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

We talked about Fibonacci-based moving averages on my post on August 29th.  What's funny to me is the first time I started calling these my "Lazy Days" support, resistance, and trendlines.  It was on a trip down to one of my favorite restaurants, "Lazy Days" in Islamorada. 

(Islamorada is about halfway between Miami and Key West and one of my favorite get-a-ways...far enough to feel "out of the office" and close enough so that if I need to really be back in the office I can be in just over 120 minutes.)

I am a discretionary trader, that means that the tools I use can be subjective. If there's one thing that traders are always looking for it's objectivity and I will be using alternate tools to add more objectivity to my trade entries.  Since I draw most of my lines and levels on my own or with the help of my automated software or Autochartist, I have ways to speed up the time it takes to go through all my forex, futures, and stocks charts. 

On one of my recent trips to my favorite restaurant, I decided to take a look at some of my positions (mainly daily chart trades) while I was at lunch.  I had bought a new laptop a few days earlier and forgot to install my automating software...so I decided to to put my Fibonacci-based moving averages on the charts.  I had plenty of reason to trust these levels as I had plenty of data and chart print outs on them from my "wave development days".

So in between bites of the most delicious coconut-encrusted, snapper sandwich I've ever had in my life, I was scanning my charts and saw the support and resistance that the "Lazy Days" Fibonacci-based lines provided.  I quickly noticed that as I drew in my support, resistance, and trendlines manually how often they lined up with the Fibonacci-based moving averages.

I'll talk more about how to use these lines in the coming days and weeks as it will be a part of my next book, which I am very excited about.

But here's a few examples of short term momo set ups...since I used so many longer term charts in my August 29th post I want you to see how they work on shorter term intraday charts.






..and here's the daily on the swissy in a Fibo-squeeze:



and another momo play on the 30 minute dollar-yen:



Try out these "Lazy Days" lines for yourself and see how they are an effective alternative to the more subjective support, resistance, and trendlines levels on your chart.

Tomorrow I'll be doing a 90 minute live webinar on these tools and more.  You can register free at raghee.com.

Hope to see you there!

- Raghee

I have been using Fibonacci-based moving averages on my charts almost as long as I have used the Wave (Raghee's Cycle Indicator) on my charts and on all my time frames.

The initial testing that I did before deciding upon the 34 EMA H/L/C had me experimenting with the Fibonacci series up to 144 and beyond.  The number beyond 144 were ruled out as they were to slow to be nimble enough market cycle indicators however I did keep the research on the 233, 377, 610, 987, 1597...all the way to the 6765 because of the dynamic support and resistance they consistently identified, especially on the daily chart.

Throughout my trading I have always incorporated Fibonacci in my trading mainly with the Wave and the Fibonacci retracements and extensions.  Fibonacci is a mathematical rule of nature, and it is that belief that has fueled my pursuit of these numbers.  But that certainly is not enough to stick with them.  The reason I do is because I see the levels these numbers help me project act as effective support and resistance levels time and time again.  It's that confirmation that created my confidence.

Since seeing is believing here are a few examples to take a look at.  Hopefully they will pique your curiosity and you will begin experimenting with these moving averages in your own trading.

Just as my Wave is made up of exponential moving averages, so are the other Fibonacci based moving averages on my charts.

Remember just like every trading indicator, these moving averages identify support and resistance.  It will be your strategy and the market trend that will dictate what you do with these "decision levels".

- Raghee

 I've been scanning the cross-rates today which is something that I don't do daily as most of my active forex trading are dollar-correlated pairs.

Since the dollar is range-bound and even moving with the crude oil market due to independent, major news in each I thought the timing was right.  You can read more about the current state of my dollar-correlated trading here and also learn about when I look to stop trading and what the clues are right now.

In the meanwhile, let's keep an eye on the 15 minute EUR/JPY as we close in on the Asian session open.

The trend is up and the play I am interested in is the short.  Why?  Because the EUR/JPY has a double top at 161.52.  Ofcourse a breakout/continuation is certainly a valid entry but a reversal short with the ceiling overhead and the "50" pip psychological level would be moving with the larger trend.

Remember though that a trending pattern has three possible entries:  reversal, trend follow, and breakout.  Don't ignore that the trend continuation also can be played with a swing off the top lines of the Wave at 161.20.

- Raghee

I'm not sure why questions seem to come in waves, but it seems many of you have aussie on the brain...the AUD/USD.

I first posted the daily aussie's Dow 1-2-3 short set up and Fibo extension update back on July 17th in this post. 

There has certainly been a lot that has happened since then!

And it always seems that during extremes there is this sudden shift to how and when a reversal will take place.  For every entry there's got to a be a set up before we shift to a buying mentality after a dramatic and/or extended downtrend.

Ok, first psychological trap:  Bottom (and top picking) is for losers.  It's the glory trade, the ego trade, the "look how brilliant I am to pick a top/bottom" trade.  Don't do it.

