A-B-C-D Trade - page 114
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Attached is the 15-min chart of EUR/USD during the European and U.S. sessions. The first portion to the left is the bounce trade. To the right is the peak of the bounces and a 30-min BAJA bearish divergence signal.
1) The moment-by-moment posts gave you an insight on what goes through our minds during the set-up and trade. The pic illustrates the 1st touch at 1.3510, followed by 3 more during the session.
Pair had considerable trouble rising above the 23.6, therefore the safe move was to exit ahead of upcoming data at 13:30 and 14:55. It managed to hit the 38.2 at 12:45, just prior to the 13:30 data. Price action did thrust up to the 78.6 at 15:15 near end of session. This period was also clouded by the formal resignation of Egypt's President.
2) Switching our view to the 30-min chart, we can see the 16:00 candle represent the BAJA bearish divergence 2nd peak. The 15-min entry is marked on attached chart by red arrow at 16:45 open price 1.3538.
Plot of retrace fib exit levels, but we also know where bottom is due to previous trade. This captured about 25 pips.
3) Now, let’s look at the 4-hour chart.Jan 31st low of 1.3570 produced a bounce on Feb 4th for about 40 pips. This price was also the top to today’s bounce trade during the 16:00 candle period
Although the bounce trade was entirely assessed based on price action, we also monitored an indicator based on DeMarker sequential principles. It uses counts, with 9 and 13 as turning points.
We easily saw the 12:00-16:00 candle would be an “8”, and expected the next to be a “9”. The 2 previous major bottoms registered 9 on Jan 30/31st and Feb 4th on the 4-hour chart. Using this indicator on the 30-min and 1-hour also showed a 9 in the same a
The television show 60 Minutes has a must-see entitled "The Collapse". It is being replayed several times tonight (California time), which you can record.
Another good one documenting the melt down is "House of Cards" also by CNBC, which aired 2009. Here's the link:
News Headlines
or go to cnbc.com
Before we get back into the swig of things, we want to get this one in.
Candlestick pattern recognition is a proven technique in the trading world, and we've covered a little of it here. When we understand that very few tools are good stand-alone systems, we can certainly benefit from these patterns as part of our trading savy.
The attached chart is EUR/USD daily. We want to feature/introduce a candlestick pattern that is probably one of the best kept secrets. We've heard of the Doji, Engulfing, and a couple of others, getting most of the publicity and attention.
The Piercing Line pattern is a 2-candle bullish reversal pattern. Preceding the pivot candle is a long down (1st) candle. The (2nd) pivot candle must open below the 1st candle, and close above the mid-point of the 1st candle.
Here's a link to a quick guide on candlestick patterns from stockcharts.com:
Candlestick Pattern Dictionary - ChartSchool - StockCharts.com
The attached chart utilizes the indicator Pattern_Recognition_Master_v3 which can be downloaded from the indicator section of this web site.
We've removed the other patterns and only left the Piercing Line, marked in aqua color.
One way to trade it would be to draw a horizontal line at the high of the pivot (2nd) candle. The next day, enter about 5 pips above that break point, and place stop-loss below that break price. However, as with most techniques after a pivot, the S/L can be placed below the pivot.
And the plotting of the ABC would also help, as per the numerous post herein.
Sorry, got interrupted.
The opposite of the Piercing Line pattern is the Dark Cloud Cover, which is of course a bearish reversal signal. The 1st candle must be a long bull candle. The 2nd candle must open higher, and close at least to the mid-point of the 1st candle.
Attached is a EUR/USD daily chart with both the Piercing Line and Dark Cloud Cover signals. The indicator also has an alert function for each pattern. The menu of abbreviations for markers is on the upper left hand corner of the chart. Best to save settings as template to save all that time of turning patterns on/off. Oddity is that there are much more Piercing Line patterns than Dark Cloud Cover patterns.
Compared to the fractal indicator, this pair of indicators allows for entry on the 2nd candle after a pivot, compared to the 3rd or 4th candle with the fractal since it is a 5-candle pattern. However, there are many more fractal signals than the other pair of indicators.
Double-check all patterns produced by the indicator as some do NOT conform.
The Sunday candle (19:00 through 23:59 GMT) closed with a small body, and can be classified as a Spinning Top. This is a reversal signal.
Here's another candlestick pattern recognition indicator, which talks to you.
There was also, on the 30-min, a BAJA bullish divergence signal on the 23:30 candle. EUR/USD opened with a gap down. Normally the gap will close, so we'll look for advance to at least 1.3545.
EUR/USD opened with gap down down, made its way to round number 1.3500 and proceeded to close the gap back up.
ABC pointing up with swings on 15-min 01:15/03:00/04:00, with Swing C (1.3527) being a precise pullback of 61.8%.
Pair just stalled at swing B, previous session high of 1.3589. Space above Point B includes regular 138.2 1.3563, same as FE 100.
As mentioned, the BAJA BUY triggered, and entry price was 1.3524 at open of 01:00 candle.
Keep eyes on potential BAJA Sell on 30-min chart, in event this latest thrust up registers a lower RSI(4) than 1st peak (03:00 candle).
The RSI(4) did register lower. This also tells us to exit the remaining portion of position.
As EUR/USD entering European session, we see big profit taking/selling which broke trend line.
The BAJA 2nd peak never had a 15-min trigger bar appear, which was a safety mechanism that prevents entering too soon in the event market continues to move in trend direction.
This would be the 1st histogram to register red (thin). When following the BAJA rules (especially for newer traders), the entry would be the next bar.
If you're following this and on demo, keep in mind that there is 10:00 EU data.
EUR/USD testing intra-day support 1.3527, which was last pivot Swing C.
During last attempt to go higher, we watched cross-pair EUR/JPY again (like yesterday), and saw a struggle between bears and bulls which was even. USD/JPY showed bear strength. This equates to USD/JPY (Yen strength) pulling EUR/JPY which in turn will pull EUR/USD - during that period.
exit at 1.3514 for + 23 gross (Point A).