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Average True Range – Your Fuel Gauge for Trading

May 24, 2017

course indicator

Average True Range – Your Fuel Gauge for Trading

As traders, we all want to find the highest probable turning points in the markets. At Online Trading Academy, our students learn how to find them through the discovery of high quality supply and demand zones. In addition to the zones, there are several Odds Enhancers that we teach that traders can use to increase their probability of success in the markets.

One odds enhancer is similar to a fuel gauge, the Average True Range (ATR). A fuel gauge in a car tells you how much gas you still have left. If you know your average miles per gallon for the car, you can figure out how far you can still travel without running out of gas. The ATR can tell you how much price movement you may experience before you run out of momentum.

The range of a stock’s price is the difference between the high price and the low price during a period of time. The true range is a little different in that it also includes any gapping that may have occurred from the prior period. So, the Average True Range measures the stock’s price vibration, (average movement between high and low) over a period of time. The default is usually 14 periods.

The ATR of a stock will differ based on the period you have your chart set for. If you are viewing a daily chart, the ATR will refer to the average movement that stock will make between the high and the low for the day. If you have your charts set for 15 minutes, then you will see the average movement for every 15-minute period. When viewing the ATR on a five-minute chart, you are seeing the average price movement for every five-minute candle.

When price is trending strongly in a particular direction, knowing the ATR for that timeframe can offer you a clue as to when price may pause or reverse. For instance, in the following chart, Apple had a daily ATR of $1.35. On April 20th, price opened at $141.21 and ran upward. Once price reached the ATR it stalled and drifted sideways. Eventually, the stock closed one penny off of the projected ATR.

Additionally, when price reaches a supply or demand zone beyond the ATR, it is more likely to reverse. Though price may still have plenty of momentum when it reaches a supply or demand within the ATR.

We can even use this ATR on a larger timeframe. For example, look at February’s ATR on XLE of $6.02. At the beginning of March, XLE opened and moved upwards before dropping most of the month. Subtracting the ATR from the high price of the month, we arrived at a target of $67.11 for the monthly trend. Just before “running out of gas,” prices reversed.

Source:
https://www.fxstreet.com/education/average-true-range-your-fuel-gauge-for-trading-201705100812

3% Growth? Really?!

May 24, 2017

3% Growth? Really?!

In Trump Plans to Slash Spending by $3.6 Trillion, Increase Military Spending, Balance the Budget in 10 Years I gave my three primary reasons 3% growth will be extremely difficult to achieve.

Greg Ip, my favorite Wall Steet Journal commentator, also provides a set of reasons why Trump’s 3% Growth Target Looks Out of Reach.

Mr. Trump—moving in the opposite direction of President Barack Obama —promises lower taxes and less regulation, which should increase business investment and thus worker productivity. Moreover, a less-generous social safety net could prod some people back to work. More workers who are more productive are the ingredients of faster growth.

Yet there are good reasons independent economists think the U.S. can’t return to its historic growth of 3%. The U.S. working-age population grew 1.2% a year from 1950 through 2000. With the baby boomers retiring and families shrinking, it will grow less than 0.3% a year over the next decade. To make a credible case for 3% growth, Mr. Trump has to identify some wellspring of workers or productivity, that is output per worker, that his predecessors have missed.

Mr. Mulvaney thinks prodding many people off social safety-net programs and back to work will be good for them, and for growth.

In principle, that’s true, but the magnitudes are doubtful. About half of household heads on food stamps and three quarters of those on Medicaid already work, says Robert Moffitt, an economist at Johns Hopkins University. At most, 13 million recipients of Medicaid and 6.5 million recipients of food stamps don’t work (and the two groups overlap). The growth of people on disability insurance can be slowed with tougher eligibility, but experience suggests getting existing recipients off is almost impossible.

When welfare was cut off in the 1990s for single mothers able to work, the share of those not working dropped by up to a third. That kind of effect on 13 million Medicaid recipients or 6.5 million food-stamp participants would generate only a modest, and one-off, boost to a labor force of 160 million. The effect on gross domestic product would be even more muted because, Mr. Moffitt notes, these workers have extremely low skills and thus productivity.

The Tax Foundation, a pro tax-cut think tank, reckons lowering the corporate rate to 15% as Mr. Trump wants would only raise growth to 2.3% from 1.9%, and that boost would peter out once all the newly profitable capital projects had been undertaken.

Even that is probably high. Most large U.S. trading partners have slashed their own corporate rates but none has enjoyed a noticeable growth dividend as a result. Businesses generally report that tax rates are unimportant in deciding whether to invest; customer demand is paramount.

Presidents are supposed to be optimists, and Mr. Trump would hardly be the first to fall short of his target. But a great deal is at stake with this one. Many of his other promises rely heavily on the 3% growth goal. For example, the budget is supposed to balance by 2027, with the help of nearly $600 billion a year in added revenue attributable solely to a more aggressive growth forecast.

Until Mr. Trump presents a credible vision for achieving that growth, the rest of his promises are best viewed with deep skepticism.

Mish Three Reasons

Here are my three reasons once again.

