Home—Online trading—Spread betting explained—Spread betting blog—The euro is testing my tramlines
Aug 31, 2012, 04:40
Posted byJohn C Burford
I’m embarrassed by riches this morning! I can pick between superb tramline lessons in the euro, gold, or the Dow. All three of my markets are following the script – so far. But it has been a while since I covered the euro - so the euro it is.
But first, I wish to refer back to some points I mentioned recently about the timeframe we choose when trading. As you know, I write in these MoneyWeek Trader articles on aspects of swing trading. I consider this to be a short-to-medium-term timeframe (hours and days). I hope I show that the methods I employ are very well suited to this type of trading – and show how to find your own profit-making entries.
All traders must discover for themselves which timeframe they are most comfortable in. Most novice traders seem to start with short timeframes because that is where the second-to-second action is. How exciting to see live tick-by-tick moves – and you can see it almost 24 hours a day! They have the latest hi-tech wizardry and scores of technical indicators and believe that this will ensure success. It all looks so easy.
But my advice will always be to begin with swing trading and then graduate to other timeframes if you wish. There are numerous advantages to swing trading.
Here are some:
• Can set entry orders while away from your screen (using stop or limit entries).
• Can set reasonable targets, often based on pre-determined chart points. These can be set beforehand.
• No need to be staring at your screen for hours on end (this can induce madness, I hear). No seat-of-the-pants decisions required.
• Can set pre-determined maximum loss per trade (3% rule) – so no surprises when stopped out! This is the low-stress way.
• Profits on good trades can be large, enabling a gradual build-up of account size – a proper business-like approach.
• And can use my tramline, Elliott wave, and Fibonacci methods with ease.
What more could a trader need in the pursuit of making money?
In a later article, I will go into why traders need to keep simplifying their approach – and reduce their data intake to the absolute minimum, despite the siren calls from the web.
OK, in my previous 20 August article on the euro - The euro may surprise the bears - I made a case that this surprise was for an extension of the counter-trend rally. This was the chart back then:
(Click on the chart for a larger version)
I had an ideal long trade at the blue arrow – and another at the tramline kiss (yellow arrow). The line in the sand for the bears was the pink bar at previous highs.
Did the market overcome that resistance? Let’s see:
As I suspected, we saw a thrusting break through the 1.24 level with a quick run-up to the 1.26 area.
For late-comers, this was another place to enter a long trade.
I had a long-standing target in the 1.26-1.27 region, so we were getting close.
Now, with this rally, can I now find clues to detect a top target?
Claim your FREE report: The six-step game-plan for
spread betting profits
When trading, I like to keep my eye on the daily chart for perspective:
And guess what? The rally has made it to an important Fibonacci level where the top pivot point is the last major top. That is a major milestone – and may indicate a turning point, especially with momentum having reached levels previously identified with tops (pink bar).
Now. Let’s zero in on the shorter timescale:
This is the July-August rally on the hourly chart and I have drawn a very acceptable tramline trio. The top line was quite easy to put in with the prior pivot point (PPP) (red arrow) and covering all the tops since early July.
The centre tramline came next, also sporting good PPPs (blue arrows) – and with the great very recent low touch-points.
The lowest tramline was last with the excellent mid-August lows as touch-points.
Using my tramline trading rules, I was looking for a short trade near the highest tramline.
This morning as I write, the market is testing the centre tramline. If that breaks, my first target is the lowest tramline in the 1.24 region.
And breaking that tramline would almost certainly spell the end of the rally – and the next surprise should be occurring in the bull camp.
The euro, although making many tricky zigzags in this rally, is amenable to analysis using my tramline and Fibonacci methods – and is providing good profit opportunities.
• If you’re a new reader, or need a reminder about some of the methods I refer to in my trades, then do have a look at my introductory videos:
The essentials of tramline trading
Advanced tramline trading
An introduction to Elliott wave theory
Advanced trading with Elliott waves
Trading with Fibonacci levels
Trading with 'momentum'
Putting it all together
• Don't miss my next trading insight. To receive all my spread betting blog posts by email, as soon as I've written them, just
sign up here
. If you have any queries regarding MoneyWeek Trader, please contact us here.
Published in Spread betting blog
More articles by John C Burford
By John C Burford, May 20, 2013
By John C Burford, May 15, 2013
By John C Burford, May 13, 2013
By John C Burford, May 10, 2013
This will be the name displayed with your comment.
This helps us verify comments are genuine. It will not be displayed anywhere on the site and is stored confidentially.
Please keep your comment within 1,000 characters and relevant to the main topic. We encourage healthy debate, but we don't allow insults or bad language. Anything off topic or unpleasant, we'll remove. Enjoy the conversation! Thank you.
To prevent spam-related comments please enter the characters shown in the 'Captcha' box to the left.
Enter the text from the box above
Remember my details
By leaving a comment you accept our terms and conditions.
The trades on this blog are all 'closed', past trades. These aren't trades for you to copy, they are there to teach you some useful trading tactics for your own spread betting. And always remember: spread betting carries a high risk to your capital as you can lose more than your original stake.
Cut through the trading jargon with MoneyWeek's easy to understand guide to spread betting terms
In his easy-to-understand video tutorials, John C Burford outlines some of the essential concepts you need to know to become a successful spread better
20 May 13
15 May 13
13 May 13
Compare the leading providers' online trading accounts for spread betting, forex trading, share dealing and CFDs, and open an account online. Plus, get MoneyWeek's tips and advice on trading online.
Copyright © MoneyWeek 1999-2013. All rights reserved.
Registered office: 8th Floor, Friars Bridge Court, 41-45 Blackfriars Road, London SE1 8NZ.Registered in England with company no. 04016750 and VAT no. GB 629 7287 94. MoneyWeek and Money Morning are registered trade marks.