Monthly Archives: July 2014

All Markets Mid-week Video Analysis, Review and Forecast, July 31, 2014

Hello traders,

two years ago, in 2012 I started sending mid-week updates to my Newsletter subscribers in order to provide additional information and as a way to show my gratitude and thanking my followers for their support and continued interest in my work.

I have recently resumed that good habit and here is my Mid-Week review for today Wednesdays July 31, 2014. In this post I am providing an updated analysis for all the 12 markets I follow currently, plus a guest pick AUD/NZD (requested by a follower): EUR/USD, S&P500 e-mini futures, Dollar Index futures, Gold mini futures, USD/JPY, EUR/JPYU, GBP/JPY, EUR/CAD, GBP/USD, AUD/USD, USD/CAD and NZD/USD.

Mid-Week updates integrate my weekly newsletter I only send to subscribers. Mid-Week updates come in the format of a 20 minutes (or so) video analysis of the current setups and where I anticipate algo trading pushing price into, for the different forex pairs and futures I follow. Find today’s video below:

 

(be patient, video is a bit longer and is being upload on youtube)

 

Note that price projections in my method are not from/to random levels and do not follow Elliot Wave, DiNapoli levels or other methods, but rather a proprietary method based on modeling effects of Program and Algorithmic Trading on price.

I like to help traders at all level of development “level plain” the trading game showing what banks, institutions and big hedge funds are actually doing (and not what they are saying they are doing). Follow my work to learn how to spot the Algorithmic Trading footprints.

I send a free Newsletter in the weekend and provide updates throughout the week. The newsletter typically includes 3 video reviews for (1) EUR/USD,  S&P500 emini, Dollar Index and Gold emini; (2) the Japanese Yen majors, i.e. USD/JPY, EUR/JPY, GBP/JPY & EUR/CAD; (3) the other majors: GBP/USD, AUD/USD, USD/CAD & occasionally EUR/CHF. Please, register here to receive the free weekly newsletter.

Note: if you find this analysis interesting, please share it on social media!

To your success!

Giuseppe Basile, CMT, B.Sc. Eng., MA.Fin,
SIAT/IFTA associate, Researcher and Trading Mentor
FXStreet.com Contributor and Toronto Forex Meetup leader

Fibstalker_face_picture
Giuseppe Basile, ~FibStalker

 

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Past (December 22, 2013) Weekly Review, Analysis & Forecast

Hello,

I realized how quickly time goes by. I am catching-up on more than six months of uninterrupted weekly video analysis. These are the videos analysis I provide to my newsletter subscribers which I then share on the blog after 3 to 4 weeks. But my backlog lately became huge!

 

Also this week, time to continue with some house cleaning…

 

Here below please find attached the three video-analysis related to past December 22, 2o13 (I know, a long time ago;  however, look at the positive side of it: this gives you an opportunity to review my past work 🙂 :

 

EURUSD, Dollar Index, S&P500 & Gold Weekly Analysis & Forecast Review, December 22 2013

 

GBPUSD, AUDUSD, USDCAD & NZDUSD Weekly Review, December 22 2013

 

USDJPY, EURJPY, GBPJPY Weekly Review & Forecast, December 22 2013

 

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for EUR/USD, S&P500 e-mini futures, Dollar Index futures, Gold mini futures, USD/JPY, EUR/JPYU, GBP/JPY, EUR/CAD, GBP/USD, AUD/USD, USD/CAD, NZD/USD and EUR/CHF and some high volume  stocks.

Subscribe my newsletter, it’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and weekly video-analysis that I don’t make available on my blog right away.

Have a good day.

~FibStalker

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Filed under Commodities, Dollar Index, English language, Euro FX analysis and trade setups videos, Forex, Trading Plan, Weekly review

Past (December 18, 2013) Daily Analysis & Forecast

Hello,

I realized how quickly time goes by. I am catching-up on more than six months of uninterrupted weekly video analysis. These are the videos analysis I provide to my newsletter subscribers which I then share on the blog after 3 to 4 weeks. But my backlog lately became huge!

