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Eurostoxx and Bund futures journal
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Eurostoxx and Bund futures journal

  #61 (permalink)
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bootsyjam View Post
Hi Rosh,
Sorry, hope I didn't come across that i was annoyed. I understand what you meant and was just explaining (as quick as I could) my reasoning for the trade. That's why the journal is here, to talk it through with either myself 9or others) so your input is always appreciated. Bund looks good for a move higher here. Would target 34 but then again my profit taking record is abysmal!

nws dude, all gd.

am leaving the bund alone til these stocks settle - if they do! all looks bit precarious at the moment. i had a setup to buy 17s then & scratched them.

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  #62 (permalink)
Keab
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Yeah eurostoxx/dax certainly liking today-I think it's safe to say it's a trend day!
The bund/eurostoxx correlation does seem to be in effect today doesn't it. If i was counter trend for the hell of it I'd be selling stoxx and buying bund but without something blindingly obvious showing a change in direction I' sitting on my hands. And cursing my early stoxx exit while I'm at it.

Good job on scratching 17s, the bund does look like it wants to go higher but is really not too sure is it...

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  #63 (permalink)
Keab
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order in to buy at 08 on the bund -missed by one pip. Bell curve extremes on all profiles, is nearly at an 00 level for support and price has formed a nice pin bar on the 15 min and looks good on the 5 min (ok I took a quick peek). Not sure I will wait for a retrace down back to 08 as that would make me less comfortable than getting on this early spurt higher.


Last edited by Keab; April 27th, 2015 at 11:26 AM. Reason: typo
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  #64 (permalink)
Keab
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Was looking at his but decided not to take it. Silly-I am trying to be a robotic trader, that's the essence of having a system. Didn't want to take it as price has gone so far already, but the set up was clear as a bell.

Price retraces to a low value area at the bottom of a lovely bell curve at the top of the range. Remember, I have to trade the edge of the bell curve, that is where value is.
Furhter confluence is that it is an 00 level which is always good for a bit of support/resistance.
Price made a little pin bar and went higher. Would not be a long term position if I had entered, is abit late for eurostoxx, and how much more energy is left in this move higher?
Still, a missed trade but hey, at least i'm picking areas and using logic to do so.

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  #65 (permalink)
Keab
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Was an absolutely fascinating trading day yesterday and so far today (no-really!).
This is simply because I am now understanding the theory, and power, of bell curves.
This is going to be a long post to put my thoughts in order and am still watching the markets too.

Looking a the charts from last night, I felt that eurostoxx would drop this morning as it had a P style Volume profile. However, it had quite a few zones below price where decent volume was traded which is not quite a proper P formation as you want to have very few contracts traded underneath the bell curve at the top. This ensures a strong move lower as if price breaks out of the bell curve formation at the top and heads lower, there is the strong implication that price will continue lower as no-one had any interest in trading there the day before, and volume/orders have not really been entered as there is no real certainty in any price area (at least that is my interpretation). This is why some spikes higher can then drop just as far-the liquiduity gap.

But as I said, this was not so clear on the eurostoxx (see chart 1) with a decent volume zone underneath the main bell curve of the day. Also, the arrow on the far left shows the high/tip of the bell curve from 2 days ago. So once again, it's an area where there has been interest/have resistance qualities. Also, see the chart on the right which is a 4 day composite of volume. There is a major gap in the bell curve here-no one was interested in trading this price in 3 days, so it's an area that is ripe for a reversal (along with all the other factors I've mentioned).

But the problem with VP is that it looks great after the fact a lot of the time. So how did it look before price reached this area on the 4 day cumlulative VP? See chart 2. There is still a massive step in the profile below the area where no-one has traded (pink arrow). So combining all this together, I didn't feel too confident shorting eurostoxx this morning. Price went into my late previous day's volume zone and went down as expected, but price action showed definite bullish reactions at lower levels meaning that a good short entry with little risk of a reversal was not to be had IMO.

As for yesterday, there was some fabulous lessons in the bell curve to be had. Note, I did not trade them, I was looking out of interest, it's a big step for me to just start trading levels like this. but it seems the way forward.

Chart 3 shows the eurostoxx after the big move higher. You can see that there is a clearly formed bell curve at the top of the range, and you can also clearly see a big gap in the profile at 3700/01 (pink arrow). I was watching this yesterday and was thinking that I would expect to touch this zone and go higher (hat tip to a trader whose site I simply cannot remember for explaining this pattern, although they did not use volume profile to see it!). Ignore the blue rectangle (it's the start of the late afternoon volume zone). Chart on the right is once again the cumulative 4 day VP |Again, the bell curve is clear.

