A-B-C-D Trade - page 284
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Split-screen, with 30-min session colors and ABC on left and 1-hour MML on right.
Asian High of 1.3155 was Point B and taken out early European. Made a full FE 138.2 and testing for more. However, with NFP on horizon at 134:30, not wise to get stuck in trade.
The peak coincides with 8/8th MML and wide 78.6 fib from plot Jan 30th/31st low/high.
The U.S NFP beat estimates by a large amount (243K vs 150K), and the Unemployment rate came in lower than consensus at 8.3% vs 8.5%.
EUR/USD whipsawed on the event, and proves once again why a small stop-loss can get wiped out quickly. The wide spreads/slippage can also drag stop-loss.
Analysts and consensus are often wrong. Unless the day trader is trained at trading the news (data), better to be safe on the sidelines.
Attached is a 30-min PSQ9 chart with Mars and Moon set at 45-degree intervals. Start of the week identified with vertical line.
Fib channel (FC) tool plots expansion using the Moon 315 and 225-degree levels for diagonal S&R.
Pink diagonal line is aforementioned last week's Moon 270, which is essential in middle between this week's 270 and 225. That would make it at an interval of 22.5-degrees, at 247.5-degree.
That peak intersected Mars 135, and was 3rd visit to this week's high area.
The price movement marked a low at the FC 131.4, which was previously touched Feb 1st 06:30-07:00.
Gray colored horizontal fib plot uses that as low and Feb 1st 16:00 high. This plot's 78.6% fib intersected the FC 131.4 during 14:00 candle low post-NFP.
We had mentioned this pair being in the so-called "intervention zone". It was at its lowest in more than 60 years.
he attached 4-hour uses a green rectangle to bracket the aforementioned BUY ZONE, form 75.75 low to 3/8th MML of 76.17.
This was a swing or position trade scenario. S/L below that significant low of 75.75.
Aside from the MML, we plotted an Andrew's Pitchfork (APF) with interior fibs. Plot:
Handle = Jan 17th 08:00 low 76.77
Upper corner = Jan 25th 12:00 high 78.27
Lower corner = Feb 1st low 76.02
Repeating instruction: change name of APF to AL1. Insert indicator AML_v1-1, to get interior fibs.
After Feb 1st test of 76.00, price walked up the lower fork. The surprise NFP and Unemployment numbers propelled pair to Lower_ML2 at 76.75. Bounce came down slightly to the blue 4/8th MML 76.56 as we speak.
R/R calculation prior to trade must make sense.
USD/CAD daily with the 2 indicators give us an idea for trend.
A red trendline place above 3 declining peaks of blue Gann Hi/Lo Activator Bars.
The HAS MA T3 (we'll call it the T3) provides S&R and trend separator. We changed to default colors to give better contrast with Gann Bars. White denotes downtrend and green for uptrend.
White dotted horizontal fibs from plot:
High = Nov 25th 1.05226 and Low = Dec 8th 1.000510
The 78.6% pullback on Dec 14th was the 2nd peak. This provided a short opportunity at the 3rd hit to the trendline plotted with the 1st two peaks. This resistance was also a preventative to a false breakout to the upside.
The next Gann Bar to turn red was on Jan 17th, after protruding below the T3. The previous day had a RSI(4) reading that dropped below the 50 mid-line. The EFT flipped below its mid-line zero.
SELL positions can use the upper borders of the T3 candles as resistance for stop-loss.
Today's activity saw price hit the 127.2 extension to the downside.
As with all moving averages (MA), the T3 lags. What it does provide, is enough room for the volatile Forex market to move, in an attempt to stay in a longer term trade.
The T3 can be an alternative to the ATR or Parabolic, for trailing stop-loss.
The perception is that most traders spend the majority of their time looking at entries, collecting indicators, EAs, and systems, while largely ignoring or spending little time on money management.
An "average system" can be a good one with sound money management. What is an average system? Let's say one example would be a system that wins about 50% of the time.
Here are some basic parameters of an interesting example:
Target Take-Profit (TP) = 3:1 Reward/Risk Ratio (R/R)
Stop Loss (S/L) moved once.
Win % = 54%
About half of wins are at full TP, R/R = 3:1.
The remaining half of wins at 25% of TP, R/R = .75:1 (3/4th to 1).
Risk per trade = 3%
About 17 trades per month.
Max Consecutive Wins = 12
Max Consecutive Loss = 6
Profit Factor (PF) = 1.46:1
Allow account to compound (no withdrawals).
Let's say the 2011 month-to-month % gain results were:
23%, 17%, 43%, 20%, 5%, 6%, -9%, 27%, 4%, 9%, 5%, 3%
End gain was 292%.
A starting balance of $10,000 = ending balance of $39,200.
The headline was Greece's and the EZ unable to ratify the debt deal, which created sentiment to the downside for EUR/USD.
Attached 30-min session colors and MML:
Fib plot High = 1.31663 Low = 1.30796
As always, we look for confirmation of plot. In this case, it came at the 1272. extension at 1.30560 during the 06:00 - 06:30 candle periods.
The breakout of the Asian Low of 1.30523 (essentially the same as the 127.2) occurred during the 09:00 period, just ahead of 09:30 data. Price halted at the 161.8 and 6/8th MML 1.30310/1.30267.
BAJA bullish divergence at this pivot low.
Together with scheduled 11:00 data (both rated medium impact), we had to make it very quick. We can see the whipsaw 11:30 candle.
Pair declined back to bottom, where another BUY opportunity presented itself. The bounce is strong and still moving up.
A bounce down off the fib plot's LOW was brief and dropped back to near 127.2 territory, for 22 gross pips, prior to resuming ascent.
Today's high of 1.31297 should be resistance as Europe is set to close.
30-min session colors with MML. APF uses Friday's High for its handle, and the Asian Low and High for the other 2 plot points.
Pair traded up during Asian, established a BAJA bearish divergence formation, before declining to the APF's middle fork, which acted as support through a narrow European session.
The 4/8th MML also S&R.
1-hour session colors with MML. Fib plot:
Low = .99465 High = .99782
USD strength at week's open, tugged pair to its 127.2 extension .99927 during the 13:00 period. This peak was a BAJA bearish divergence formation.
Another MML level exists between the 2 shown surrounding the peak on the 1-hour chart, and marked by horizontal dotted line.
S/L can be quite tight, just above the 138.2 fib of .99993 (and significant round number parity). The key is exiting prior to the 15:00 CAD data.
Retrace fib plot can be the tight European session Low/High. The TP targets include
38.2% = .99764
50% = .99714
61.8% = .99664
Market reactionary today on events:
03:30 Australia surprises by keeping rates on hold instead of cutting 25 basis points (1/4 point)
11:00 negative EU data
13:00 report that Greece debt deal ready for signature today
15:00 Bernanke regular scheduled testimony before Senate Banking Committee
- one of the early statements was Mr. Bernanke's reiteration that U.S. interest rates will stay low to 2014, which caused another spurt up in EUR/USD
Pair at +1/8th MML and just above Friday's whipsaw high due to NFP. Day for sidelines, and definitely risky to short EUR/USD.
To occupy one's mind, good time to analyze longer term charts.
Here's EUR/USD 15-min with Standard Deviation Channel plot using Asian Low to High 08:00/06:30.
Confirmation of plot at 07:15 & 07:30 respect at mid-channel. Other aspects were volume decline (red bar) at 07:30 gravestone doji at mid-channel mean, which was also at 50% retrace fib.
Breakout of Asian High at European open was rejected at upper channel, and price hugged mid-channel mean for a while until finally dropping to lower channel.
Greece deal not yet ratified.