 

Also this week, time to continue with some house cleaning…

 

Here below please find attached the three video-analysis related to past December 18, 2o13 (I know, a long time ago;  however, look at the positive side of it: this gives you an opportunity to review my past work 🙂 :

 

EURUSD, Dollar Index, S&P500 & Gold Analysis & Forecast Review, December 18 2013

 

GBPUSD, AUDUSD, USDCAD & NZDUSD Daily Review, December 18 2013

 

USDJPY, EURJPY, GBPJPY Daily Review & Forecast, December 18, 2013

 

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for EUR/USD, S&P500 e-mini futures, Dollar Index futures, Gold mini futures, USD/JPY, EUR/JPYU, GBP/JPY, EUR/CAD, GBP/USD, AUD/USD, USD/CAD, NZD/USD and EUR/CHF and some high volume  stocks.

Subscribe my newsletter, it’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and weekly video-analysis that I don’t make available on my blog right away.

Have a good day.

~FibStalker

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Filed under Commodities, Daily review, Dollar Index, English language, Euro FX analysis and trade setups videos, Forex, Trading Plan

Past (December 17, 2013) Daily Analysis & Forecast

Hello,

How quickly time goes by! I keep catching-up on more than six months of uninterrupted video analysis. These are the videos analysis I provide to my newsletter subscribers and which I then share on the blog after 3 to 4 weeks. But my backlog lately has become huge!

So, this week too, I continue with some house cleaning…

Here below please find attached the video-analysis related to past December 17, 2o13 daily analysis (I know, I know, a long time ago;  however, look at the positive side of it: this gives you an opportunity to review my past work 🙂 :

 

EURUSD, S&P500, GBPUSD, AUDUSD, USDCAD Daily Analysis & Forecast Review, December 17th 2013

 

If you want to get access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for EUR/USD, S&P500 e-mini futures, Dollar Index futures, Gold mini futures, USD/JPY, EUR/JPYU, GBP/JPY, EUR/CAD, GBP/USD, AUD/USD, USD/CAD, NZD/USD and EUR/CHF and some high volume  stocks.

Subscribe my newsletter, it’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and weekly video-analysis that I don’t make available on my blog right away.

Have a good day.

~FibStalker

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Filed under Commodities, Daily review, Dollar Index, English language, Euro FX analysis and trade setups videos, Forex, Trading Plan

“Social Dislocation” with Alfonso Esparza at the Toronto Forex Meetup Group, July 29 2014

On Thursday July 3, 2014 I had the honor and pleasure to host Alfonso Esparza as guest of the Toronto Forex Group, for a very inspiring, useful and practical presentation. Alfonso is a senior, experienced currency analyst with OANDA and publisher of MarketPulse.

As a trader and market analyst I am into using a “modern variation” of Fibonacci to spot areas where participation of widespread classes of algorithms can be anticipated. So although I value fundamental analysis, I rarely make reference to it in my trading, as I find it is very difficult to integrate discretionary tools into my rule-based trading.

But what I and the other several participants have learned from Alfonso at the July meetup is that there can be identifiable market, economic and geopolitical situations, like those developing from social dislocation (the topic of July presentation) that can be analyzed and explained using well defined conceptual frameworks. This can surely be of help to any trader using any trading style.

A great example is the study of recent movements in Turkey, originated by the third re-election of a president and a sit in in a park that snowballed into much larger protests. This caused – between Q2 and Q4 2013 – social unrest in Turkey that, combined with the potential withdraw or reduction of US money (after the FED started mentioning tapering), sent the Turkish Lira and the currencies of other emerging markets tumbling.

As a result the Turkish Lira lost almost 30% in about 6 months, but the Turkish equity market remained relatively stable, with a slightly downwards bias. This confirms a number of very important, and in some cases unanticipated, facts when it comes to trading special situations like, for instance, the opportunities originated by social dislocation.