Seriously, think about it this way.  Realize that anyone short (I am still hanging on to a single lot as I have scaled out of my original Dow 1-2-3 set up) is still looking for lower lows and navigating through each support level. I'm conscious of the fact that one of the support levels will finally being a bounce or stall BUT I'm not looking for a reversal buy on the daily chart quite yet.

A key low at 0.8513 was broken but that's not the significant low that is being watched...that low is 0.8500.

Today's session low of 0.8495 is a sign that the "00" buyers are still hanging in there.  But each push by sellers is chipping away at this "00" support.  This psychological level is where the battle between buyers and sellers is being fought.  With the slight bounce I'm seeing there is indeed reason to think that in the near term 0.8500 will hold. 

There is 30 minute and 60 minute RCI resistance between 0.8546 and 0.8599.

On to the weather...As many of you may know, then "Tropical Storm" Gustav was upgraded to a hurricane.  I set this trade up when I read the NOAA report (I live in South Florida so it's a part of life...).  For forex traders, this means that the crude oil market is in play with the storm path decidedly Gulf-bounce and that has in turn effected the dollar...which ofcourse has effected the dollar-correlated majors.  You can check out my "weather report" here.

Finally a big thanks to those of you who joined me this morning for the my weekly Chart Pattern Trading webinar.  We had a few new traders in the room who had questions about the RCI (Raghee's Cycle Indicator" aka the "Wave"). 

About the name change:  My "Wave" was all too often confused or associated with Elliot Wave (it's not).  And frankly, had I known when I put this tool together and started testing it all those years ago that I would be writing books, traveling, teaching, and posting charts all over the web, well, I would have given it a better name!

The RCI (aka Wave) is three individual 34 period exponential moving averages.  One is set on the high, one is set on the close, and one is set on the low.

- Raghee

I received some really good emails regarding the prior post regarding the swing trade and I thought I would share the gist of them here since a couple thoughtful points were brought up.  Thanks for your feedback.

The first and I think most important point was that the trade, when it did finally trigger during the Asian session, represented a 21 pips risk at entry.  The point of validity (stop loss) on swing trades is the opposite side of the RCI (aka Wave) plus five.  In this case that price at entry was 109.61.  Remember since the RCI is dynamic resistance in a downtrend, that price level can change.

I also liked many of the emails I received mentioned the fact that there was a second chance short entry at between 8:00 and 8:30am EST that morning.  And that is correct!



The RCI/CCI short did not follow through immediately and offered a chance for selling that morning long before the swing short set up.  While that has no direct bearing on the swing short getting stopped out, it does have a bearing on being able to capitalize on the initial set up and playing during a more reasonable hour of the day.

- Raghee

The 30 minute dollar-yen has turning over and begun trending lower.  The initial set up was a Raghee's Cycle Indicator/Commodity Channel Index (20) short.

The trigger came at 2:30am to 3:00am EST.


Now, if you're anything like me...you're probably sleeping.  My active trading hours are roughly 7am to Noon. So as with any 24 hour market, you have to have ways to set up another trade.  In this situation the early morning turn over led to a down trending market and a four to six o'clock angle on the RCI.

Now I'm looking at a swing short if prices can bounce to the bottom line of the RCI (the 34 period EMA on the low).


A couple things are going for this entry.  First there's a good chance it will trigger during the Asian session, and second, I love the "50" psych number as resistance as the current number we're looking at is the 109.49 level.

- Raghee

I'm posting this partly for a comment left in the previous post ("Trade Management on the EUR/JPY 240").

While I am going to walk through them step by step, keep in mind that these are two separate trades.

Playing a trend reversal trade is especially challenging when the previous trade was a trend following swing entry that was stopped out, however, entering RCI reversal trades are quite often done after a swing trade stops out.

I posted a 240 minute EUR/USD swing short which -- with the weakness in the U.S. Dollar today -- broke through the point of validity.

If you want to see the details of the U.S. Dollar and crude oil moves, click here to read the post.

I'm going to walk you through what is essentially a stopped out swing trade that triggers a RCI/CCI reversal entry.


1)  This is the entry for the short.  Yes, the clock angle of the cycle was not the best for a swing as the downtrend was weakening, but none-the-less it was basically an aggro swing short at 1.4771.

2)  Prices did follow through the "00" and this did allow for an exit in front of the "00" at 1.4705.  The low was 1.4669.  This price action did set in motion the process for two keys orders: the exit and ratcheting the stop from a risk based to a break even

3)  Prices hit the break even stop (five pips above the entry = 1.4476)  You're out of the short trade.

4)  Price continue to rally up through the top line of the RCI with CCI (20) confirmation, this is the buy trigger for the RCI/CCI (aka Wave /CCI) entry

5)  The initial profit target.  Just like the profit target in the short was based on stepping in front of size at the "00" same on the upside.  Step out in front of the 1.4900 at 1.4895. 

- Raghee

Questions? Join me each Tuesday at my weekly webinar here at at FXStreet.