USD – No election euphoria then… US ABC consumer confidence has fallen to -50 in the week ended 9 Nov, as against -48 the previous week – still mired in the grim-looking state of personal finances and the wider economy.

GBP – UK house prices declined at -5.1% year on year in Sept versus a revised -4.6% in Aug, which initially was -3.4%. Not looking good in the buy-to-let market, but we knew that, didn’t we….

EUR- ZEW index of economic expectations, Germany, rose to -53.5 in Nov from -63.0 in Oct – still lowest levels in the noughties…

G20 – More noises about coordinated fiscal action at the national level from G20 countries in the run-up to this weekend’s meeting.

Following on from a previous post on the Williams Percentage Range forex indicator here’s a comparison with the %R and the standard Stochastic indicators Stoch (8,3,3) simple moving average.

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Williams Percentage Range, or Williams %R is a momentum indicator similar to Stochastic indicators and again is concerned with determining overbought and oversold levels.

%R = (highest high over x periods – close) / (highest high over x periods – lowest low over x periods) * -100

The range is from 0 to -100 with above -20 = overbought, and below -80 = oversold.
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Last week, as is usual in these days of the necessary correction, was all about interest rate cuts.
The Bank of England came out top with a surprise 150 basis point cut. Aggressive, or what… the question now being whether it will be passed on by the banks and lead to any real benefit… The largest rate cut since Tony Blair cut loose the Bank of England in 1997 apparently…
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More technical indicators – and the Awesome Oscillator is another variant on the simple moving average theme, not unlike MACD.

The Awesome Oscillator is 34-period simple moving average, (using smoothed values, ie midpoints of the bars (H+L)/2), subtracted from the 5-period simple moving average – and as per usual plotted as a histogram, green color bars higher than preceding, red color bars lower than preceding. Here’s an example showing a downtrend followed by reversal – the signal to sell is good, with it’s zero line crossing

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Found this interview with Tom DeMark while surfing around – DeMark has always stressed:

• “My method is anti-trend, contratrend, it’s pattern recognition and price exhaustion.”
• “Make certain you’ve made your technique objective – it should be a definitive process.”
• Although, also – “Good discipline, a knowledge of limitations and good money management are more critical than the system or indicator.”

He also says that he retired on leaving business grad school – markets & investment have been a retirement hobby ever since, and not a proper job at all… Think I know what he means, sort of….

Spend your time looking at 1-hour candlestick charts and then switch to a 5-minute chart and what happens?

Suddenly, all these exciting trends jump out at you, making you think that here’s some action, better get on it… Major movements, established trends, breakouts? None of these. Remember the vertical scale – these are just a few pips here and there, the illusion is of faster, more dramatic activity. If you switch back to the longer period charts it all comes back into perspective.
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Charts can do this to us traders…

Or, more accurately, indicators can do this… Having just seen a nice march upwards, along the top Bollinger boundary, there’s a bit of a squeeze, and now the trend is into its third (Elliott?) wave. Everything worth consulting says go long, so it’s buy….
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First up – this isn’t anything daunting in terms of the math – in market technical analysis the term fractal is used only to indicate a recurring pattern. There’s no difficult stuff like chaos theory or the theory of groups involved…

Fractals are a suggestion of reversal among larger market movements.

A bearish turning point fractal = 5 consecutive bars, the highest high preceded and followed by two lower highs.
A bullish turning point fractal = 5 consecutive bars where the lowest low preceded and followed by two higher lows.
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Floor pivot points are the simplest type of pivots used in forex.

From the previous period: H = high, L = low, C= close

Pivot (P) = (H + L + C) / 3

Resistance R1 = 2P – L
Resistance R2 = P + H – L
Resistance R3 = H + 2(P – L)

Support S1 = 2P – H
Support S2 = P – H + L
Support S3 = L – 2(H – P)

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