Slowkeys Intraday Setup Using Slope Strength and Diff

[slowkey]

Finishing my thought on divergence.

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Comparing the Magenta trend line on price to MACD we do see the histo pattern emerge with a green-red-green pattern. Easy to see the divergence that the white and red trend lines define on the MACD. Elder would define divergence only by the characteristic change of the Histo.

[slowkey]

Forex did not like the RBA Rate cut. I love this little indicator.

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[slowkey]

Just want to show why I like Fibonacci so much. This is the one I drew on the EUR/USD last week. Notice how the 61.8 has so far acted as resistance this week. Fibonacci is a very nice tool and really easy to draw on a chart just using the last significant top or bottom. It can be very powerful on the weekly and daily charts.

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Also do not forget the 100 and 200 moving averages on the Daily chart. The 200 has been acting as support to the EUR/USD for the last 3 trading days. See the chart below. You also see the 61.8 resistance clearly on the Day chart too. The 200 is the dashed green line I have the arrow pointing at.

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We basically have a sideways market at the moment and if reports are true there has been some Sovereign buying that is keeping us range bound. I would expect a retest again of the 200 moving average at some point. There is no USD news coming out in the AM and I really just do not get a feeling that we will see any strong fundamentals in the EUR zone during the next 24 hours. Trading a mix of technical and fundamental knowledge is not going to be in a lot of peoples comfort zone. Fundamentals I think more than anything else have to be learned by the trader to the point he can discern the impact of what he is hearing and have confidence he can use it to help his technical trading. Forex Live is a great news site and I like Jamie's rules. This site can be quite entertaining even if I do not always agree with the punditry. These guys know where the bids, offers , and stops are most likely to be and have good sources. These guys are all former bank traders and analyst. I have no association with them but they are rendering a real service to the retail trader and there really has not been anything like this before for the retail trader.

Basically Jamie says you should give a strong emphasis to a trading plan when Techs and Fundamentals converge. If they do not agree than side with techs.

So I think you should be looking for convergence as a rule when you start to look at the fundamentals.

[slowkey]

EUR/USD seems to be in about a 130 to 150 pip range for the last 5 days. The SDC is sort of flat to slightly bearish. We have had a couple of real nice moves on Friday and Monday.

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I could almost justify placing a trade at the upper 1.618 channel. However most of the action has been on AUD as the itsaquestion dashboard illustrated earlier. AUD is -.92 on the Baluda slope-strength indicator set to the 4 hour time period and EUR .41. EUR strength has come at the expense of the AUD and not USD weakness. Some of the movement on EUR/USD is a result of cross flows. For the last 16 hours the AUD has gotten just hammered by the EUR. Traders are unwinding their carry trades almost in a panic after the RBA rate cut.

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The weekly below shows where the 78.6 Fibonacci level is and it is a ways off. The question will be has the AUD finally hit a bottom and will it retrace past the 78.6. That would sort of signal it. The AUD has been very strong against the EUR since the 2008 crisis.

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[slowkey]

A beautiful chart of Diversion on EUR/AUD. You can also see it on the NT indicator in blue.

EUR/AUD is starting to run out of bullish steam. It may consolidate or we could see a correction since this was such a large 170 top to bottom move today.

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[slowkey]

So I am not sure I would agree with Elders more narrow definition of Divergence at least on a lower time period like the 15 minute. The reason is easy to see. Drawing the line on the MACD continues to define divergence where the histo pattern would be more confusing. Probably on the daily chart or 4 hour chart his definition would hold up better.

AUD is still getting sold off hotly. How goes China has a lot to do with how goes AUD. There is an interesting article in zero hedge about the largest city in China being on the verge of bankruptcy. A city of 10 million people in the heart of the biggest chinese province Guangdong. It is the economic power house of china near the south china sea. The province has over 100 million people and a GDP of over a Trillion dollars.

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[slowkey]

So far the best days for EUR/USD have been Friday and Monday. One commentator called the movement no rhyme or reason. Well good news in USD does not seem to be followed by much of a party. Really just a chop the last two days. However Non-Farm payroll on Friday and the first US presidential debate this PM could be putting a damper on movement. Better than expected data today in USD for the second time this week and if that happens on Friday who knows. The best thing to call the last two days is just Chop. Total top to bottom range today just 60 pips. We sit just - 5 pips under the open price. MACD just Flat really since Monday. All you trading EUR/AUD had the best party in town this week. Good example of Techs and Fundamentals converging.

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[slowkey]

Just a look at EUR/USD before Non-Farm pay roll.

Weekly Fibonacci from last significant high. The actual top on the weekly would have been in 2011. We have been on a 15 month down turn from that top. On Thursday we easily blew back past the 61.8 of the weekly Fib. We probably are forming a Double Top on the Daily.

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You might say we have hit bottom looking at the weekly. However it is not until you look at the Monthly that you get the big picture and get an idea of just how far EUR could really fall.

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So question emerges is the EUR overvalued considering the crisis in the EUR zone. Well I am not sure but there would seem to be room for the EUR to to continue south from the long view. Now looking at the Daily chart we can see where we are today before Non-Farm Pay roll in the US.

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Having drawn a Fibonacci off of the the recent daily top to the bottom of this short retrace we find ourselves at the 61.8 level exactly. The Daily could easily retrace 100 percent for a nice double top.

This can be seen better on the 4 hour below.

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It will have a lot to do with the non-farm Pay Roll tomorrow. It will be interesting to see if the consolidation continues right up to the announcement or if we will see a sell off in the London session. The odds would be on continued consolidation.

[slowkey]

So we have all good news out of the USD this week. A huge drop in the unemployment rate continues to spark risk on trading with the CAD the biggest winner today and EUR continuing to be happy after the words from ECB Mario Draghi on Thusday seemed to keep the EUR happy. AUD continues to be in the dog house which is doing nothing to help NZD except against AUD. So a different kind of risk=on trading. USD not in to terrible of a position in the long run. It has held below 78.6 of the recent top. There just has been no stong risk events in the EUR zone this week and a recovery in the USD will help everybody.

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I am hoping we get a risk=off Friday afternoon and I am fading Non-Farm pay roll at 1.3050. Hopefully we will not consolidate around 1.3050 and on a Friday I think that unlikely but it seems a safe trade at the moment. USD is fundamentally stronger this week with good news all week. I would rather fade news events when I see strength like this. Any way I just got up and did not see the NFP till just now. I would expect to make a few pips fading the report.

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[slowkey]

Big winner this week is the EURAUD bulls. The last 5 days of the Daily chart.

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