Maybe.

4. 3 Feb 2010 - again, not quite a bearish pin, but (in this case) a trend contiuation, not reversal.

5. 5 Feb 2010 - Now here's a beauty: distinctive bullish pin with a real trend reversal

6. 24-25 Feb - 2 successive pins - trend continuation.

7. 3-4 March 2010 - there is a change of direction (longish pull-back rather than change of trend I would say) with no pin, although some might recognise other PA patterns here.

8. 24 Mar 2010 - now that's kind of a pin, but it's not working in the usual direction - the nose isn't going in the opposite direction of the move, but the same - anyway, upward trend resumes.

9. 12 April - pullback - not really a pin though.

10. 19 April - now there's a nice bullish pin, and up it goes.

11. 4 May 2010 - here we have a bearish pullback (no pin), followed immediately by

12 5 May 2010 - bullish pin, indicating (presumably) a resumption of the uptrend.


Now one of the reasons it's quite hard to trade these on the longer T/Fs, even though they may be more reliable than say, the 1H, is that (obviously), they don't occur all that often (even less often on the weekly chart). There are other reasons why they can be hard to trade, but I don't want to get too bogged down in detail here.

As I have said, I don't take as much notice of these as I used to, but perhaps I have been neglecting them somewhat. If pin bars (or more generally, Price Action) can be effective (at least on longer T/F charts) on their own, if they are also supported by fundamentals, they could be quite powerful, don't you think?


I'm now just looking back on my (broker's) copy of the chart, to see if I have been suffering from "selection bias" - am I just picking out those that worked and ignoring those that didn't?

Well, that is always a danger, and something to beware of.
I've only done a quick scan by eye, going back to 2001, and my immediate impression is:

- There are many examples of pin bars apparently signalling either a trend reversal, a significant pullback, or a significant trend resumption/continuation after a pullback.

- However there are probably many more examples of reversals with no pin bar pre