A-B-C-D Trade - page 275
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Hi, Haven't posted before except to ask for an exit EA. I want to contribute like the other kind posters here. I reference a poster named Glenn that showcased a London Breakout method a couple of years ago, as well as some of the indicators below. Don't really need most of them, but in the event you want to monitor momentum, etc., it will be on your chart.Have heard that some don't trust the breakout as it can go back into the "Box". Understanding how the market moves with the fib A-B-C-D action will provide more confidence in your trading. Forex Fib Trading -------A-B-C-D Trade Chart Intervals: 1, 5, 15, 60 Trigger 1-min Optional Indicators: Fractal ADX Cross Gann Hi-Lo Activator Ichimoku Heiken Ashi Keitner Channel_v1 FX Sniper’s Ergidic CCI & Trigger Forex Freedom Bars MTF Heiken Ashi (sw) Adjustments: Add 78.6 fib Add price display to each fib line. Type in %$ after fib number. Rules (you can use other breakout entries including break of S/R and channels): 1)London Breakout method. Measure hi/lo from Asian session (Box). Usually, entry is after candle closes outside of that hi/lo Box, the 5-min candle for example. 2)Place Stop-Loss at A) last pivot on 5-min…or B) exit when 5-min candle closes inside of the Box. Remember to factor in spread on Stop-Loss. 3)Size number of lots based on your max risk. If you are using exit B, you must set a stop-loss of a certain number of pips as a safety net. You can use something like 10 pips inside the box (plus spread if any). 4)Target profit based on fib extension from 5-min chart’s last move. If last move was small (less than about 30 pips), usually fib extension will hit 1.618% (FE 161.8%). If last move was large, target smaller level of 1.000% (FE100%). ·You can move the stop-loss when market reaches the FE 100% extension and you either A) target the 1.618% fib, or B) take partial profit at 100% and balance at 1.618% fib. 5)TA-B-C-D movement should always be monitored and understood. When a top or bottom is established, the move will retrace to 38.2%, or 50%, or 61.8%. In some cases it will go 78.6% and 100%. A = Start of move. B = End of move. C = Retrace Point. D = is where we want to project the extension. 6)After the move retraces, we look for it to break B. You can set an automatic entry 2 to 3 pips beyond B. Remember to factor in the spread. (See paragraph 10 for Move in Progress). 7)Look at 5-min chart and measure the last move (A-B). Use fib extension tool off of those 2 points. The Take Profit (TP) will be as per #4 above. 8)Always check 1-min chart. It can be used as the trigger in an attempt to get a better entry and/or exit order price fill. Smaller moves can also be identified on the 1-min chart that may not be visible on the 5-min. 9)You should always consider re-drawing fib extensions if a move gets exhausted before your exit. Adjust your Take Profit accordingly. 10) If you are using the Box breakout (such as the London Breakout), the move outside of the box may be a Move in Progress (MIP). Draw the fib retracement and fib extension to ascertain what is going on. If the move stalls and retraces into the Box, you are less jumpy because you can anticipate a retracement to a certain level and watch for a reattempt to break “B”. This is the reason some breakouts go back into the BoxYou can now enter when “B” is broken just beyond the Bo 11) Monitor longer time frames for support and resistance (S/R). 12)Always trade with the trend if you are a beginner. Use the Ichimoku and Freedom Bars for that purpose. The market moving above or below the Ichimoku clouds indicates current up and down trend situation. The Freedom Bars track 4 time frames in blue and red to indicate up/down market coloration. A trader can elect to only trade in the direction when all 4 time frames are one color. 13)The FX Sniper crossover aids in confirming trend and directional change. The Multi-Timeframe (MTF) Heiken Ashi also provides crossovers but is less sensitive with overbought/oversold. 14)The Keitner Channel helps visualize oversold/overbought conditions. It also has a middle line for those trading from the outer extremes to that point. 15)The Gann Hi-Lo Activator assists in identifying a reversal of direction. 16)The ADX Cross is displayed with arrows. It confirms change in direction. Is effective on the 15-min chart, but may be best on the 30-min for reference. Use with Fractals, which indicate pivot/directional changes.Happy trading!