Very unfavorable demographics
Huge debt overhang
Poor prospects for growth in real wages

Greg Ip missed the debt overhang but his points are all valid, especially demographics and shrinking family size.

One of the reasons for shrinking family size has to do with student debt (debt in general), a point I mentioned.

Kids are graduating from college loaded up with debt they cannot service. Record numbers have moved back home with their parents. Some have done so because they do not have high enough wages, others because of a need to take care of their aging parents.

Still others share households and apartments because the cost of homes and the price of rent have soared far beyond what many can afford.

Rising real wage prospects are dim, and productivity has little to do with it.

Also consider the knock on effect of low rates of family formation. How many more Walmarts, Pizza Huts, nail salons, etc do we need? We have store saturation at a time when increasing amounts of items are purchased online.

Automate cars and truck are just around the bend, and millions of truck driving jobs will vanish. That will boost productivity, but it will do nothing for real wages.

The Fed, hell bent on causing inflation in a demographically-deflationary word enhances point number three.

Benefits of Deficit Reduction

Whether or not Trump can hit 3% growth, there are still benefits of reducing the bloated public sector.

Entitlements need to be cut, as do military spending budgets, public sector pensions, and numerous government programs.

Source:
https://www.fxstreet.com/analysis/3-growth-really-201705240732

EUR/USD preserves daily gains above 1.12 after FOMC minutes

May 24, 2017

analysis eur news

EUR/USD preserves daily gains above 1.12 after FOMC minutes

After an unsuccessful attempt to break above the 1.12 handle at the beginning of the NA session, the EUR/USD pair gathered momentum and rose to 1.1220 following the release of the FOMC meeting minutes. As of writing, the pair is trading at 1.1218, holding on to its daily gains.

The general assessment of the economy was largely unchanged according to the minutes as the members saw the job market strong and the consumer confidence solid. On the other hand, policymakers agreed that they need to see the data to continue to improve to verify that the recent slowdown in the economic activity was temporary. Although the expectations of a June rate hike solidified above 80% according to the CME Group FedWatch, the probability of two more rate hikes in 2017 eased to 46% from 50%, pushing the US Dollar Index below 97. As of writing, the index was down 0.34% on the day, at 96.95.

Tomorrow's economic docket will feature the weekly initial jobless claims, wholesale inventories and the trade balance data from the United States and strong readings could allow the investors to start pricing the possibility of two more rate hikes in 2017, helping the greenback recover its recent losses.

Technical outlook

The immediate resistance for the pair could be seen at 1.1265 (May 23 high) before 1.1300 (Nov. 9 high) and 1.1365 (Aug. 18 high). To the downside, supports are located at 1.1200 (psychological level), 1.1170 (daily low) and 1.1100 (May 19 low).

Source:
https://www.fxstreet.com/news/forex-today-fomc-no-surprises-in-minutes-dxy-and-10-y-us-yields-lower-stocks-higher-201705242026

ESM: Greece won't need debt relief if it keeps its surplus above 3%/GDP for 20 years - Reuters

May 24, 2017

eur news

ESM: Greece won't need debt relief if it keeps its surplus above 3%/GDP for 20 years - Reuters

According to a confidential paper prepared by the European Stability Mechanism, obtained by Reuters, Greece will not need any debt relief from euro zone governments if it keeps its primary surplus above 3 percent of GDP for 20 years.

Key highlights (via Reuters):

Greece would have to keep primary surplus of around 2 pct/GDP until mid-2030s if maximum debt relief offered
Maximum debt relief under consideration is extension of avg weighted maturities by 17.5 yrs from current 32.5 yrs
Maximum debt relief would also cap interest on loans at 1 pct until 2050, limit loan repayments at 0.4 pct of greek GDP
Maximum debt relief would also entail euro zone buying back some 13 bln euros worth of IMF loans to Greece
Under IMF assumptions of future Greek growth, primary surplus, even maximum euro zone debt relief offer is not enough -paper

Source:
https://www.fxstreet.com/news/ecm-greece-wont-need-debt-relief-if-it-keeps-its-surplus-above-3-gdp-for-20-years-reuters-201705241326

Pivot Point

May 23, 2017

chart advance course

Pivot Point

Poin pivot bisa kontroversial karena ada begitu banyak versi yang bersaing. Konsep intinya adalah dengan menggunakan ringkasan dari periode tinggi, rendah, dan dekat dengan dukungan atau penolakan proyek untuk periode yang akan datang. Poin pivot adalah perkiraan kasar dan siap bahwa beberapa analis memberi nama "indikator utama", walaupun sebenarnya tidak "menunjukkan" apa pun kecuali serangkaian proyeksi sewenang-wenang. Apalagi, pivot points kurang nuansa indikator yang mengukur jarak dekat terhadap high, atau close terhadap range low-low. Namun, seperti dalam semua hal teknis di Forex, jika sebagian besar pedagang menggunakan poin pivot dan jika semuanya menurunkan proyeksi yang sama atau serupa, poin pivot memiliki kapasitas untuk menjadi ramalan yang dipenuhi sendiri.

