Sleeping Wolf... I don't like the way price broke over into January at all... I don't think we should be holding long positions at the moment in GBPUSD.. I'm still giving it a little more patience before I hop on board.. The candle for december signals a bottom should occour now or soon.. It is not a 100% guarantee that there is a bottom in place yet.. Be careful !

As for targets.. I use Fib targets usually...

Gday Brad and a Happy New Year to you. Followed your recommendation on the GBP / USD reversal. Entered long today @ 14450 and set a stop just below the lowest point last month @ 14350. Had my heart in my mouth when the price went back to re-test the lows but thankfully it held...and has now moved upwards.

One quick question, how do you calculate target prices? Are you using a specific tool or combination of Fib / Candle patterns?

Thanks again for your assistance and all the best for a profitable 2009!

Cheers

Luke

I'd say get your hands on anything from Steve Nison.. Books ? Sure why not ! --- Depending on your account balance (I'm not sure what kind of capital you are dealing with) I would advocate shorting USDJPY anywhere around current levels.. But I would also warn you of the high volatility present in this pair... So possibly expect upside before down side.. Just stick to your guns and dont over-leveredge and you'll come out a net winner .. For now the possibility remains that the phsychologically important 100.00 Number could cause some heavily whipsaw price action, But this will only be prelude to a major Bearish break sooner or later.. The longer term elliott wave structure indicates the U.S. Dollar will plummet against the Japanese Yen.. Even though many comments have come from the Bank Of Japan saying they will do anything in their power to stop the appreciation of the YEN, they can't, plain and simple.. Currency markets are not owned by the bank, they are owned by the people who need the currency (The People) .. The Bank can only try to manipulate the price fluctuation, the exact same way we try to, but their attempts to fight the mass phsycology of the people will prove to be futile in the end no matter what they do... Knowing that the Bank Of Japan is trying to keep USDJPY at higher prices as of late, they will continue to do so until it is impossible anymore then price will continue downward.. Have the patience to stick to your short USDJPY position if you hop on board, it could be a choppy ride, so just know what your in for..

Hi Brad.

Just got my hands on the Elliot Wave book so looking forward to get stuck into that. The Steve Nison DVDs might have to come in a little while....perhaps after I have some winning trades. The AUD/USD exchange rate isnt what it used to be and the set is about $700 US which translates into about $1000000000 AUD at the moment!!! I notice Steve Nison has a couple of books out, would you recommend them at all or better to save up for the DVD set?

I notice the USD/JPY rallied somewhat on Friday - would now be a good time to add to a short position as I missed out earlier when you recommended going short?

Thanks as always.

Have a good weekend.


Luke

I always start by looking at the monthly, then the weekly, then the daily and so fourth. --- As for stops--> You will want to place your stop about 5 pips above or below the reversal point (depending if going long or short), plus whatever you pay on the spread. I deffinately recommend learning Elliott Wave too, The book is called Elliott Wave Theory by Frost and Prechter. There is also another Elliott Wave book as well called Mastering Elliott Wave by Glenn Neely, both are excellent. You'll find the combination of candlesticks and Elliott Wave with help you in a big way. -- Also, move your stops to break even when the market allows you, and as price progresses in your favour move the stops up behind price to lock in your profits, but don't move them up too far, leave the market room to bounce around or you'll get stopped out of positions too early.

I use MACD and stochastics on occasion but not always.. They do help when you're first starting out trading, after a while they are not necessary because you'll be acustomed to what you are looking for.

G'day Brad.

Appreciate your prompt response and assistance. I'll look into the Steve Nison DVD as suggested. Another question - do you use other indicators when trading such as stochastics / RSI / MACD?

Also, when looking for trades, do you typically begin with looking at monthly charts and then work your way down to weekly / daily?

I understand about setting a stop and how to do it now so thanks for that. Typically how far past the reversal candle would you place a stop (i.e 10 pips, 100 pips or does it vary)?

My next goal is to learn where to set a realistic target - is it worth looking into Elliot Wave Analysis for that or do you have any other suggestions?

Lost a few bucks on the damn AUD / CAD but not too much so looking forward to the next trade.

Thanks again for your help - so many questions.....


Cheers

Luke (aka SleepingWolf)

Hi there Sleepingwolf. I learned candlesticks from the best, The man who introduced them to the western world, Steve Nison (The Godfather Of Candlesticks) lol His website is CANDLECHARTS - STEVE NISON He sells a DVD set that will take your trading to unheard of potential, I highly recommend getting your hands on it. As for setting stops, it's fairly easy, You need to wait for a candlestick reversal, once it is identified you place your trade with a stop above the reversal. (Pretty easy) If you know candles. -- PS: I'm not too sure about that short AUDCAD trade, I'm no longer in that one, price didnot move as expected and I'm not sure about direction in that pair right now so I'm not touching it right now until a clearer pattern emerges. There are plenty of opportunities elsewhere anyway.

If you have any questions or need help with anything feel free to shoot me a message, I'm always glad to help.

Hi Brad,

Long time reader - first time poster for me here! I am newcomer to to FX and read your posts regularly as I feel you are very informed and well researched. I'm an Aussie (dont hold it against me) and have finally decided to take the plunge on a trade you suggested - shorting the AUD/CAD pair...fingers crossed! I have a couple of questions which I hope you dont mind answering if possible:

1. Are you able to recommend a website which provides useful info on Candlesticks (and perhaps suggest which candles you consider to be most important)?

2. I'm having troubles with working out where to set stops and limit prices. Are there any 'golden rules' you use? Being new to charting I get really confused as to whether to use a short term chart such as 15-mins or longer term such as the weekly / monthly which you seem to favour. I did a FX course via CD which was excellent however it was using a very short timeframe of 15-min candles and due to work and family commitments it's hard for me to sit in front of the computer all the time. I'd like to be able to place an order, set the stop and limit and then walk away...and not have to monitor the trade every minute of the day. I understand the concept of support & resistance, Fib retracements but not the Elliot Wave analysis you use which seems to be useful for setting price targets.

3. I use IG Index to trade which allows me to bet a certain amount per point move - I can also IG to do the contract however I'm not entirely sure how this works and how much exposure I will have with the position. Which option do you use?

Sorry for the long winded e-mail.

Look forward to hearing from you.


Cheers