Inside the Currency Market: EU Levels

The fact that EU broke the all important line of demarcation that signifies long to short at 1.3214 Wednesday after the release of the FOMC minutes, now says we have a short EU market. We are now in sell rally mode.

Many tout the 1.3240 level to sell corrective pullbacks. This level is a minimum pullback since its only the 5 day average target. 1.3188 was yesterday's 50 day average target so hence the reason for its technical significance today. More importantly, 1.3185 was yesterday's 100 day average level so its break is another statistical significance. Further, this break will call continued EU levels in coming days. My target at this level is currently 1.2956 but will change slightly this morning before market opening.

Current EU levels are bounded by my rock solid probability bands at 1.3351 above and 1.3080 below with historic technical significance at about 1.3064. My bands change at a rate of about 20 pips daily so current levels are close until market opening when exact levels are re recorded for the day. For now they represent solid buy/sell levels and should be employed as a guide.

On a longer term, historic basis dating back to Jan 1 1999 when EU first began trading, 1.2830 is not only the longer term target but it just appeared in my MA set up Feb 14. We may see this level touted in coming days as a target.

For now, 1.3285 should we see that level is a solid statistical sell point.

My target for now is 1.3147.

I'm Brian Twomey author of Inside the Currency Market

8 members like this

Comment by Brian Twomey on February 28, 2013 at 6:08pm: Marco, Apologies, had a lunch. Take distribution mean divide by SD, Number coincides with range expansion or compression. See range compression in bands? Number rises with compression and warns of breakout or range market. NU was 91 Monday, dropped 200 pips.

Comment by Brian Twomey on February 28, 2013 at 6:09pm: Hi Leon, I saw the faux paus and laughed, we are okay Leon

Comment by Brian Twomey on February 28, 2013 at 8:55pm: what made the free float currency market in this modern day was Gauss, Euler, Pearson and Neyman as the 4 pillars for SD, e, Correlations and confidence intervals, they will reign forever

Comment by Noel on February 28, 2013 at 10:41pm: Thanks Brian, more food for thought

Comment by Brian Twomey on February 28, 2013 at 10:57pm: Marco, welcome, anytime, Peter, don't give up so easily, been watching this discussion since inception

Comment by Peter jcp on February 28, 2013 at 11:30pm: Hi Brian - first apologies - I know you have tweaked your strategy and probably will use MM with it as well for future trades etc.

My problem is - I am results driven - and only trade for money and to achieve as good as return as possible with a small risk profile - ie if I am only going to use half a percent or 1% of my capital but strive for 5%+ return daily - how can i do it ?

The model that works for me the best - certainly over last 5 yrs as been scalping - ie multi trades in a session with good RR's

That's why I am not really interested in 300 pip trades - unless they are from a 5 pip stop - as I just dont want to waste time and energy with 100 pip stops and waiting a week for a result.

Its just not commercially efficient - that's why HFT came about - the quickest way to make the best returns with lower capital levels.

With regards to Derek - I do agree with some of his comments - I am not just a debater or arguer for the sake of it - I just will say it as I see it - whether controversial or not - but as you are aware always with respect ;-))

Regards

Peter

Comment by Brian Twomey on February 28, 2013 at 11:50pm: Peter, yes upgraded my approach and it makes bundles. I don't knock you, your strategy or anybody's else's approach, never did , never will. I'm in favor of anybody's approach that works. Me and you Peter are and will always be on the same side. I thought watching this discussion, we could answer old unsettled and friendly debates about math and markets, stops, collusion since Derek has many many years on the inside and far more deeper than I would ever see in my lifetime. It has been fascinating

Comment by Brian Twomey on March 1, 2013 at 9:17am: Peter, All Respect these ranges until 8:00 am as the break comes, 1.3269,- 1.3062, 1.3289 -1.3042, 1.3302 - 1.3029, 29 - 42 is consistent with 13 -15 pip candles, 42 - 62 is off by 5 -6 pips. I respectfully suggest all to watch out

Comment by Brian Twomey on March 1, 2013 at 9:20am: Peter, The ranges were violated last hour by 3 pips, 11 hours ago during Aussie's Performance release violated by 11 pips

Comment by Peter jcp on March 1, 2013 at 9:21am: Morning Brian - I would be watching 3042 - 29 and 17 if we break under 60 and 53 - Have a great day - regards Peter

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