Hi everyone,
I still could not confirm the arrival of ITD 11 because there's still no reversal confirmation that I am looking for. I am looking for a daily candle close below the signal day. In our case, the low of signal day now is 1.592, and we still could not get a daily candle close below 1.592.
There are three possibilities at this point:
1. If 1.608 holds, then ITD 11 may have arrived on time at May 27.
2. ITD 11 could arrive late in which case we should see more high in this next couple of days before a more meaningful reversal,
3. ITD 11 has arrived on time at May 27, but then inverted at 1.585, and now going higher to ITD 1 due around June 11. You could see this illustration in my previous post titled 3 possible locations for LTD. The inversion is illustrated at the second chart.
We need several more days to determine which one is more likely.
Thursday, May 28, 2009
Tuesday, May 26, 2009
Delta Introduction
Delta was founded by Jim Sloman and Welles Wilder. Welles Wilder is also famous for developing technical indicators which are among the most commonly used today such as RSI, SAR, and ATR (Average True Range).
Unlike other trading system, Delta places emphasis on time rather than price. The premise is that TIME is more important than price. Delta believes that every market has a cycle and this cycle is influenced by the way our solar system operates. When Delta projects that it's time for market to turn, then market will turn regardless of price. A Delta trader first and foremost concerns about time, and price level is secondary.
Delta is essentially a swing trading system that focuses on time. The idea of Delta is based on a cycle system, where currency makes highs and lows based on a pre-determined cycle. Delta does not try to forecast price level. To forecast price level, we could combine Delta with other methods, such as Fibonacci, trend line, Elliot Wave or other system.
Delta cycle is divided into different time frames: a 4-month cycle, a 1-year cycle, a 4-year cycle, a 19-year cycle, and others. In my post, I often mention the term ITD (Intermediate Term Delta), MTD (Medium Term Delta), LTD (Long Term Delta), and SLTD (Super Long Term Delta). This corresponds to the different time frames cycle.
If you'd like to know more about this system, below is some information:
The official site for Delta is: http://www.deltasociety.com/index.aspx
The official book for Delta is Delta Phenomenon: http://www.deltasociety.com/deltaphenomenon.aspx
Delta training CD: http://www.deltasociety.com/deltatrainingCD.aspx
Another Delta training CD: http://www.deltasociety.com/marketmatrix.aspx
As you can see from the link, these materials are quite expensive to buy. If you are new to FX trading, you may want to try to learn something else first that doesn't require you to pay. The fact of the matter is there is no single holy grail trading strategy which gives you 100% accuracy in your forecast. Stop Loss therefore is a must and proper use of leverage is required. In the end, money management is what determines our success and failure.
So if you are new to FX trading, before you spend money in buying anything, get as much free education as possible. Basic understandings of candlestick, trend line, Fibonacci, and Elliot Wave would be very helpful. In fact, I think trying to learn Delta without basic technical understanding will be quite a challenge, since it takes some effort and time to truly understand and use this system properly. An example of a good free website to learn all of these and more is: http://www.babypips.com/school/
Do check out, read and re-read the money management section of the free website above.
This system, just like any system, will not suit everyone. Some will like it, some will not. Those who like to trade often (daytrader) may not like this system. Many people also hate and think of this system as a scam. For me personally, this system is a welcome addition to my trading arsenal.
For some people, this system's theory about repeatable market cycle influenced by the heavenly bodies is completely rubbish, so be aware of the contra opinions out there. This system is also considered by many to be overly complicated. To me it's pretty straightforward and natural, but it's a different experience to each person.
I created this blog to function like a trading journal, to record how I understand this system and how I implement it to analyze the forex market. I did not create this blog to declare that this is the best system or that this system has no flaw. I like this system because it suits my personality and trading style. It's by no means a perfect system, there'll definitely be times when the analysis is wrong. Even if the system can't be wrong, I am a human, and I sometimes make mistakes in my interpretation of the system. But for every trade idea I posted, I would provide a logical reasoning from my interpretation of the Delta system, and for every mistake I make, I will provide a reason of why and where I get it wrong. This blog is best used by those who either know and use the system, or by those who already have their own reliable system but want to compare and want to know the timing element.
