A-B-C-D Trade - page 41
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
Here is the EUR/USD breakout.
1) First ABC (black fibs):
A = 07:00 high 1.2813
B = 07:50 low 1.2782
C = 07:55 high 1.2797
Asian Low = 1.2780
FE 100 = 1.2766
FE 127 = 1.2758
FE 161.8 = 1.2747
Euro data at 10:00 which was the candle that reached the target FE 161.8. Thus, exit was at FE 127 or FE 100 depending on each trader's conservativeness.
There was a better, wider plot for this first ABC, but that is hindsight and we'll stick with this plot for tutorial. You can explore the other option.
2) Second ABC (blue fibs):
A = 07:55 high 1.2797
B = 12:25 low 1.2735
C = 13:30 high 1.2772
FE 100 = 1.2709 (target - hit)
FE 127 = 1.2692
FE 161.8 = 1.2670
We also knew that 1.2715 was significant fib on Daily chart per past mention/post.
1.2700 is round number and natural bounce upon first approach/hit. Probed to 1.2698. The bounce first hit resistance at the 236.2 fib from first ABC, price of 1.27208, then proceed to 2nd ABC's FE 61.8 of 1.2723.
From Point C to Point D (1.2698), we plot retrace fibs. The 38.2% retrace fib = 1.2726.
If an intermediate/advance trader conducted a bounce trade, the 1.2723/26 area is a good conservative area for exit. Make sure to factor in the spread (subtract 2 or 3 pips), and cushion (subtract 1 pip).
Bounce trade entry = just above 1.2700 + spread = 1.2705
Target profit price = 1.2720 (net after spread + cushion). Projected reward = 15 pips.
Quick note. 2 bounce trades occurred, that we easy to spot ahead of time.
1) EUR/USD
1.2732 was U.S. session high.
Bounced at 07:00 after probe to 1.2733.
Retrace is still in progress.
Conservative target at 38.2% retrace from Asian Low to High of 1.2711 hit.
50% = 1.2705 (hit)
61.8% = 1.2698
78.6% = 1.2688
2) EUR/JPY
Asian previous high 106.50 was revisited at 07:00.
Retrace fibs Asian Low To High:
38.2% = 106.23
50% = 106.15 (hit)
61.8% = 106.07
78.6% = 105.94
Bounce trades per previous post hit all retrace levels.
EUR/USD
5-min chart attached with data release arrows.
1) False breakout to downside after European open. Limited to 15 gross pips below Asian Low. Exit ahead of 10:00 GMT European data likely resulted in small profit, break-even, or about a 15-pip loss.
2) Breakout to upside was due to Canadian interest rate hike at 13:00 GMT. The Point B pivot was 10 pips above the Asian high of 1.2732. Extension went 31 gross pips. Distance between Point B and extension high was 20 gross pips.
Tricky using ABC as volume on longs was very heavy.
A = 13:00 low 1.2674
B = 13:45 high 1.2742
C = 13:55 low 1.2716
FE 61.8 = 1.2758 (hit)
FE 100 = 1.2784 (target)
FE 127 = 1.2803
FE 161.8 = 1.2827
USD lost ground with cross-pair USD/CAD, which pulled up EUR/USD. Negative European data at 10:00 (German Industrial Production) probably limited this pair's upside, together with profit taking at end of session.
******
After spike up that was spurred by the Canadian rate hike (13:00), we saw another bounce trade opportunity.
14:15 established then-high of 1.2762. After pull-back/pivot, the FIRST approach to that high price occurred with the 15:05 candle reaching 1.2763.
Plot retracement fibs from last significant move (not on attached chart):
Low = 13:00 1.2674
High = 15:05 1.2763
23.6% = 1.2742
38.2% = 1.2729 (target – hit
50% = 1.2719
61.8% = 1.2708
There was a medium-impact Canadian data release at 14:00, so we’re assuming some traders took profit just prior to that, creating the small pivot retrace (Point C)
Some traders will exit a majority of lots at the 23.6% fib and the balance at the 38.2% fib.
*****
While the breakouts were limited, there were bounce trade opportunities before and after the "meat" of the session. As mentioned before, having knowledge of support and resistance levels provide premium opportunities.
With the bounce trade, we can have a tight stop-loss. These examples may have a 10-pip stop-loss utilized. That can double the amount of lots we normally trade.
If our goal was to make 3% during the European session with the breakouts, that same target is met with the bounce trades. This is called "scaling" our lot size, which was covered in more detail previously.
Counter-trend trading should be reserved for experienced traders.
Attached is a wide shot of the EUR/JPY 5-min chart. It includes the last part of the Sept. 7th Asian session.
1) The last ABC to the downside at Asian close Sept. 7th had its FE 236.2 fib reached as the bottom during the next Asian session.
A = Sept 7th 05:45 high 107.74
B = Sept 7th 07:35 low 107.10
C = Sept 7th 08:00 high 107.37
2) During U.S. session Sept 7th.
A = 17:35 high 106.62
B = 22:10 low 106.10
C = 00:50 high 106.50 *
* We illustrated a fib channel plot in a recent post. Adjust the 2nd line's dot to Point C 106.50 on Sept 7th. That creates more channels.