And that's where I want to trade, the edge of the bell curve!
So what happens? Price went to 99 and then shot back to 17 (chart 4). I was looking at the pin bar on the 15 min but felt that it was too late (more on that 'too late' with the bund this morning). The pink line is the 00 area marked out.
Aaah those bell curves....
I should add that my long trade on the eurostoxx yesterday did not qualify as a scalp short at the top of the bell curve before it began it's move higher as it had reacted violently to lower prices, and I felt that this was a clue that price was on it's way. Although I clearly had no idea just quite how far....

Attached Thumbnails
Eurostoxx and Bund futures journal-28-04-chart-1.png   Eurostoxx and Bund futures journal-eurostoxxchart-2-28-04.png   Eurostoxx and Bund futures journal-28-04-chart-3.png   Eurostoxx and Bund futures journal-28-04-chart-4.png  
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  #66 (permalink)
Keab
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As for this morning, the eurostoxx bell curve has had it's way once again. Chart 1 is the 4 day cumulative VP (CVP from now on).
My job is to spot where a bell curve ends, and where a new bell curve starts, and to spot the zone between these two areas of decent volume where NO-ONE (relatively) wanted to trade. Because when price reaches these areas, they react. The pink arrow shows a clear low volume area between bell curves, and it corresponds nicely with some previous late afternoon high volume zones, and a previous high as well, so there is confluence.

And what does price do? Hits 85 and pops up 17 points! See chart 2 (the purple circle is the price action for the hit of 85).
Again, I have not taken these trades, but I'm sitting and watching these levels with great interest now.

One vital thing to note. This is technical trading using the existing VP zones as the extremes.
Prices that are deemed to be too high or too low are still valid because there has been no new news (hmmm-grammar) to change the market's perception of where value lies at price.

These technical levels have less validity once news has come into the market, as the perception of good/bad value with a bad jobs report/high CPI/a grexit (gasp can I dare say that?) will change that perception of price.

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Eurostoxx and Bund futures journal-28-04-chart-5.png   Eurostoxx and Bund futures journal-28-04-chart-6.png  
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  #67 (permalink)
Keab
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Ok, on to the bund.
Again, the bell curve was in full effect both yesterday and today. My long yesterday was a good technical set up but it ran into (you've guessed it) a liquidity gap on the 4 day cvp.
I made two mistakes:

1) Even though it was a good set up (see yesterday's posts) I did not react to this and exit the trade at breakeven and took a full loss. I was too closely wedded to my trade idea, and did not see the signals r.e. how price reacted once it reached these levels.
2) When price eventually broke through the low end of the bell curve, I did not react quickly enough, or didn't want to (think it was the second one to be honest) when price dropped. I knew that price would move fast if the low was broken, but I did nothing. Obviously it went a fair way down, but in a position like that (trading into good volume on the previous day, a quick profit of -10 pips isn't too much to ask for. To be fair to myself, it's a breakout trade and those trade positions always look like you're getting in at the worst possible time which does explain a part of my cautionary feelings. But the fact remains I knew what was going on and didn't react. I was annoyed my awesome trade idea hadn't worked so wasn't interested in the trade that went converse to my theory.

Fast forward to this morning. The bund has wonderful double distribution VP on chart 1 below (two bell curves basically).
The areas where no-one was interested in trading yesterday is marked in pink (about 26-32).
So I would be looking at this zone as being very important today.

In early trading, price moved lower into the previous day VPOC and heavy trading bell curve on the lower section of the day (chart 2). Price had a nice pin bar which showed that it din't want to be there. Long at 23 (wait for candle to close, then open position a pip or so below the close). Price takes off as expected. But. where does it hit? Go on-have a guess.
It goes as far as 31 and turns tail and shoots all the way to the bottom of the prev day's bell curve.

Insanity is apparently doing the same thing and expecting a different result (a bit like voting for LibLab Con in the UK or Democrats/Republicans in the US election and thinking things will change--ooooh political).

So what I did today was scratched the trade at breakeven. I did not enter short however as it was moving into volume so trade location was a lot less clear to me (see chart 3). But look once again at the reaction to the bottom of the bell curve. No-one wanted to trade there yesterday ( or in the last 4 days on the CVP), so in the absence of any news.....
Pow-chart 4, a complete reversal.

I have not traded any of this. I wasn't too sure how strong the reversal was at the bottom of the bell curve as zones can and do get old. I didn't like the idea of a 9 point stop loss to find out if this zone was still valid. Turns out it was!