The last thing I want to say is this: Regardless how good our trading system is, an improper use and a lack of money management still ultimately lead to a disaster. We need to manage our money and risk well since there's no such thing as certainty in FX market.
Happy trading.
Cmellon
Unlike other trading system, Delta places emphasis on time rather than price. The premise is that TIME is more important than price. Delta believes that every market has a cycle and this cycle is influenced by the way our solar system operates. When Delta projects that it's time for market to turn, then market will turn regardless of price. A Delta trader first and foremost concerns about time, and price level is secondary.
Delta is essentially a swing trading system that focuses on time. The idea of Delta is based on a cycle system, where currency makes highs and lows based on a pre-determined cycle. Delta does not try to forecast price level. To forecast price level, we could combine Delta with other methods, such as Fibonacci, trend line, Elliot Wave or other system.
Delta cycle is divided into different time frames: a 4-month cycle, a 1-year cycle, a 4-year cycle, a 19-year cycle, and others. In my post, I often mention the term ITD (Intermediate Term Delta), MTD (Medium Term Delta), LTD (Long Term Delta), and SLTD (Super Long Term Delta). This corresponds to the different time frames cycle.
If you'd like to know more about this system, below is some information:
The official site for Delta is: http://www.deltasociety.com/index.aspx
The official book for Delta is Delta Phenomenon: http://www.deltasociety.com/deltaphenomenon.aspx
Delta training CD: http://www.deltasociety.com/deltatrainingCD.aspx
Another Delta training CD: http://www.deltasociety.com/marketmatrix.aspx
As you can see from the link, these materials are quite expensive to buy. If you are new to FX trading, you may want to try to learn something else first that doesn't require you to pay. The fact of the matter is there is no single holy grail trading strategy which gives you 100% accuracy in your forecast. Stop Loss therefore is a must and proper use of leverage is required. In the end, money management is what determines our success and failure.
So if you are new to FX trading, before you spend money in buying anything, get as much free education as possible. Basic understandings of candlestick, trend line, Fibonacci, and Elliot Wave would be very helpful. In fact, I think trying to learn Delta without basic technical understanding will be quite a challenge, since it takes some effort and time to truly understand and use this system properly. An example of a good free website to learn all of these and more is: http://www.babypips.com/school/
Do check out, read and re-read the money management section of the free website above.
This system, just like any system, will not suit everyone. Some will like it, some will not. Those who like to trade often (daytrader) may not like this system. Many people also hate and think of this system as a scam. For me personally, this system is a welcome addition to my trading arsenal.
For some people, this system's theory about repeatable market cycle influenced by the heavenly bodies is completely rubbish, so be aware of the contra opinions out there. This system is also considered by many to be overly complicated. To me it's pretty straightforward and natural, but it's a different experience to each person.
I created this blog to function like a trading journal, to record how I understand this system and how I implement it to analyze the forex market. I did not create this blog to declare that this is the best system or that this system has no flaw. I like this system because it suits my personality and trading style. It's by no means a perfect system, there'll definitely be times when the analysis is wrong. Even if the system can't be wrong, I am a human, and I sometimes make mistakes in my interpretation of the system. But for every trade idea I posted, I would provide a logical reasoning from my interpretation of the Delta system, and for every mistake I make, I will provide a reason of why and where I get it wrong. This blog is best used by those who either know and use the system, or by those who already have their own reliable system but want to compare and want to know the timing element.
The last thing I want to say is this: Regardless how good our trading system is, an improper use and a lack of money management still ultimately lead to a disaster. We need to manage our money and risk well since there's no such thing as certainty in FX market.
Happy trading.
Cmellon
Monday, May 25, 2009
May 25 - Three possible locations for LTD 15
Hello everyone,
GBP has not shown reversal confirmation per the rule I posted two days ago. Without confirmation, this pair could continue going higher.
