The canada and crude are being watched closely as both are sitting near key decision levels.

So what’s going on in oil going into the weekend.  It’s quiet in the pit.  I’m looking specifically at the Dec. contract as that’s the month I’m short.

The bottom line of the Wave has help buyers in check but there certainly hasn’t been a sell-off as the U.S. Dollar Index continues to trade within Monday’s wide range.  My short position is just sitting…but boredom is and has never been a reason to exit.  However, if the market cycle shifts it will get my attention and if prices rally up through the top line of my Wave, my trade is no longer valid and I’m out.

The canada has me looking at a short off the Wave which means that the crude oil market will have to rally and this is opposition to my crude oil short…I have to be aware of that as I am trading both commodities and the forex pair.

I’m looking for a short off a hit from the bottom line of the Wave and that will initiate my short - as long as the market cycle is still down (four to six o’clock Wave angle).

So here I am, between a rock and hard place but with the understanding that if my crude oil trade fizzles out with a USD/CAD downtrend, the USD/CAD trade could be a viable entry.  Now here’s one more scenario and it’s not ideal but it is one I must consider if I am to short the canada, and that would be a break down through the support of the 233 LDL (Lazy Days Line).

 - Raghee

Another day of waiting to see whether the groundhog sees his shadow…only this time the groundhog is Congress.  With all the closed door talks all that we can do is sit and wait.

The question I keep getting is what the 700b bailout will do to the dollar.  I am split on that as I think the move could be bullish OR bearish depending on perception of the bailout worldwide.  Any significant cash infusion one one hand could deflate the dollar but at the same time, could this also give the world a chance to regain confidence in U.S. securities?

The dollar shows this “wait and see” psychology as there are two issues…FIRST, will there be a decision before tomorrow’s 3:00pm “deadline” and TWO, what will the final bill look like?

 - Raghee

The timing for this particular post is good since Friday the price action on the USD/CAD pushed below the bottom line of the Wave.  

Here’s where a failed swing meets the opportunity to be a trend reversal.  Now think about WHY the swing was merited in the first place.  The trade sets up because the trend was 12 to 2.  The trigger is when price touched the support of the Wave itself.  Now it’s valid as long as 1) the trend is in place and 2) prices stay above the bottom line of the Wave.

The trend reversal which is most often set up by a failed swing is a short as prices break the bottom line of the Wave with at least a -100 reading on the CCI.  I call it the Wave/CCI set up, or Wave reversal set up.  

Secondarily we must consider both the U.S. Dollar and the crude oil market.

This bounce is crude oil strengthened the Canadian Dollar and weakened the U.S. Dollar resulting in the deeper pullback.  The break of support requires more crude strength and greenback weakness.  I am looking to short crude oil as it trades into 107.50-108.00.

Currently the USD/CAD is resting on Lazy Days support at the 55ema.

 - Raghee

I like breakout trading, it allows me to take advantage of a move as price breaks congestion or consolidation.

These set ups must first and foremost, set up in a sideways market, which for me means a sideways, three o’clock Wave angle.

Now consider a few scenarios.  Since the forex is a 24 hour market, there are times that we can miss trades.  Maybe you’ve taken the trade and have either run out of lots to scale out of or been trailing stopped out.

There could be any number of reasons that we are now looking for another way into the USD/CAD.

Here’s the USD/CAD as it is today.

The trend is now up.  I have also drawn in the Autochartist pattern alert so you can see the market cycle as it was at the time - which set up the momentum entry long.

Now I am transitioning to swing (trend following) trading.

The play now is buying into the dip back into the top line of the Wave.

You can use the Lazy Days Lines to help with trade management…

- Raghee

I had a great time out in Las Vegas!  But I am so glad to be back!  This is the first week of my new schedule here at FXStreet with my Chart Pattern Trading webinar on Tuesdays and my premium webinar on my Forex Market Pulse on Fridays.

Las Vegas was hectic and fun as usual.  I did a four hour presentation on trading covering my Lazy Days Lines and Market Pulse.  Both of which you can learn about each week here at FXStreet.  I saw my good buddie CVJ in Vegas and had a chance to sit and talk with him about trading and the markets and more about what he feels a contributor here at FXSTreet should offer.  As one of the original FXStreet members I take his advice and will be implementing more about those ideas here.  Thanks CVJ!

I also had a chance to hang out with my good buddies at Interbank FX and their new Chief Currency Strategist Rob Booker.  Rob is one of those rare genuine people that I consider lucky to call a friend.  And without spilling the beans, he is working on some things that are really going to blow your mind.  I for one can’t wait to see the kinds of things he’s cooking up out there at IBFX.

By the way, I love the new blog layouts.  Kudos to FXStreet for the redesign!