1. The forex currency exchange against the dollar and other leading currencies will always see the wildest changes. Thus, the Forex is really the place to be when it comes to volatility, and you want to keep an eye and study social dislocation.

2. Quick outflows out of the affected country will take place, also facilitated by size and liquidity in the Forex market, and decrease in demand for the currency is typically witnessed.

3.  Investors’ confidence in the country’s equity market can wane after continues protests and it is possible that some investors will reduce their positions. However a “crash” is not to be expected.

4.  Commodities always represent the safe heaven and will rise as some of the outflows from the country are invested in metals

The above points also represent, according to Alfonso, the areas where to look for impacts of social dislocation.

As part of the presentation, a simple model for understanding the effect of social unrest has also been provided: the “Social Disruption Cycle”, which illustrates the evolutions of unrest as function of the possible responses from Governments. Unrest can be caused by several factors like, for instance, youth unemployment, inflation, population growth, economic crisis, political uncertainty.

Governments can choose to respond to unrest in different ways that include acceptance and dialogue or oppression and further violence or larger unrest.

The effects of internal factors like those mentioned above can also combine with several external or global factors that will make the analysis more articulated.

Some traders call it the “big picture”, the main global developments of the moment: the “macro factors”. The current macro factors to consider, not only when evaluating social dislocation, that were discussed are:

1.      US Fed tapering and Bank of England anticipating a potential hike

2.       European Central Bank swamped in the deflation battle

3.       A 2% inflation goal of Bank of Japan (part of 2013 Abenomics)

4.      China slowdown

I like to conclude this article with a brief mention of another model offered by Alfonso. As an engineer and practical lover of conceptual frameworks and models, I could not leave out the “Disruption and Market Reaction” model.

Particularly interesting is the role of social media in current markets: the bad news will break out whether the government and media will want it or not, and the Forex market will be the first to record the depth and anticipated effects of the social unrest.

The other markets will typically wait and have a clear idea of the size and scope only after the government response, and international and social media will give a reading on the situation. Depending to the type of response, markets will calm down in case of peaceful resolution or continue their downward trend in case of oppression.

OANDA has gracefully offered access to the full recording of the presentation, including the Q&A session, and I heartily recommend you watch and learn from Alfonso. The presentation also explains the three steps to avoid being blindsided by social disruption and how to correctly read the facts, in relation to the dimensions and effects on the Forex exchange rate, the actions that can be anticipated and taken on investments and the monitoring of other asset classes.

The simple and effective “framework” offered by Alfonso is completed by the current analysis of special situations represented by Turkey, Thailand, Greece, Brazil and Ukraine, offering both a lucid reading of the current environment and model examples and study cases of about how to go with the analysis.

Watch Alfonso Esparza’s presentation: “Social Dislocation: Identifying Actionable Strategies and Potential Immediate Market Dips” on MarketPulse.com.

Alfonso is a senior currency analyst with OANDA and publisher of MarketPulse (www.marketpulse.com), a site specializing in forex, commodities, and global indices research, analysis with the goal to provide timely and informative research on major macroeconomic trends, technical analysis, and worldwide events that impact different asset classes and investors. Alfonso can be reached at alfonso@oanda.com

Giuseppe Basile is a CMT, trader, mentor, technical analyst and active market researcher for IFTA/SIAT, in the markets since 2001. He is publisher ofwww.fibstalkertrading.com specializing in forex, futures and stocks trading and a unique trading edge: spotting Program Trading footprints on price. Giuseppe is FXStreet.com contributor and host of the Toronto Forex Meetup Group and can be reached at fibstalker@gmail.com

"With Alfonso Esparza at the Toronto Forex Meetup Group", July 3, 2014

“With Alfonso Esparza at the Toronto Forex Meetup Group”, July 3, 2014

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This week’s focus of my newsletter, July 28 2014

Dear traders,

this week’s focus of my newsletter has been on…

  1. My video analysis, review and forecast on 12 markets using the FibStalker methods (I keep adding markets…)
  2. What you find on trading books and mainstream trading education about the use of Fibonacci will not make you successful in the markets… I will tell you why.
  3. My research papers related to trading methods, HFT and Money Management in Modern Markets

Follow the instructions below to get the information. You are still in time to get the analysis for this week

Register here to receive the free weekly newsletter.

