A-B-C-D Trade - page 268
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Here is GBP/USD split-screen, with breakout to upside ahead of 09:30 GDP.
Left 15-min chart has MML and fibs, with price touching 161.8.
Right is continuance of our 1-hour SDC plot with FC both directions. We can see price currently meeting SDC upper channel as resistance.
As mentioned, we kept the 1-hour SDC plot sloping up (yellow). Price expanded 100% in both directions after plot was devised.
A 2nd SDC was applied (green) using high/low of Dec 21st 10:00 and Dec 22nd 13:00.
We labeled the European High at 08:00, which touched the 1st SDC upper channel resistance. The 09:30 U.K. quarter-to-quarter GDP figure came out slightly higher than forecast, while year-to year met expectation.
Price declined to the FC 31.4 below the SDC lower channel by the 13:00 period. The diagonal Moon 90-degree (red) intersected this location.
The event within the 13:00 candle was the 13:30 U.S. GDP and GD PPI, which came out as mixed results.
We placed the 2nd plot point at the 13:00 candle, since that resulted in the candle at the resulting lower channel.
30 minutes after data, the 14:00 candle period started its move up. The most conservative TP target was the mid-channel, as per our previous statements.
14:00 candle open price was 1.56548 = spread = 1.56588 for BUY entry.
The mid-channel (mean) price was 1.56723 for TP target.
The 13:00 low was 1.56481 + cushion = 1.56441 for stop-loss.
Reward/Risk = 14/14
HOWEVER, if TP target was the yellow 1st SDC's mid-channel, where it also intersected the 2nd SDC's upper channel, that R/R was significantly higher.
This was hit during the 14:00 candle period, marking price of 1.56962. This R/R was 38/14 and ratio of 2.7:1.
The BUY trade stayed with the uptrend, while making a 2nd plot to ascertain regression to the mean during a pullback.
SDC plot on 30-min using low-to-high Dec 22nd 14:00 and Dec 06:30.
The high was a 78.6 retracement of the Dec 22nd high to low range. BAJA divergence up there with 2 peaks of 02:30 and 06:30 candles, registering 92 and 82 on the RSI(4).
The 06:30 period whipsawed a bit due to negative low-impact French data. Perhaps a short squeeze there. The 6/8th MML level intersected the upper channel resistance.
Pair declined and price bounced off of the lower SDC channel line during the 09:30 period, which saw release of U.K. data. This made it back up to the mid-channel mean, which acted as resistance.
This pair likely pulled up by cross-pair correlation with EUR/GBP, which gained on the negative U.K. data.
Breakout of the lower SDC channel to the downside occurred during the 13:00 period. The RSI(4) also had reading crossing the 50 level, which can indicate change of trend, and can be used as a trigger.
The fib channel was aligned to the SDC's upper and lower channel lines, to produce expansion levels. Price made a 100% expansion by the 14:30 period, and also found support at the 3/8th MML.
Looking left, we can see previous support at that level. Plotting a horizontal fib, pair just now made a 38.2% retracement.
Aligning the FC to the SDC's mid and lower channel also produces good expansion levels. In this case, the pivot bottom is the FC 61.8 and retracement to the H138.2 is meeting resistance at the FC 31.4.
Your homework is to plot a SDC where it will give you a trade going upward in the direction of the trend, using the start point of the 2nd SDC of Dec 14th 16:00.
The 2nd plot point must be in oversold, below a RSI(4) reading of 20. The candle also must be at or very near the bottom SDC channel line.
****
The plot (yellow) is Dec 14th 16:00 and Dec 19th 03:00, per attached pic.
The RSI(4) was below 20, at 17.5 (your reading may differ). The 03:00 candle dipped slightly below the lower channel of this 2nd plot, marking price of 1.5463. Stop-loss placement just below this dip.
Entry can be made when price surfaced back up over the lower channel. This intersects the 1st SDC's (green) mid-channel. Let's call entry price at 1.5489.
Price made a hit to the FC -31.4 during the 09:00 period, and dipped back and closed at the green mid-channel of 1st SDC. However, the S/L held and trade still active.
The TP at the yellow mid-channel price 1.5540 was hit during the 13:00 period. There were no impending data forthcoming.
Reward = 51 pips
Risk = 29
R/R ratio = 1.8:1
Happy holidays to all that celebrate. May you and your family have a great New Year.
The attached 4-Hour GBP/EUR plots SQ9(Price) indicator at Dec 21st start price of .83015, which was a bounce off January low.
We labeled 3 trade points thereafter as well.
The Dec 22nd 08:00 high hit the 45-degree level .8347 precisely. We can see this level act as support on Dec 20th 16:00-Dec 21st 08:00.
The next candle at 12:00 made a revisit to the low, which is typical bounce opportunity BUY.
The latest is the just concluded Dec 26th 12:00 candle period that bounce off the 67.5-degree level of .8370. This was previous support on Dec 14th 12:00 and resistance on Dec 21st 00:00-08:00.
As always, money management is the other part of the equation. These entry points allow for tight stop-loss placement, and therefore good R/R.
Here's the same chart, but with Standard Deviation Channel (SDC) added.
SDC plot uses high-to-high Dec 21st 04:00 and Dec 26th 08:00. Entry effected during 12:00 period high which intersected the 67.5-degree. We can see the mid-channel mean is where price touched during this candle period low.
The mid-channel intersected the next SQ9 level down, which is the 45-degree.
This addition of the SDC assisted in the take-profit (TP) target and risk/reward assessment for quick bounce trade.
Here is split screen with 15-min session colors MML on ,and continuance of 4-hour SDC plot on right.
The SDC's lower channel provided support during the current 04:00 candle on the 4-hour. We can see the bounce better off the 15-min TRIGGER chart, which is identified within the 07:15 candle.
The 15-min uses horizontal fib plot from Asian 00:00 open low .83466 and Asian High .83708. The bounce was off of the plot's 138.2 area and near 4/8th MML.
The retrace is went to the 38.2 of .83457 based on Asian High/Low plot (not shown).
Split-screen EUR/USD 12-27:
Left is 15-min with MML and retrace fib plot. Low = 1.30411 High = 1.30825
Right is 30-min with MML and SDC plot using high-to-high:
Dec 26th 13:00 and Dec 27th 08:00
Pink horizontal line is 1st plot point high 1.30811, and used for tightest S/L adding spread/cushion. 1.30851
Entry 1.3078, before or after probe above upper channel.
TP target mid-channel 1.30630 + spread/cushion = 1.30660
Reward/Risk = 7/12 and ratio of 1.7:1
BAJA divergence at top.
This smaller trade scenario can be more prone to slippage.
1-hour high-to-low plot: Dec 21st `0:00 and Dec 23rd 20:00.
Confirmation of plot at several points, including hit to mid-channel Dec 26th 18:00
1st touch at lower channel during Dec 27th 00:00. If wish to wait until oversold on RSI(4), can wait until close of next 01:00 candle, which registered 15.
02:00 open price 1.56007 is BUY entry point + spread = 1.56037.
TP at mid-channel accomplished during 06:00 candle period, marking price 1.56387. Reward = 35 pips
Maximum S/L option was just below Dec 23rd 20:00 low 1.55856 and about 20-pip risk
R/R 35/20 and 1.7:1