So what am I going to be doing more of here at my Chartology blog.  Well for one, I want to get more chart pattern set ups here and incorporate my Lazy Days Lines as well.  My goal going into 2009 is to make more objective tools available to traders so that they can make decisions on trading based upon chart levels with less discretion.  You know discretionary trading for new traders in intimidating.  New traders certainly cannot trade with the confidence of experienced, seasoned traders as confidence comes from understanding and confirmation of the tools and set ups.

I also will be spending more time on what I think is the most important concept I teach:  Market Cycles!

So I think that Vegas was a great way for me to kick off this new week, new schedule, and new blog design.

 - Raghee

I’m sitting in Salt Lake City Intl airport waiting for my flight to Vegas and thought I would share a few ideas from the past couple days.  I was talking with a friend of mine and greattrader…and we were discussion economics and their place within an overall trade set up.

Economics, Fundamentals, News…I think they are most applicable on daily and weekly chart set ups.  As a chartist I certainly don’t ignore the undercurrent of any trade I make.  I think in many ways all good trades begin with an economic story that we understand.  It may not be a complete picture (I don’t think that exists) but we can be as well informed as we can be.  Much of that will be limited by what we UNDERSTAND.

So if a trade or an overal view of the market begins with an economic story, what exactly does tht represent?

I think for shorter time frame set ups it’s impending news.  e.g.  a 30 minute EUR/USD set up and NFP on Thursday night or Friday morning.  For longer term set ups it can be — for example — March ‘09 Fed Fund futures and the U.S. Dollar Index futures.  These are just simple examples…you can dig much deeper and look at many other correlations for getting an economic story you can wrap your brain around.

Looking at your charts with an understanding of not only the psychology but fundamentals effecting them can be helpful - just as long as you wait for price to confirm your research.

 - Raghee

I’ve had some active posting here at the Chartology blog these last few months…but this week I will be out of the office. I’ll be presenting at the Forex Expo in Las Vegas. I’ll be sure to post some pictures and thoughts once the show starts…

- Raghee

My buddie CVJ had some interesting thoughts about tomorrow’s Non-Farm Payroll and I thought I would share them here at the Chartology blog:

    With such massive activity in the low-yielding  currencies of the Dollar and the Yen…we certainly have an emotionally heavy Marketplace !

    Risk Aversion takes place when the unwinding…decoupling…and non-correlating aspects of "Fear" makes its’ presence known.

    The high-yielding high interest rate pairs begin to look for "safe haven", and repatriate into lower-yielding units like the Dollar and the Yen.

     Risk Appetite is the opposite of this phenomenon….when we see repatriation into the high-yielders, with the " Hollywood Star of the Show" being the Carry Trade concept.

    The ECB and BoE hold rates…my efficient and effective friend, Jean-Claude Trichet,  is rather muted in his ECB Commentary…the massive 3% falloff in Equities and the Dow….Crude still pulling back….do I need to go on?

    This paradigm shift is enough to make your puppy understand the concept of being "averse" to something…….

    Seriously….where does this leave us ahead of the most volatile Data flashpoint in Foreign Exchange…..the Non-Farm Payroll Report ?

    As a Trader, I am choosing to not participate. I have nothing against NFP, or News Trading work for that matter…that is not the relevant question.

    I do follow the NFP each month and really study Fundamentals and the "numbers inside the numbers"….I simply  choose to never taken  positions.

    I choose not to…simply because my trading style and comfort zone simply does not compliment it. If I have maintained logical and sound positions in the first place…the volatility of NFP does not tempt me and it is not needed.

    …And here lies the Lesson…….no technical reasons and complex Fractal analysis…no lack of Fibonacci confluence or charting patterns…..I simply pick and choose my "battles".

    That’s it…..no mystery.

    NFP is…to me…a "battle" I have already won before engagement.

    Every Trader is unique and different…. and it is our psychological levels of comfort that make us so in how we approach this business….

Thank you once again for sharing your ideas my friend!

- Raghee

The trend has been down since the roll-over through the Wave the end of July.

With a clock angle firmly at 4 to 6 o’clock it’s no time to try to pick a bottom.  If you are looking for a buy, it will be better set up on a time frame that is not in a mark down cycle.

There is no doubt that right now we are testing a thick support level but there is a big, BIG difference between trying to pick the bottom in a market (dumb, dumb, dumb!) and playing a break up through resistance (brilliant!).

EUR/USD daily

IF we get a worse-than-expected NFP number tomorrow it will create in a bounce in the EUR/USD.  I will be looking for a short on the 180 or 240 minute time frames if the set up triggers on the move higher.

EUR/USD 180 minute

And don’t forget that there have been short set ups on the shorter term intraday charts.  This morning there was a 60 minute short that triggered during my Forex in the Morning chat:

EUR/USD 60 minute

There will be key support levels below the "Support/Decision/Area" at the 610EMA Lazy Days Line at 1.4150 and the psychological level "0O0" (triple zero!) at 1.4000.

EUR/USD Daily with Lazy Days Lines

- Raghee