Yen is the mover of the day, what do indicators suggest is the downside target? Amazon has shown an interesting post earnings pattern all year, will this one be the same? Using ATR as a filter.
A very good evening to you traders. Looking here at the DAX, it continues to probe that key level that we talked about a couple of weekends ago, actually a couple of days ago now, but the range is so low it’s hardly even worth trading. If you look at the ATR now which I’ve got at a one period setting which is just not doing anything and actually if you look at 15 minute, look how many wicks we’re getting on each candle, there’s really not much going on. USD / JPY is the mover of the day, gets us the most interest. That actually is the biggest range we’ve had, excluding Brexit for a long time, so I think it’s our second biggest of the year. So things are happening over there and you know what, if you were to look at this and you were to put on a Keltner channel or even a Bollinger band or something that gives you the standard deviation or helps you frame the direction the move. We can be expecting good move now back to 100, I think would not be unachievable, both of the lower Keltners and lower Bollinger bands are all pointing in that direction, if we get a continuation.
So there’s plenty of mileage there, it’s not a case of chasing it, but it’s a case of perhaps waiting for the opportunity on a pullback. But it’s been a one way street so far today, but let’s see how it closes the week up. Which actually brings me to a point, if you look at the one period ATR, it’s a really good way of filtering out markets that are moving. If you just wanted to look at markets that were moving, your one period ATR would show you that nothing is happening at all in the DAX, so you wouldn’t want to get involved. However, it would be flagging up quite nicely for something like the Yen, which means you haven’t got to be sitting there in front of the screens, you can just scan through and look what the previous day’s range was and see what key levels are going to be in play for the next day.
Now ATR is a little bit different from actual range of the day, because ATR takes into account the close and then the high of the next day. So if that’s the candle there, just trying to draw this without making it look silly… but there’s the close there and it takes the range, that’s the true range, according to this formula and it takes the average of that rather than the low. Now obviously with the currencies, unless it’s Sunday night, that’s absolutely fine, so be aware of that, although you can customise your code to just take it for the high and low of the day to give you the actual range it was trading in the day. But for most purposes that’s pretty good and actually unless you’re day trading, you probably want to see the gaps that are coming into the market because you’re holding for a few days it’s going to give you a better picture of the sort of range you’d get.
But anyway, from a high to low perspective today the Yen has done very, very decent range, we are, excluding the Brexit, we’re the second highest of the year and, in fact, we may well be for all four over a twelve month period, you can eyeball that yourself and see where we are. So worth watching, let’s see what happens with that.
Very quickly finally I want to look at Amazon. Now Amazon had earnings at today. One pattern I’ve noticed that every time for earnings, after earnings, when the market breaks, the high or low of the earnings day candle, you often get a pretty decent trade out of it. This one broke the high, didn’t then break the low and subsequently had a good run. This one broke the low and then we had a good run off there. This earnings cycle here broke the high of the earnings candle and we had a good run there, similarly, the low here. So if you go back four or five different earning cycles you can see that Amazon, in particular, if you take the first day’s range or the first day’s candle after earnings and then trade the subsequent break of that, whenever that may come, then for the past four or five times we’ve got a run. Are we going to get that this time? I don’t know, but it’s just a pattern I’ve observed and I thought I would share. Okay, have a great weekend traders, see you on Monday evening, 7pm approximately for the daily videos. Take care.