I am lost from the beginning can you help give me a good explanation as you would give a lay man
I am lost from the beginning can you help give me a good explanation as you would give a lay man
Greetings,
To keep things simple, ignore the indicators. Just focus on the fib expansion (ABC) and fib retracement tools.
Those tools are used to measure breakouts of the Asian High or Low. As depicted in the beginning of this thread, there are certain hours denoting the Asian session.
The indicator time_modified is used to color the 3 sessions. You need to adjust the time settings. This is done, as for all indicators, by clicking:
Charts
Indicator list
Select name of indicator - click "Edit"
These hours change with Daylight Savings. Right now we use:
Asian = 00:00 - 07:59 Color = Yellow
EU = 08:00-16:29 Color = powder Blue
USA = 14:30-20:59 (partly overlaps EU) Color = Tan
These colors work with a chart background of moccasin color. To change background color, right click on chart. Click "Colors" tab. Change background color by selecting from drop down menu.
To save time, here is a template that you can save into your template folder. It includes a S&R indicator called MurreyMath1.0. You can delete it if it doesn't suit you.
Save to path: programs/name of your MT4 provider/experts/templates.
*****
The above sets up your chart to see breakouts. You use the fib tools to measure extensions up or down. You just need to read dozens of examples to get the hang of it.
The fib measurements allow us to see the swings. The fib ratios of 127.1, 138.2, 161.8 are the extension levels.
1) Fib retracement plots A-B by using the high to low or low to high. For example, when you plot low to high, we look for price to break the high and make an extension upward.
2) Fib expansion plots 3 swings A-B-C. You have to click on the 3 swings. Price breaking Swing B will usually extend.
What we tried to show was instead of simply using a set stop-loss and take-profit for these breakouts, we can be more precise using these fib tools.
The rest of that post pertains to money management. Stop-loss options are discussed. Sizing/scaling number of lots to trade. This is important with any trading. Risk/reward should be at least 1:1.
For example, if your maximum risk per trade, and all open positions is 2%, you need to adjust number of lots traded based on the stop loss amount/exposure.
This subject has been discussed, and we posted a link to a simple spreadsheet calculator on google docs. If you can't find it, ask and allow time for us to dig up details.
Additionally, it is not recommended that day traders with small stops stay in the market during high-impact economic data releases. There are web sites with full economic calendars, for guidance. One is DailyFx.com.
*******
Sorry, but this is as far as we can go due to time constraints. This thread has grown into featuring many other techniques. Therefore, the breakout of the Asian High/Low examples are found in the beginning.
Here is a chart using this indicator set on natal date of 01.01.1999 for EUR/USD daily.
We can increase number of days/candles we would like to project into the future. This is accomplished by changing the setting for "future bars". To shift peaks/valleys, change natal date. Start with changing the year.
We used yellow trendlines to highlight the major swings. The resulting swings from these types of tools can become inverted as it relates to price.
We labeled the major inverted period from approximately April 2009 to end of Nov 2010. From that point to present, we observe an inversion at the May 2011 peak.
2nd chart zoom-in shows Nov 25th dip in price was precisely caught by A4, with the lowest numeric reading for that curvature. It also caught the Dec 14th price dip, with the highest numerical reading for that curvature.
These types of indicators do not denote direction, but only turning points. However, the "inversion" aspect are well known to long-time practitioners.
As far as accuracy, it will vary and often be off a few days. Use as general guidance, and with other S&R, etc.
Attached is the A4 for GBP/USD daily, with natal date set to 02.14.1971. We've been dissatisfied with the results of using a natal date of 01.01.1801.
RSI(4) filter set on 80/20 O/B O/S, except for the last 2 arrows, where we decided to highlight them as 70/30 qualified. This is due to the pair being less volatile with its swings versus EUR/USD, Gold and Oil.
Signal dates are:
Sept 19, 2011 BUY
Oct 16th SELL
Oct 28th SELL
Nov 25th BUY
Dec 23rd SELL (70/30)
Jan 8th BUY (70/30 - entry day after signal)
Let's take the Jan 8th example for analysis. Reasons to take this signal at 70/30 include:
-1/8th MML there for support, and is a level that held up as support since September.