Sebuah kebajikan dari pivot point adalah bahwa begitu mereka dipetakan berdasarkan angka-angka masa lalu, mereka tidak berubah, dan Anda dapat melihat aksi harga berkembang dibandingkan dengan proyeksi titik pivot, yang digambarkan sebagai garis horizontal dari penutupan terakhir. Dalam ekuitas, biasanya menggunakan HLC minggu sebelumnya untuk menciptakan titik pivot untuk minggu yang akan datang, namun dalam Forex yang bergerak lebih cepat, para pedagang dapat menggunakan HLC kemarin untuk periode saat ini atau HLC dari periode empat jam pertama untuk Berdagang satu jam. Anda bisa membayangkan kombinasi tak berujung.

Aritmatika untuk titik pivot standar sangat mudah, tapi setidaknya lima versi titik pivot dapat ditemukan, masing-masing sedikit sedikit aritmatika. Rumus klasik dimulai dengan Primary Pivot Point, atau P, yaitu High + Low + Close dibagi dengan 3.

Versi Fibonacci titik pivot menggunakan angka Fibonacci untuk mendukung dan melawan proyek:

DeMark Pivot Points dirancang oleh Tom DeMark , yang telah menemukan banyak indikator lainnya, banyak di antaranya dipeluk oleh para pemimpin hedge fund. Versi DeMark membuat poin penting bahwa itu benar-benar penting jika tutupnya terbuka atau di bawahnya saat menghitung pivot. DeMark memasukkan faktor baru bernama X:

Setidaknya ada tiga versi pivot points lainnya yang dapat ditemukan, dan berhati-hatilah - banyak situs yang menawarkan untuk menghitung titik pivot untuk Anda tidak mengungkapkan formula pastinya. Anda mungkin bisa berasumsi bahwa situs ini menggunakan versi klasik. Pengecualian adalah kalkulator titik pivot kami, yang memungkinkan Anda memasukkan data harga dan memperoleh titik pivot menggunakan empat metode yang berbeda, termasuk DeMark, lengkap dengan rumus.

Lihat tabel di bawah ini, yang menunjukkan tingkat dukungan dan penolakan DeMark untuk harga 5 periode dalam lingkaran yang diproyeksikan ke masa depan. Harga tinggi berhasil mematahkan resistansi R1, tapi tidak menutup. Ini adalah poin penting - beberapa analis mengatakan bahwa melanggar support atau resistance oleh bagian manapun dari bar cukup untuk menyebutnya pelarian, namun Sperandeo adalah salah satu ahli yang mengatakan bahwa Anda harus bersikeras untuk menutup jalur tersebut untuk menyebutnya sebagai "pelarian . "Dalam hal ini, tinggi adalah pukulan keluar atas dan harga mulai crash, dan crash melalui dukungan. Perhatikan bahwa harga goyah dan ragu-ragu selama sehari sebelum pelarian. Ini menunjukkan bahwa lebih dari satu pedagang melihat level DeMark yang tepat.

Pelarian salah dari level pertahanan DeMark

Dalam contoh ini, data yang digunakan adalah lima periode data (dalam EUR / USD) dan butuh waktu lebih dari dua puluh periode untuk pelarian akhir yang sebenarnya terjadi. Ini adalah nilai akhir dari titik pivot - mereka dapat berfungsi sebagai jangkar untuk mencegah perdagangan impulsif dan impulsif sampai bukti benar-benar terjadi.

Sekarang lihat grafik berikutnya, perhitungan titik pivot klasik (dinamai "titik pivot lantai"). Data yang sama digunakan seperti dalam contoh DeMark. Perhatikan bahwa R1 yang agak rendah rusak, tapi hanya dua periode sampai ke bagian atas pukulan. Kemudian, setelah harga turun, ia melayang tepat di atas support selama 6 periode sebelum akhirnya memberikan breakout-by-the-close. Sekali lagi, ini menunjukkan bahwa banyak pedagang menempatkan dukungan pada atau mendekati level ini.

Titik pivot lantai pada bagan yang sama seperti di atas

Dan di situlah letak sebuah masalah. Jika Anda memasukkan semua perhitungan pivot point pada satu bagan, Anda akan lumpuh karena keraguan. Yang mana yang benar"? Baiklah, semuanya dan tak satu pun dari mereka. Tidak ada jawaban yang benar - hanya ada metodologi perhitungan yang selaras dengan selera risiko dan tingkat disiplin Anda. Sebagai contoh, versi DeMark akan membuat Anda kekurangan tingkat yang lebih tinggi (1.37418) daripada versi "lantai" klasik (1.36857 untuk S1).

Bagaimana kamu memilih Poin pivot harus digunakan bersamaan dengan indikator lain yang sesuai dengan gaya trading Anda. Jika kita menambahkan MACD ke chart titik pivot klasik, misalnya, kita mendapatkan sinyal jual pada tanggal harga akan mematahkan pivot point itu sendiri. Lihat gambar berikut di bawah ini. Anda bisa menggunakan pelarian itu untuk entri awal dan pelarian S1 untuk skala ke posisi yang lebih besar.

Poin pivot lantai disertai MACD pada grafik yang sama