3) Breakout of Asian High during European session Sept 8th.
A = 08:55 low 105.85
B = 10:20 high 106.66
C = 12:55 low 106.27
FE 100 = 107.11 (target - hit)
FE 127 = 107.34
FE 161.8 = 107.63
The FE 100 107.11 is about the same level as the Sept 7th Asian Low of 107.10.
*****
4) There was a 1st approach at 15:05 to that level thereafter, thus a bounce trade set-up.
Plot retracement from Point C (low) to FE 100 (high):
23.6% = 106.91
38.2% = 106.79
50% = 106.69 (hit)
61.8% = 106.59
78.2% = 106.46
A = Sept 8th 15:05 high 1.2763
B = Sept 8th 19:50 low 1.2709
C = Sept 9th 01:40 high 1.2742
FE 100 = 1.2688 (hit)
FE 127 = 1.2673 *
FE 161.8 = 1.2655
* same level as Sept 8th low pivot upon Canadian interest rate announcement.
Fibo Fan:
Low = Sept 8th low 13:00 1.2674
High = Sept 9th high 01:40 1.2742
Retracement fibs:
High = Sept 9th 01:40 high 1.2742
Low = Sept 9th 04:45 low 1.2689
23.6% = 1.2702
38.2% = 1.2709
50% = 1.2716
61.8% = 1.2722
78.6% = 1.2731
The fan's 78.6% caught the low at the FE 100.
The fan's 61.8% acted as resistance for the bounce off FE 100, to the 38.2% retrace fib of 1.2709 (also FE 61.8).
The retrace may form a Point B in event of break downward. Some traders enter here going down to max of previous low.
Decline can bounce off that Asian low of 1.2689 area since it is the first approach this session.
We entered sell on break of Point B down, filling 1.2686.
Stop-loss just above Point C + spread = 1.2712
FE 100 = 1.2655
However, our daily chart show support around 1.2659-61.
Programmed for 1.2661, but ready for manual intervention earlier.
Result thus far was we exited 80% at 1.2673.
Balance still alive. Data coming early Euro session. We'll look to exit soon.
Balance exited at 1.2665 + spread = 1.2667 ------ plus 21 net pips
First 80% of lots exited at 1.2673 + spread = 1.2675 --plus 11 net pips
Entry price 1.2686
We didn't want to get past the end of Asian with our position. Often, the Asian players will take profit and we'll see a pull back.
As per keeping abreast of the economic calendar, we also wanted to get out before the next data at 08:30. A bit unorthodox with the timing juxtaposed against the breakout tutorials.
Attached is split screen of EUR/USD and EUR/JPY (which can be lead pair since we're in Asian session).
After GBP data at 08:30 all major pairs stalling now after negative effects to GBP.
EUR/GBP resistance at .8273, which is FE 236.2 and yesterday's high.
Retrace fibs:
38.2% = .8252
Bounce trade opportunities Sept 9th:
GBP/USD at 15:00 revisit of 1.5474 which was previous high during Asian. USD data at 15:00 - no trade.
The 08:30 test of Asian Low was a no-trade since GBP data was released at 08:30. No bounce occurred.
EUR/USD at 12:40 first revisit of Asian high. USD & CAD data released at 12:30. Too close to data release.
EUR/GBP at 10:10 first revisit of .8267 European session high. Data at 11:00.
We mentioned significant resistance was at .8273. When a sell position is anticipated off session high, we plot our retracement fibs off last "significant" move.
Low = 07:20 .8218
High = 09:00 .8267
23.6% = .8255
38.2% = .8248 (hit at 10:40)
50% = .8242
61.8% = .8237
78.6% = .8228
Our previous mention of .8252 as the 38.2% was based on pair reaching .8273. We must make the adjustment to .8267 high after it failed to advance above that point.
This opportunity should have been good for about 10 net pips, while risking a maximum of 10 pips.
Exit ahead of scheduled 11:00 GBP data.
After another attempt at 13:15, pair made a full retrace to session low and beyond, with bottom near LOW per above.
Attached is 5-min chart of EUR/USD with data arrows, extension fibs, and retracement fibs.
A = 11:50 low 1.2708
B = 12:40 high 1.2742
C = 12:45 low 1.2721
Asian High = 1.2742
FE 100 = 1.2755
FE 127 = 1.2765 (hit) see note
FE 161.8 = 1.2776 (target)
Entry = 13:10 open price 1.2752 after spread
Stop-loss options included 1-min pivot 1.2735 plus cushion = 1.2734 for 18 pip risk.
Projected reward = 24 pips
After 12:30 USD data, pair only reached the FE 127 before retreating (see note).
Stopped out just below FE 100 since we move our stop-loss after a 5-min candle has closed above the FE 100. This scenario was a break-even trade as entry candle was fast and fill = 1.2752 at 13:10.
If previous day's high was kept in mind, an exit at the FE 127 would have produced +13 net pips.
Further USD data at 15:00 was met with downward action to effect a 78.6% retrace from:
Low = 07:20 1.2664
High = 13:25 1.2765
Note: Previous day's high was 1.2763, which is significant resistance.
Edit: Yes, this made it a bounce trade opportunity.