In the meantime, I identify three possible locations (time wise) for long term top (LTD 15).
1. LTD 15 could be due at ITD 11. If this is the case, then long term top should be due around May 27.
2. LTD 15 could be due at ITD 1. In this case, ITD 11 inverts and long term top should be due around June 11.
3. LTD 15 could be due at ITD 2. If this is the case, long term top should be due around June 22.
There is also another possibility that MTD 12 inverts, and LTD 15 is due at MTD 2, but I consider this one unlikely for now.
Wednesday, May 20, 2009
May 20 - Real Time Example - Trading Delta Point
Hi everyone,
Here I am using a real time example on how to trade Delta point. The idea and rule was posted yesterday with title "How to trade Delta point".
Today (Asia time) GBP is making a new high at 1.58184. From my Delta chart, we are already close to ITD 11 high. ITD 11 high could also be MTD 1 high and LTD 15 high, therefore this is a significant long term top. However, if you are familiar with Delta, you would also know that we are in inversion time zone for ITD. What this means is that ITD 11 could invert, and MTD 1 and LTD 15 could be due at ITD 1 high instead. If you are not familiar with Delta, then just ignore what I said here. Basically all I am saying is that we are near a signficant long term top.
As I have said in my previous post, trying to pick an absolute top is a little difficult for two reasons:
1. Delta turning date is approximate and not exact. If we enter short too early, the upward move may not yet finished.
2. It's a little difficult to set up an objective stop loss.
But we do know that we are nearing a Delta turning date. So now I have started to do the exercise posted yesterday. Since today GBP is making a new high, today would be the "signal day" or otherwise also called "current high day". As you can see in my chart, the low of the signal day is at 1.5641. Therefore if in the future we have a daily candle close below 1.5641, that would be the first signal that ITD 11 high probably has already arrived.
If tomorrow GBP is making a new high (let's say 1.59) then tomorrow would be the new signal day. We keep updating the signal day everytime GBP makes a new high, and we measure the low of the signal day, and if in the coming days we get a daily close below this low of the signal day, that would be the first signal to us that ITD 11 may have already arrived.
Hope this real time example makes the rule and idea more clear.
P.S. I am not very sure how many people actually read my blog. If people get some benefit out of this blog, I would be glad to keep writing my thought and chart. Whether you are just a guest or someone who register and follow my blog, please feel free to write comments or anything so that I know that someone actually reads my blog :D
Tuesday, May 19, 2009
Trading Delta Point
Delta is helpful in providing a perspective on the overall direction of the market. It also gives us an approximate time zone where we can expect a market turn.
There are several ways to trade Delta turning point. One of the ways is to try to pick absolute top price or absolute bottom price near Delta turning time. However, Delta turning time is not exact on one particular date. Delta gives a probable time zone for reversal, not an exact date. Therefore the danger of trying to pick up a top and bottom price near Delta turning date is that we enter too early and the move has not yet finished. However, sometimes in certain situation, analysis of other system such as Elliot Wave and Ichimoku could yield the same conclusion of imminent turn and this is where it's probably worth it to try to get the best entry price near Delta turning date when everything agrees with each other.
Another safer approach to trade Delta point is to wait for reversal confirmation near Delta turning date before we enter into position. Of course this means that we may have to forgo some pips, but this approach is safer and we could also set up a better and more objective stop loss. The following chart illustrates this approach
For example, let's say we are trying to short and catch a Long Term Top (LTD high) for GBP USD. We could wait for reversal confirmation before we enter into short position. Here's the rule:
Rule: Place a sell (short) at the low of the first day that has a close below the low of the high day.
Rule explanation: When we are nearing Delta turning point, we could start to observe price action. Any day that makes a new high becomes a signal day. We then draw a horizontal line from the low of the signal day several days into the future. We call this the current high day. Let's say the next day market makes a new high again, then this new high becomes the new signal day, and we do the same action above (drawing a horizontal line from the low of the new signal day several days into the future).
