A-B-C-D Trade - page 37
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We are about mid way through Asian the session.
Attached is 5-min EUR/USD with fibo fans pointing up and down. Also added an ABC.
Fibo fan pointing down:
High = 08:15 1.2725
Low = 00:45 1.2649
Fibo fan pointing up:
Low = 15:00 1.2620
High = 18:30 1.2672
ABC:
A = 15:00 low 1.2620
B = 23:30 high 1.2679
C = 00:45 low 1.2649
FE 100 = 1.2708 (hit)
FE 127 = 1.2724
FE 161.8 = 1.2744
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We feel bounce will come off the E 127 area, which is also high from yesterday's European session.
Just broke the FE 100, we shall see.
When we run out of fibo fans, we move the high or low.
Fan pointing down, moved LOW to 02:15 low 1.2681. This provided a 78.6% fib that the market is hesitating at (resistance).
Aug 24th European high of 1.2718 may also be respected by some traders. The question would be do we enter based on 1.2718 high from Aug 24th or 1.2725 high from Aug 25th (same area as current FE 127)?
A trader must weigh being wrong (entering based on Aug 24th high 1.2718), and being down 7 additional pips, versus missing the train entirely.
We also need to measure last significant low to high with fib retrace tool. We then must select our take profit target, using on of those fibs.
We like the low of 1.2649 and the anticipated high of 1.2724/25.
23.6% retrace fib = 1.2707
38.2% = 1.2696
50% = 1.2687
61.8% = 1.2678
78.6% = 1.2665
We have no data releases during Asian session.
We can see that based on the low of 03:00 GMT 1.2687 and high (thus far) of 1.2717, it has already retraced 38.2% to 1.2706.
Based on this, we hold on and wait for possible climb to the 1.2724/1.2725 area. If it doesn't happen, no money lost. There will be other opportunities, often daily.
There is a 07:15 GMT high-impact data - Swiss Employment.
We moved the fibo fan low again, to 03:00 1.2687.
Attached chart has split charts, one is 5-min and the other is 1-Hour.
EUR/USD probed above our resistance to 1.2735. The 5-min candle refused to close above resistance of 1.2725.
We entered SELL at next candle, filling at 1.2722.
We plotted fib retracement from the low 1.2649 to high 1.2735.
- 38.2% fib = 1.2702 (target - hit)
- 50% = 1.2692 (thus far hit 1.2693)
- 61.8 = 1.2682
- 78.6 = 1.2667
Auto exit at 1.2705, and profit = 17 net pips on this bounce trade.
Some minor data drove movement. Next is 07:15 higher impact data. We'll move to sidelines.
Here is chart with fibo fan plotted to new high, for the short (SELL) trade.
Low = 00:00 1.2649
High = 06:10 1.2735
As we can see, the retrace off the bounce respected fib levels. Our particular exit on the horizontal 38.2 also was confirmed by the fibo fan's 38.2 diagonal fib.
It also conformed to the fan's 50% nicely.
Attached is 5-min chart with fib retracement fibs based on pull from Asian Low to Asian High.
We used arrows to point out data release points. The most recent was the weekly U.S. Jobless Claims.
The market looked to have largely shrugged off positive numbers, after a small spike down. Pair returned to area of Asian High of 1.2746, probing higher to 1.2764 before collapsing.
We did not like the approach to the Asian High. The pivot for Point B was 1.2726, extremely far ( 20 pips) from break point at Asian High.
It did pivot after initial probe to 1.2758, but we chose to stay on sidelines ahead of European Close with its anticipated dwindling volume.
The 15/15 pip technique would have lost.
Bounce down off of Asian High of 1.2746 had already occurred at 07:30 1.2744. That was considered "first approach", which offers highest probability for bounce.
However, this happened just 15 minutes after release of Swiss data, thus many did not trade it. It was also sandwiched between 08:00 European data.
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All in all, can't be disappointed with not trading during Euro session. We were fortunately afforded an opportunity to make a bounce trade during Asian, off resistance of 1.2725.
As we prepare for the European session, we saw an opportunity to make a bounce trade during Asian.
Attached is split screen of both 5-min and 1-Hour charts.
5-min uses fibo fans and retrace fibs.
We shorted EUR/USD at the 78.6 retrace fib of 1.2730 from:
High = 19:00 1.2740
Low = 00:00 1.2692
Targeted profit at retrace 50% fib price of 1.2716 + spread and cushion. See 1-hour chart for retrace fib plot. On the 1-Hour, we also had the indicator DayProjection Fibo, which had a fib at 1.2730 as well.
Entry fill = 1.2727
Exit fill = 1.2721
Profit = 6 net pips
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Pair probed just above the 1.2730 resistance, to 1.2731 before descending.
We had a fibo fan plotted on 5-min:
High = 19:45 1.2740
Low = 1.2692
The 78.6 fib from this fan acted as support and was close to our exit target, and thus we "took the money on the table" and exited manually early. See chart.
Stop-loss placed above our resistance of 1.2730 at 1.2736.
Risk = 9 pips
Reward = 9 pips (projected)
Attached is 15-min EUR/USD chart. We plotted retrace fibs based on previous European session (Aug 26th) low to high:
Low = 12:30 1.2665
High = 14:30 1.2764
The market traded in a tight range ahead of two U.S. data releases.
1) U.S. GDP 12:30 GMT
2) University of Michigan Consumer Confidence 13:59 GMT
As we can see, after initial reaction, pair went in opposite direction. Good example of the whipsaw action following the higher impact data releases.
Data, news, economic analysis, and world events drive the markets. Technical analysis attempt to take advantage of the moves and reactions.
While we respect the data-driven moves, we stay out during data release. Obviously, there are throngs that "trade the new". We invite you to attend their threads, etc.
We view keeping abreast of data, etc. as quite educational, but largely for dinner conversation or debate amongst friends or colleagues. The reason for this the psychological aspect of trading.
As inter-day traders, we can easily get psyched out of a trade, or certain components of a trade, by too much focus on the fundamentals.
Since there are so many data releases, we may be afraid to pull the trigger.
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After the spikes, we look at the peak. Pair probed just above the yesterday's Euro session high of 1.2764, to 1.2778.
We plot fib retracement of today's last move up.
Low = 1.2675
High = 1.2778
The 50% fib (1.2727) off this pull is the same as the 38.2% from yesterday's Euro session Low to High.
The 38.2% is 1.2739.
A trader would enter after being convinced that the retrace is under way. There is a host of indicators that can be utilized to ascertain entry, such as cross-overs and overbought-oversold. The OB/OS would need to come back below the threshold, prior to entry. These is basic advice. There are many thread that explain the use of these indicators.
In both cases, we see that the pair dipped a little after its probe, but made a re-attempt to go higher, which failed. Obviously, the stop-loss would have been placed above the new high of 1.2778.
This is not a bounce trade as danger existed due to the volatility in the immediate aftermath of the data release.
We also had U.S. Fed Chief Paulson's statements in the mix.
S/L = 1.2782
If entry 1.2760
Risk = 22 pips
Targets:
38.2% = 1.2739 Reward = 21 pips
50% = 1,2727 Reward = 33 pips
Risk also involves being so close to end of the week. Must not be stuck in a trade after closing.