Monday, October 11, 2010

10/11 Forex

  • Euro bear phase against the yen proves to be a ghost; pair back in bull phase (EUR/JPY).
  • Heikin-Ashi trend turns down on EUR/JPY.

ppspps openupper pivotlower pivot
EUR/USD US$1.39 US$1.35 sep13 US$1.40 US$1.30
USD/JPY¥82 ¥85.08 sep22 ¥85 ¥82
GBP/USD US$1.59 US$1.59 oct8 US$1.60 US$1.54
EUR/JPY ¥114 ¥107.82 sep14 ¥117 ¥108
USD/CAD C$1.01 C$1.03 sep24 C$1.06 C$1.02
USD/MXN M$12.41 M$13.07 sep2 M$13.06 M$12.28

The bull signal on EUR/JPY came early in the day on Friday. I noted at the time that the signal was ghosting, and in the end it faded away. This is a normal, fairly unattractive characteristic of Person's Proprietary Signal (pps).

The pair is trading equidistant between the midline and the upper monthly pivot.

I'm also starting to throw the Heikin-Ashi trend into the mix, not for any deep analytical reason but because I'm curious how it stacks up against the pps.

One downside of the pps, for me, has always been that second "p": Proprietary. It's black box, and only Mr. Person knows what goes on inside.

The Heikin-Ashi trend, by contract, is an entirely open signal, derived from Japanese candlestick charts. It averages high, low, open and close for the past six days, and produces a candlestick based on that.

A close above the 50% mark is an uptrend, below is a downtrend. My charts color-code downtrends as red and uptrends as green.

It is said that all the usual candlestick patterns work on the Heikin-Ashi charts, with less of a tendency to whipsaw. My interest in using it is as a simple signal: A trend change is two Heikin-Ashi candlesticks in a row that differ in trend from the candlestick that came before. For example, a green stick followed by one red is still an uptrend, but followed by two reds, it becomes a downtrend.

For entry and exit confirmation, I'm using an 8-day exponential moving average (ema8). A new Heikin-Ashi downtrend must be accompanied by a turn down in the ema8 before I open a bear position, and likewise a Heikin-Ashi uptrend must be accompanied by a turn up in the ema8 before I open a bull position.

In the case EUR/JPY, the ema8 has not yet turned down, and so I would not short the pair at this point.

The analysis uses the daily Person's Proprietary Signal, developed by John Person, and the monthly Person's Pivot, which he also developed.

These are black box signals -- the "proprietary" means that Mr. Person knows how they work under the hood, and I don't. But they have shown a fair degree of success in identifying good entry and exit points, and I find them useful.

On the glance, "pps open" means the price at the start of trading in the United States on the day the signal appeared.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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