We keep doing the above until we have a daily candle close below the low of the signal (high) day. Once we get a daily candle close below the low of the signal day, we place a short (sell) below the low of the day and put stop loss above the signal day.
The above's rule applies for trading a Delta high turning point. For trading Delta low turning point, we just simply reverse the rule
There are several ways to trade Delta turning point. One of the ways is to try to pick absolute top price or absolute bottom price near Delta turning time. However, Delta turning time is not exact on one particular date. Delta gives a probable time zone for reversal, not an exact date. Therefore the danger of trying to pick up a top and bottom price near Delta turning date is that we enter too early and the move has not yet finished. However, sometimes in certain situation, analysis of other system such as Elliot Wave and Ichimoku could yield the same conclusion of imminent turn and this is where it's probably worth it to try to get the best entry price near Delta turning date when everything agrees with each other.
Another safer approach to trade Delta point is to wait for reversal confirmation near Delta turning date before we enter into position. Of course this means that we may have to forgo some pips, but this approach is safer and we could also set up a better and more objective stop loss. The following chart illustrates this approach
For example, let's say we are trying to short and catch a Long Term Top (LTD high) for GBP USD. We could wait for reversal confirmation before we enter into short position. Here's the rule:
Rule: Place a sell (short) at the low of the first day that has a close below the low of the high day.
Rule explanation: When we are nearing Delta turning point, we could start to observe price action. Any day that makes a new high becomes a signal day. We then draw a horizontal line from the low of the signal day several days into the future. We call this the current high day. Let's say the next day market makes a new high again, then this new high becomes the new signal day, and we do the same action above (drawing a horizontal line from the low of the new signal day several days into the future).
We keep doing the above until we have a daily candle close below the low of the signal (high) day. Once we get a daily candle close below the low of the signal day, we place a short (sell) below the low of the day and put stop loss above the signal day.
The above's rule applies for trading a Delta high turning point. For trading Delta low turning point, we just simply reverse the rule
Monday, May 18, 2009
May 19 - On the Way to ITD 11
Hi everyone,
There's no change from my previous chart. We should be on the way to ITD 11 high which is due around May 27.
A medium term top (MTD 1 high) could be due together with ITD 11 high, and if this is the case, this would also be a Long Term top (LTD 15 high) as well.
However, medium term top (MTD 1 high) and long term top (LTD 15 high) could be due later at ITD 2. If this is the case, it will be due at around June 22. My guess is that MTD 1 high and LTD 15 high will be due here around this time. Price level wise probably around 1.6, but we'll look at it more when time is near. Also keep monitoring Dollar Index chart, as we could do a pretty clear Elliot Wave count on it.
In any case, a long term top will soon be due, giving an excellent opportunity to short for a long term or medium term time frame.
For those interested in super long term time frame, I believe that Super Long Term bottom (SLTD 2 low) was already IN at 1.35. Thus, even if we break down from LTD 15 to LTD 16, it should not break lower than 1.35. But I would not worry too much about this for now as this is a very long time frame. As time goes by, SLTD position will get clearer.
Tuesday, May 12, 2009
May 12 - Considering this new count
The short setup in my previous post was not executed. It's getting quite late for ITD 9 if it has not yet arrived, and thus I am a bit uncomfortable. Perhaps it has already arrived and I ignore it!
Upon looking at price action, I am now seriously considering this attached Delta count. If 5260 is broken in the next few days, I will be using the attached Delta chart as my primary count. ITD 11 will be due at the end of May.
Saturday, May 9, 2009
May 8 - ITD 9 not In yet
Apparently ITD 9 is coming late as GBP is still rising up as USD is under pressure across the board. In my past post, I mentioned a possible price level target with the use of the parallel trend line channel. Currently, GBP is close to the top of the trend line channel.
I am looking to short at the top of the trend line channel at 1.537 - 1.538 with a tight Stop Loss at 1.5415. This setup however would only be valid on Monday. If price doesn't reach 1.537 on Monday, I would remove this trade as the trend line channel is sloping upward. If this trade is executed, and if my stop loss is taken out, I would just wait patiently until I see a solid reversal signal.