Note: and if you find this analysis interesting, please share it on social media!

To your success!

http://eepurl.com/pV6mL

Giuseppe Basile, CMT, B.Sc. Eng., MA.Fin,
SIAT/IFTA associate, Researcher and Trading Mentor
FXStreet.com Contributor and Toronto Forex Meetup leader


Giuseppe Basile, ~FibStalker

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“Why traditional use of Fibonacci retraces will not make you successful?”, July 27 2014

Why traditional use of Fibonacci retraces will not make you successful?

Here is the reason. Read this article carefully…

I never considered the use of the Fibonacci numbers in my trading…

Until I have discovered that some of the Fibonacci numbers – a very small set – can be used to model the participation of powerful classes of algorithms that are very active and widespread in modern markets.

In today’s markets human participation and volume generated in exchanges is only a portion of that generated by algorithms which, in some cases, exceeds 80% of the total.

If that is the cases then (and it can be proven), why traditional uses of Fibonacci traces found in literature are still regularly proposed by trading experts ?

Are implications of the use of traditional Fibonacci fully understood?

I do not think so. Let me explain why.

First of all we should ask why the majority of the Fibonacci levels are not significant when modeling institutions’ algorithms, probably the strongest power in the markets, backed by billions of dollars?

Secondly, how are the Fibonacci numbers derived?

If Fibonacci numbers are a wonder of nature – i.e. we find them into manifestations of nature, like the DNA helix or a strong hurricane structure – in a recent research paper published for IFTA/SIAT, I have shown how some of the numbers like 38.2%, or 23.6% are engineered in a way that not necessarily reflects manifestations in nature.

So, from a practical point of view, we may well be dealing with pure human inventions rather than levels that explain or help trading the markets. Levels that are “grounded” into real market behavior, as I like to note.

Thirdly, why Fibonacci number are considered useful in trading?

The simple argument – according to traditional literature – is that trading any market is comprised by free willed individuals. Fibonacci places “natural limits” to how excited or depressed a free-willed mechanism will expand or retract into. Therefore, you can look for a Fibonacci ratio to catch the expansion of price or the retraces of a move.

Unfortunately, when it comes to practical trading, Fibonacci has to be paired with other trading techniques. Some writers like to make a parallel with the 3 best-non-kept secret to investing in real estate: Location, Location, Location.

In fact the trading equivalent, they say is, is Confirmation, Confirmation, and Confirmation.

I would rather say it is Psychology, Psychology, and Psychology.

Which brings to the fourth point: why confirmation? And what are the consequences?

Confirmation is needed because Fibonacci levels alone are not enough.

We do not know where price will stop, i.e. at what level. Moreover, typically price will overshoot or undershoot a level in a totally unpredictable way that confuses traders.

For this reason, the most immediate fix has been to consider other supporting techniques, e.g. price patterns or indicators, so that a trader would get involved at a Fibonacci level, only when the confirmation techniques all agree.

If this concept makes sense from a conceptual point of view, it does not mean is the way to go to be successful in the markets.

And, in fact, it is sufficient to look at the statistics for a confirmation. Again and again we observe that over 90% of traders still lose consistently in the markets.

If use of Fibonacci – in the way it is proposed by the traditional literature – was any better, the number of successful traders would be much higher. Don’t you think?

So what is the problem with confirmation?

In my research I have identified two major issues:

  1. Use of confirmation is complex for new and experienced traders
  2. Some uses of confirmation are flawed both from a conceptual and practical view point

Let’s start from the first issue.

The majority of people, including experts, think that you can add several techniques and use their reciprocal confirmation for practical trading.

Nothing more removed from reality and practice.