But what I DID do, which I didn't do yesterday (the definition of insanity-remember?!) was play the break of the low volume zone at 31. I understood why it was important, and I understood that one it broke price would most likely pop higher. So I went long at 30 when I saw people pile in, and exited at 36.

You can see from chart 4 that the bell curve from yesterday is acting as a brake on price moving higher. I'm not short as it looks like price is trapped and is quite undecided right now.
If I was going to guess, I would say that price is primed for a move higher on the bund today, but right now I'm not sure what form that will take, and it will take some form of new information which makes large traders act differently to move things along.

Attached Thumbnails
Eurostoxx and Bund futures journal-28-04-chart-7.png   Eurostoxx and Bund futures journal-28-04-chart-8.png   Eurostoxx and Bund futures journal-28-04-chart-9.png   Eurostoxx and Bund futures journal-28-04-chart-10.png  
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  #68 (permalink)
Keab
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Wrong on that one-the bund is off to the races!

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  #69 (permalink)
Keab
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Phew-another long day.
I definitely prefer the morning sessions-whether it's freshness (both in terms of myself as well as the levels).
Let's face it, the POC sometimes becomes irrelevant in the afternoon if it takes into account earlier trading in the London session, whilst levels in the London session are still newer/stronger. Well, that's my excuse and I'm sticking to it.

No trades this afternoon, just watching.
Frustrating that I did not manage to get on the expected move down on the eurostoxx but tomorrow is another day.

Eurostoxx synopsis for tomorrow:
Nothing clear for me on VP. It's retraced yesterday's move-the liquidity gap. Has finished up roughly where it started, a bot higher, supported by longer term POCs. Was one nice move on the 15 min that went up to the top of a formed smaller bell curve and then dropped lower before/during news this afternoon. Need more confidence to take those.

Too tired to post loads of charts-this is it here (chart 1).
One interesting thing to note after the fact-not only did it turn at the low volume node as expected, it could be argued that the high volume node from the day before that it had retraced below may have acted as resistance. Will remember that one for the future. Low volume node has the arrow on the right, the previous day high vol node is circled.
I was confused by this trade as there was also a pin bar on the 15 min chart at the bottom of the bell curve so was a potential long. Need to work out when it's just a retrace and when it's a reversal-not easy!
One thing that I'm looking at is on a 5 min chart (oh yes-them again)-if there is an engulfing reversal bar on much lower volume then this could be a sign that a move is exhausted.

Speaking of exhausted, am too tired to go through the bund action today.
One thing I will say is that it has a perfect bell curve distribution today which means we could be on for a big day tomorrow if that range is beaten. Bund is in a chanel right now, so there's a lot of pent up energy looking to go somewhere....

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  #70 (permalink)
Keab
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Bund:
Well today was the day for the big unwinding. After spending a few days stuck in a channel, a break of this area would mean a capitulation by one side, so any moves either up or down out of the channel would be exacerbated by people exiting their positions for a loss. So in the case of the downside move today, those who bought expecting a move higher would have to sell to exit, driving the price lower.

As I mentioned yesterday, there was a pure bell curve on the daily volume profile, meaning that traders were balanced in their views. But what that also means is that there is a lot of volume committed to each side, and any breaks of the bell curve can result in violent price moves for the reasons I have given.
VPs of the previous few days all had multiple HVNs and LVNs (High/Low Volume Nodes) which shows different distribution areas. The clue that something big might happen today was that perfect bell curve.

So did I make any money out of it? Nope. Buying at the bottom of a range/just after a breakout terrifies me!
Breakouts are the most heavily watched, and most heavily gamed types of trade. Having said that, with that analysis behind me I should have felt confident taking a trade when I saw price moving. But where is a good entry? That's the eternal problem.

If i cannot get in on the initial break, then I should be looking to play the highs/lows of any new HVNs that form at the bottom of the move. Of course, this could also be a sign that a reversal is on the cards, but I think I need to change my contrary mindset and go with the flow. A sharp down move in good conditions (the channel etcetc) should give me confidence to enter on the first HVN rather than fearing a reversal. There was a good one in chart 1. I was looking at this as a potential reversal-it makes sense as price has had the brakes put on, the VPOC had shifted down and there was a volume spike (an exhaustion?). But with the conditions in place, I should have realised that it's a trend day and shorted the top of the developing range with hardly any volume traded above it.

Like I said, it's hard to know for mke which way price wants to go in these situations. I think that in the absence of any specific info, I have to rely on the analysis of the previous few day's price action. If the price had dropped to this area and it had strong reasons to reverse and go higher (HVNs/LVNs, Daily POCs etcetc), which in other words means it was running into clear areas of support/resistance, combined with a less clear daily VP (like the bund) then maybe more caution would be required.

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