Looking at Dollar Index chart, as I said in my previous post, we are now moving nicely in wave C targetting 50% fib around 80.5. However, we are currently at 38.2% fib with a trend line support, so there could probably be a temporary rebound of some sort before USD continues to weaken.
Thursday, May 7, 2009
May 7 - Waiting for a Daily Close Below 4980 for ITD 9 Confirmation
ITD 9 was probably IN yesterday at 1.52. It does not reach my preferred level around 1.53, but we did get a bearish engulfing daily candle, signalling a potential reversal. Only a daily cande close below 4980 would give me more assurance for this conclusion. Alternatively, we could rally one or two more days to 1.53 before reaching ITD 9.
IF ITD 9 was IN yesterday, we are moving down to ITD 10. I have a problem to estimate the due date for ITD 10. The average due date of ITD 10 is on May 13. This average due date is based on the average of multiple past cycles. However, in the last cycle, ITD 10 was due late and if we just use the last cycle as the basis to forecast, then ITD 10 should be due around May 20 instead.
The other problem is that MTD currently is in Inversion Time Period. I put MTD 12 low as IN with ITD 8 low. Without inversion, the medium term trend is UP and we will move up to MTD 1 high with a series of higher ITD high and higher ITD low. With inversion, the medium term trend could stop halfway, and then reverse, making MTD 1 as a low instead.
I have two possible scenarios here:
1. Bullish scenario (MTD does not invert)
In this scenario, MTD direction is UP and does not invert. If ITD 9 was IN yesterday, we are moving down to ITD 10, and most likely it's due on May 13 of next week. After ITD 10, we will move up to ITD 11 and it's going to be higher than ITD 9.
2. Bearish scenario (MTD inverts)
MTD 12 could now invert at ITD 9 and thus making this as a medium term top and MTD 1 later would be a medium term low instead. If this is the case, we are moving to ITD 10 due probably at the later date around May 20. In this scenario, there's a possibility that ITD 8 low (4395) would be taken out at the conclusion of MTD 1.
Tuesday, May 5, 2009
May 5 - ITD 9 High Should be Near
I said before that because ITD 9 is still several trading days away and due to the structure of the Elliot Wave of Dollar Index, there's a good probability that ITD 7 (5067) would be taken out. Today it is finally taken out.
We should be close to ITD 9 high now. My feeling is that before reversing, we may make one more rally to around 1.53 and probably due in the next two days. This last rally should clean up all the remaining bears as they would scramble and cover their shorts, and it would convert majority of people into a bull and buying dips.
Once most people become bullish, GBP may surprise once again by reversing as ITD 9 would most likely be also a medium term top (or even long term top). A long term top would mean that GBP is ready to move progressively lower to break 1.35. From Delta perspective, LTD 15 could either be due at ITD 9, or later on June. In Elliot Wave perspective, wave C of 4 could be due here at ITD 9.
Sunday, May 3, 2009
May 4 Cable Delta Update
As projected in my last Delta count, Cable is moving up in ITD 9 and it will be due around May 5. ITD has a standard deviation of +/- 4 trading days, so exact turn date may not be May 5. We are nearing this turn date now, and GBP can reverse at any moment, including at this current price level (4940).
However, if GBP can keep continuing to climb and break above 1.5, I am looking for a price level around 5290 for the top of ITD 9 this week. This will be the top of the parallel trend line channel per my chart. MTD 11 must be due here too because by then it already has 3 ITD highs, so after the turn day around May 5, GBP USD should reverse down to below 4395 (below ITD 8 low).
LTD 15 could be due together with ITD 9 and MTD 11 too, and if that is the case, after May 5, GBP USD will reverse to minimum below 3652 (below MTD 10) or even below 3500 (below MTD 8) if SLTD 2 has not arrived at LTD 14. However, Delta also allows LTD 15 to be due later at MTD 1 around June.
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