These people seem to forget that trading is a numbers game.

When you use different techniques for confirmation you have also to mind the main problem: reconciling the signals of each and every one of these techniques.

Traders who use several confirmation techniques never seem to mind the probability of each and every ‘combination’ that these techniques can present themselves in a particular situation.

Plus the indications from these techniques have to be reconciled with price itself.

Therefore, initially traders get excited by the idea of confirmation, but then they start realizing that, indeed, their trading becomes even more difficult.

The reason is that traders do not have the knowledge and the skills to reconcile all the possible configurations of the indicators, plus they do not know how to reconcile indicators that offer opposite readings.

Moreover, the majority of traders, including experienced traders, do not use a probability, reliability, expectancy and frequency of opportunity in their trading.

So, confirmation is only useful if you employ a very limited number of indicators and, even in that case, it is still complex and tends to shift trading into discretionary approaches, a sure recipe for disaster and lack of success for starting and experienced traders alike.

The second issue mentioned above (e.g. flawed use of confirmation) is related to the way the techniques are used in confirmation.

In my recent research paper I have documented some issues like the ‘inversion of semantics’ in using retraces and  the practice of using the clustering or confluence.

Confluence is when multiple Fibonacci levels are identified in the same area from different Fibonacci traces. The areas where levels fall close to one another identify ‘clusters’ deemed to be stronger support or resistance areas.

The reasoning behind confluence areas is that of confirmation. However, how can single, unreliable Fibonacci levels come all together to identify something that is more reliable?

It would be like thinking that a bunch of inexperienced and unreliable players could come together to form a great basketball team that wins the season.

How probable is that? Could that ever happen? I do not think so.

Still you find a lot of traders who speak with confidence about confluence and clustering like it was an effective technique. It is not, and you do not have to fall into the trap.

Yet Fibonacci numbers can be employed in a very effective way when used in what would generally be considered a totally unconventional approach (and here lies your edge), to explain price structure in modern markets.

Some of the Fibonacci numbers can be used to model the presence of algorithmic trading on all timeframe in high volume markets, which includes equity indexes, large stocks, major forex pairs, commodities and other highly participated asset classes.

The fact that I found fascinating is that this way of looking at the market enables techniques unheard of before, like procedural tests of areas of support and resistance (a technique I called FibStalking timing) and price discovery.

Particularly, price discovery – a technique to extract information on what price can do next – is enabled by the same levels used for the stop losses.

Moreover price discovery is often obtained without risking any money in areas where timing is performed through the FibStalking technique.

To learn more about the FibStalker methods that can enable you to trade and explain price and get involved in the same price areas where algorithms do, as well as, use a method that incorporates the psychology of the markets, check out the information in www.fibstalker.com

The simplicity of the methods and reliance only on price information, is what a lot of students and followers like and appreciate about my work.

 

If you like this article and it makes sense to you please share your own stories and thoughts about using Fibonaccileave a comment on the blog or drop me an email to: fibstalker@gmail.com.

 

In my research and practical trading I study the effects on price of classes of algorithms in high volume markets. If you are interested in a new and effective trading edge, check my work at www.fibstalker.com.

Happy Trading

~FibStalker

WHO IS GIUSEPPE BASILE?

Giuseppe Basile
Giuseppe is a Certified Market Technician and swing trader, IFTA and SIAT associate. Holds a B.Sc. in Computer Engineering and a MA in Finance. In the markets since 2001, became trader and mentor in 2007. Studied with several traders in UK, Europe and US, adding over 7,000 hours of screen time between 2009 and 2013 alone. In 2012 launched FibStalker, a blog specializing in forex, futures and stocks trading, where he also runs a free newsletter and publishes daily videos with actual setups and complete trading plans.

Giuseppe’s unique method attempts to spotting footprints of Program Trading, a powerful class of algos that governs the markets. Giuseppe is a rigorous researcher with several published papers about money management, automated trading, HFT and innovative timing and trading methods.

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