- Close to Dec 29th low 1.53599 for tight stop-loss.
- Was a Sunday candle. We wrote about certain aspects, dubbing it the "Sunday Reversal Candle".
- 4-Hour BAJA bullish divergence
Switching chart to 4-hour, we have a 7/8th MML (and the -1/8th becomes 6/8th) as a take-profit target at about 1.55000 (also round number). This level was indeed hit precisely, and was a 38.2% retracement from Jan 3rd high.
Once again, these larger time-frame charts are used for guidance. You don't necessarily want to trigger off of them.
Here's a set-up on the WW for EUR/USD 4-hour, that has completed at Point 5 for entry, per attached.
Swings are
1) Jan 8th 22:00 low 1.26649
2) Jan 10th 12:00 high 1.28172
3) Jan 11th 16:00 low 1.26606
4) Jan 13th 04:00 high 1.28772
5) Jan 13th 12:00 low 1.26229 (closed at 1-3 trendline)
Within the WW rules, entry effect for a BUY when price confirms above the 1-3 trendline.
Target at the 1-4 trendline, which of course slopes up. Individual traders can have other exit targets, or apply partial exit strategies.
We can even plot an Andrew's Pitchfork using Swings 1-4-5, and trade to the middle fork.
The 1-hour has 1/8th MML at 1.27563.
BAJA bullish divergence at Swings 3-5.
Attached WW indicators include one using white numbering, and the other in color. Preference depends what background color is on your chart, for better viewing.
Remember that confirmation of the France downgraded was released after the markets closed on Friday. Therefore, we will have reaction Sunday/Monday.
EUR/USD has opened with a 40-pip gap to the downside.
On the attached 4H AUD/USD, we use the Ichimoku and MML for S&R, along with traditional fib plot of:
High = Jan 3rd 16:00 1.02853 Low = Jan 9th 00:00 1.01441
Price currently at 50% fib 1.02647
We highlighted the 38.2 fib 1.02362, which is below the blue 4/8th MML. It is also near/at the Ichimoku upper cloud boundary, and Jan 13th 15:00 low. This is a level for a bounce trade BUY.
Switching the chart to the 1-hour interval, we get more MML levels.
Stop-loss options include just below the 3/8th MML of 1.02234, as seen on the 1-hour. Risk about 20 pips.
TP target includes 5/8th MML 1.02844 (on 1-hour), which would be approximately the same as the 50% fib of future plot:
High = Jan 13th 21:00 1.03329 Low = above detailed level 1.02362
Reward/Risk = 42/20 and about 2:1 ratio.
Larger S/L options include lower edge of Ichimoku.
EUR/USD respected 1.2622 support and was range bound through Asian. Conflicting opinions on whether Friday's S&P downgrade of France (and other EZ nations) was fully priced in.
French bond auction today with slight yield increase thus far.
Pair closed gap just ahead of European open and now trading at 1.2675, rising above Wolfe Wave 1-3 trendline which had acted as resistance.
The Andrew's Pitchfork plot's lower fork also acted as support, and middle fork still represents a nice target to the upside.
We had also identified MML level at 1.27563, which is the same area of 50% retrace fib from Friday's High/Low.
Quick note, as we have just seen a spurt to the upside on EUR/USD.
Japan watching FX market before deciding on whether to intervene. Reportedly the pair under watch is EUR/JPY.
Edit add: ...but this obviously will affect all Euro pairs. In other words, if a trader is short EUR/USD, the position will be negatively impacted by any intervention or even false rumors of such where the market reacts.
EUR/USD TP level at the MML just hit during 04:00 period.
Chart on left is 1-hour GannSQ9 which shows price had to hurdle resistance at the 90-degree of 1.27355.
Chart on right is same 4-hour Wolfe Wave plot, where we had option of MML level 1.27564 as TP. Cand view MML on 1-hour as 1/8th level. As mentioned, this is also near the 50% retrace level (high was large move's top).
Other TP options include Andrew Pitchfork's middle fork, upper fork, and Wolfe Wave pattern's 1-4 trendline.