HLHB Weekly Update – December 9, 2011

The Bad News: HLHB Trend-Catcher

EUR/USD 1-Hour Chart

This is perhaps the most terrible week to date for my HLHB Trend-Catcher System. Last week’s buy signal at 1.3512 turned out to be a loser as a downward crossover materialized at 1.3433 stopping out the trade with a 79-pip loss.

The trade that followed that, the long signal at 1.3433, also ended with a loss of 25 pips as the moving averages crossed over again. From there, it was all downhill for the Trend-Catcher System.

A total of 8 crossovers materialized this week. Here’s how each of them went:

1. Long at 1.3458, closed at 1.3425: -33 pips

At the start of the week, an upward crossover materialized that closed the trade from the previous week. However, the trade closed faster than you can say, “Jingle bells!” The candle following the crossover went 10 pips below the low of the crossover candle, stopping it out with a 33 pip-loss.

2. Short at 1.3401, closed at 1.3400: -1 pip

The second trade for the week lasted for about a day only to close around breakeven when an upward crossover materialized.

3. Long at 1.3401, closed at 1.3389: -12 pips

The third trade seemed promising as EUR/USD inched higher. However, the pair got rejected at resistance at 1.3450 and got stopped out with a 12-pip loss.

4. Short at 1.3375, closed at 1.3403: -28

Shorting at 1.3375 would’ve been another valid trade too. But sadly, it turned out to be a loser at the pair just bounced off support at 1.3350 and went back up to 1.3400.

5. Long at 1.3403, closed at 1.3401: -2 pips

After trade number 5 materialized, the pair just consolidated until another crossover occurred at 1.3401.

6. Short at 1.3401, closed at 1.3389: +12 pips

The only trade that ended up as winner materialized towards the end of the week but it didn’t last more than a couple of hours as the MAs crossed over again. Luckily, the crossover took place 12 pips below the entry price.

7. Invalid trade: ADX < 20

I would consider this signal invalid since the Average Directional Index (ADX) didn’t seem to be over 20 during the crossover.

8. Short at 1.3420, closed at 1.3422: -2 pips

This last trade could’ve been a winner had the pair not spiked up. It got stopped out almost immediately at price went over 10 pips the high of the candle prior to the crossover.

Now you see why I’m thankful that I only trade my system on demo. It just doesn’t do well when the market is ranging! But I already have an idea how to tweak it for a better system. Stay tuned for that!

The Good News: EUR/USD Short

EUR/USD 1-Hour Chart

My discretionary trading system, on the other hand, performed exactly the opposite though. My technical analysis proved to be correct as price found resistance at the falling trend line. (You can check my trade idea by checking this blog post.)

Of course, it also helped a lot that brand new European Central Bank (ECB) President Mario Draghi and his merry men decided to cut interest rates to 1.00% from 1.25%. Even though it was expected, the risk sentiment took a hit following the announcement.

Furthermore, Draghi also said that the ECB would not increase its government bond purchases in the near future. With money already tight in the euro zone, this wasn’t exactly good news for euro bulls.

Closed at 1.3350: +80 pips / +1.33% Gain

All in all, I’d say that this week was a pretty good one. Even though the HLHB Trend-Catcher sucked big time, my discretionary trading system is on a roll!

XOXO,

Huck

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  • Greg

    Hi Huck,

    What are your settings on the EMA’s you use on the HLHB, please. Nice result on the EUR.

    Thanks

    Greg