A-B-C-D Trade - page 36
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
New Point C established, as market shifted through some medium-impact Euro data at 06:00 GMT. This required repositioning of Point A. Results are that the FE 127 is 1.2603, which is still in the area that we are pinpointing as support.
This is not the breakout of Asian ABC parameters.
We exited our short.
Small bounce off FE100 price 1.2612 from our adjusted ABC. We are still anticipating a bounce off support at the 1.2600/1.2605 area. I'm sure some waiting BUY orders there.
O.K., nice bounce off 1.2607. We shaved 14 net pips, trading to 38.2% retrace fib 1.2627.
Attached is 5-min chart with bounce trade. We did not trade the breakout of Asian Low as we knew the 1.2605 area was significant, as per recent posts herein.
We always pre-program entry a couple pips or more from bounce area. Draw retracement fibs for target exit.
High = 06:30 1.2658 and Low = 08:15 1.2607
38.2% = 1.2626
We always think it's a good idea to also add some cushion at exit too.
Although this bounce has hit the 61.8% retrace fib, we are satisfied with our trade to the 38.2.
This is good example of benefits of keeping our eyes on longer interval charts for significant support/resistance (S&R).
Not only did it keep us out of a false breakout to the downside, but also allowed us an opportunity to make a bounce trade, with a tight stop-loss and thus leveraging more lots.
European data at 09:00 GMT.
Cheers
Attached 5-min chart on EUR/USD covers the 3 occurrences on Aug 24th.
1) Bounce trade off support
2) Breakout to downside halting at FE 100 price of 1.2588.
- still felt same support level formidable.
3) Market reaction to U.S. Data (Home Sales) released at 14:00 GMT.
- Traders anticipated a negative number and it basically had been telegraphed leading up to data release. Actual number even worst than anticipated. Pair spiked up, which we had aligned with an ABC pull:
A = 12:25 low 1.2587
B = 13:55 high 1.2639
C = 14:00 low 1.2614
Asian High 1.2658
FE 100 = 1.2666
FE 127 = 1.2680
FE 161.8 = 1.2698 (hit)
Too fast and furious for us to trade since pivot and breakout occurred at 14:00 data release time. Certainly, wide spreads and slippage part of the scene during that point of entry.
Looking at the previously posted 1-Hour chart with the fib arcs, etc, we can see the pivot after spike caught by the 61.8% fib arc.
Edit: In an effort to locate resistance for spike, use fib fan and pull:
High = Aug 8th 1222
Low = Aug 24th 1.2587
The 38.2% diagonal fib would have the 1-hour candle resistance at about 1.2710
Take the same high/low and plot the retrace fib, and arrive at the 38.2% fib price of 1.2715.
Attached 5-min chart includes activity after spike up due to disastrous U.s. Existing Homes Sales figures.
We had a 21:00 GMT data release on U.S. ABC Consumer Confidence. Altough rated as low-impact since there is another index more higher regarded, it seemed to have driven the pair back down.
We have following plotted:
Retracement fibs from Low =12:20 1.2587 and High = 14:25 1.271
- Pair initially retraced to 38.2 fib before data pushed it to 78.6 fib
- Now bounced from 78.6 to 61.8 fib
Fibo Fan: High = 14:25 1.2715 to Low = 21:20 1.2616
- We can see resistance aligning in upper area. Goal is to use it for potential retracement trading off resistance from fibs (bounce sell).
Fib Expansion (Extension):
A = 17:40 high 1.2690 (session high)
B = 20:40 low 1.2659 (also previous Asian high)
C = 20:55 high 1.2668
FE 100 = 1.2637
FE 127 = 1.2628
FE 161.8 = 1.2617 (hit)
- The FE 161.8 is near the 78.6 retrace fib of 1.2615
-------
We are in on short from 61.8 fib. This is trading between the fibs.
We filled short @ 1.2635.
Profit target FE 161.8 1.2617......
with plan to take majority exit at FE 127 fib 1.2628, which we did (75% of lots).
We waited for 3rd atempt to break the FE 127 price and decided to exit our remaining lots.
We filled all at 1.2631 for net +4 pips.
We were able to load up on lots since stop-loss was only 5 pips.
If it breaks FE 127, no regrets.
We used manual exit and chart price was 1.2629 in both instance when exiting.
While last trade looked small, profiting 4 pips, it was not.
Let's say that a trader's normal stop-loss (risk) is 20 pips.
Trade with 5-pip stop-loss allows us to scale and increase number of lots. In this case, to maintain same risk (as a percentage of account), we end up trading 4 times the normal amount of lots.
In other words, if our risk for each trade is 1%, it can still be 1% on the last trade when properly scaled.
This means 5 pips stop-loss = 1% risk
4 pips net profit = 8/10th of 1% reward
There is a scaling/risk calculator on this thread. Just search with those key words.
SCALING/RISK CALC is on page 10 of this thread.
Attached are 2 charts, a few candles in time difference. Each chart has both a 5-min and a 15-min chart of EUR/USD and various support and resistance.
Arrow down is entry for a sell position as it bounces off resistance.
There was 20 pips between FE levels, and it looks to be probing further down now as we speak.
These kind of trades allow for a tighter stop-loss and thus more leverage. We cannot regret staying out of data release periods. Instead, with our S&R skills, we can capture small gains between fibs that will equate to the same type of $ profit, with proper scaling.
Attached 5-min chart has arrows pointing to data release time points, which drove the market.
Traders looked to be anticipating positive numbers prior to the 08:00 GMT release time EUR/German IFO, which they got. On sidelines, this was a pass. The spike up halted near previous day's European High (red line on chart).
The 12:30 U.S. data cut short any gains from the breakout of the Asian Low*.
Since the pivot for Point B was about 16 pips from the Asian Low, this would have been a pass anyway.
14:00 U.S. data involved negative housing stats again. EUR/USD, however went pro-USD after data released. This was probably due to the current "flight to safety" element of the USD.
* ABC for breakout of Asian Low:
A = 08:00 high 1.2725
B = 10:00 low 1.2644
C = 10:30 high 1.2660
Asian Low = 1.2628
FE 61.8 = 1.2610 (hit)
FE 100 = 1.2579
FE 127 = 1.2557
FE 161.8 = 1.2528
Alternate Point A = 09:15 high 1.2699, but it doesn't make risk/reward palatable since distance from Point B and Asian Low remained the same, at 16 pips. Just too much lost to that.
--------------
We can see a 5-min candle close just below the Asian Low and pivot. We switch to a 1-min chart:
A = 11:02 high 1.2646
B = 11:09 low 1.2624
C = 11:16 high 1.2632
FE 100 = 1.2609 (exact hit) **
FE 127 = 1.2603
FE 161.8 = 1.2595
This was tradable to the FE 100, in hindsight. It never resurfaced above Point C, until next data released at 12:30. Thus, a small profit or break-even prior to exit ahead of data.
** We must remember significant support, per previous post, around the 1.2600/1.2606 area.