Dynamic Trend Profile

A couple days ago, I was able to identify a quality trade setting up in the Australian Dollar. (see chart 1 below) Thais trade exceeded its target.

Last night during our 8 to 9:30 PM Live Session, we discussed the current Australian Dollar.

One gentleman said he was long the Aussy from 7507. He said he took his trade based on his own analysis and wanted to see if the Dynamic Trend Profile correlated with his impressions. I showed him how the PC room currently has a triggered trade from 7510, only 3 pips away from his entry price. I then showed how he could possibly use that trade to help manage his current trade, to some degree. I told him, for example, last night when we looked at that PC chart in progress (see chart 2) it was approaching the intial breakeven target at 7657. To me, that might be a resistance area where we might want to re-evaluate his trade, or consider adding our own technical analysis tools to the chart to better define current potential resistance levels or later pullback supports. Finally, I suggested we continue to monitor this Forex currency contract for new DT room trade setups to see how long we could piggyback off this larger trend in progress before we ultimately witness a more healthy pullback. The buy day trade setups we talked about last night appear to have worked out (when I go home tonight will try to add those charts here later... i left that work at home where the work was done on a home computer) and now we appear to be generating some new day trade buy setups.

I think I also told the gentleman, at this point in the trading game we have to be just a little more selective today and into tonight with these new setups because this currency has not had a good pullback in a while, and because the PC room is identifying the initial breakeven target as a possible resistance area worthy of temporary respect.

My final observation with the Aussy Dollar is that it does appear to have more upward trendability at this time so we should continue to respect this Profile strength identification. (ie, see below a weekly chart, add some simple Fibonacci retracements or anything else you want to add to help you here.)

When we finally do get a good pullback in the Australian dollar, then the higher rooms should generate more new buy setups, ones which I am inclined to give more credence, more attention and respect at that time, particularly if the Aussy Trad Balance and DT Profile are still identify good quality strength with those setups.

Nice SB trade in Aussy this morning. =15 RF and 5 star labeling, seems to have worked well so far and is still in entry phase so quick mover!

I mentioned our "Live Session" discussion about the Austrialian Dollar earlier in this thread (see Wednesday, July 26), I went home last night and copied these files so I can share some of that discussion here.

First, the one chart below shows the end result of our Wednesday evening trade setup for that day trade room. (It was printed out a day later, but it exceeded its target.) A similar new day-trade buy setup came into place yesterday that it got stopped out before this early morning SB trade showed up. (I did worn in yesterday post to be more selective at that time.)

But the real thing I wanted to share with you from our live session was our "Room-Size" discussion. Our second chart below illustrates my attempt to explain the room size concept. I showed a weekly with its trends, then a daily chart with its trends, then a hourly with its trends. The thicker up arrow represents a bigger trend in progress on a higher time frame, such as a daily chart. Now, when you take that same chart and re-issue it to a lower time frame you begin to see more internal moves within that bigger move. I drew smaller arrows to highlight those smaller trends in progress within that larger overall uptrend. If you looked really hard, you might even observe even more smaller trends, or quicker moves within those smaller trends. If you wanted to do a very sophisiticated technical analysis of this concept you can see up to eleven layers of trends within trends. That, essentially, is the room-size concept-- looking at trends within trends within trends, etc, if they exist.

The room-size concept is nothing more than monitoring a multiple of time frames for higher efficency, then frame up which trends look more interesting. If a pullback or a pause period is identified within one of those trends, it eventually gets identified at the proper time and price as a possible trade setting up in that particular room. Before we take the trade, we take a final look at the quality or integrity behind that trade setup idea to verify it is really worth taking.

This is also why we use the DT Profile (see third chart below) to verify there is enough higher room strength to push that trend back up if there are pullbacks. As long as higher time frames or higher room-sizes are showing momentum either being maintained or accumulated more, but not strongly reversing, we continue to monitor those pullbacks or pauses of varying degrees for a manageable way to get back into that previous trend.

The Aussy looks vulnerable, particularly if it cracks the Sept 13 - 22 trading range lows.
The DA room currently has a Short in progress that just hit the initial breakeven point.

If a very aggressive trader looking for a way to enter a trade with too much risk, here is an example where I combined technical analysis perspective with the PC room buy trigger. I would have considered this trigger a while back if I could put my own stop loss much closer, just below the key pivot point shown in chart. Once a profitable trade I would use my own trailing stop to protect position until out of the woods and can figure a way of staying in it longer-term. Just a sample example for aggressive traders looking for unique trading ideas.

Here is the current Aussy/US SD and SC trade in progress...