A-B-C-D Trade - page 306
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As a footnote, the QTA had plot per below, resulting in turning point cluster:
High-to-high (HH) = 5-29 08:00 and 5-31 09:00 (6-4 23:00 = 127.2% expansion)
Low-to-low (LL) = 5-31 00:00 and 6-1 12:00 (6-5 00:00 = 100% expansion)
That peak also is near the 78.6% retrace (1.25428) based on using last week's high/low.
Fib plot from last week's low to this morning's high has 50% retrace at 1.24140 which was touched 08:00 and produced bounce up. The red horizontal trendline 1.24700 became resistance and met during 14:00.
We changed the 15-min to a 30-min to better illuminate the BAJA Divergence dips at 09:00 and 11:00 candle periods. RSI set on 4-period.
Market did not get what they were looking for - FED hint of QE3, during scheduled Benanke testimony.
Attached is 15-min EUR/USD session colors with MML. Basic S&R includes 3/8th MML and red horizontal line of Asian High.
14:00 spike candle drove price toward lurking buys at the 3/8th 1.25427. The 2 black "X" mark exit options for the scalper. One is at the next MML up, the 4/8th 1.25732, and the other is the Asian High 1.25842.
Bounce did occur from the 15:30 candle period and each exit option was respected. This was a reasonable tight S/L scenario, producing minimum 2:1 R/R.
When the market establishes a significant high or low, it is a prime selection for use as the StartPrice for the SQ9(Price).
The attached EUR/USD 30-min therefore plots from the June 1st low of 1.22866.
The blue horizontal fib plot uses that as its low and High = June 5th 00:00 1.25413.
This High is used since there was the largest retrace (50%) after that peak.
Now we can see today's price action reach a peak at the 270-degree (1.26214) and near the 138.2 fib extension. This is also near last week's high.
The subsequent move down respected support at the 203-degree, which is where the High resides. This BUY opportunity was just outlined in the previous post.
Other opportunities derived from this SQ9 plot includes rejection upon the first approach/revisit of the High on June 6th 08:00 (1.25265). The bounce down respected the 23.6% and 38.2% fib levels as exit options.
We're going to focus on the pivot that occurred just ahead of the Asian Session open.
The attached split-screen features a 15-min chart on the left, with session colors and MurreyMath1.0 (MML).
Chart on the right is a 30-min with SQ9(Price) using 1.26244 as the StartPrice and direction down. This is yesterday's 13:00 high. HAMA_T3 and Gann Activator Bars (GAB) also on chart.
Left chart shows pivot at the 4/8th MML ahead of Asian. Chart on the right has that same price action meeting the HAMA_T3 candles as resistance.
The SQ9 provided a take-profit (TP) target at the 90-degree price level of 1.25123. Therefore if entry effected around the 45-degree of 1.25683, gain was about 50 net pips.
Fairly tight S/L just above the HAMA_T3 candles 1.25810 made risk about 17 pips.
R/R under this scenario = 3.8:1
Note that both the MML and SQ9 levels at entry and TP exit are virtually the same.
Here's a pic on a 1-hour time-frame showing breakouts from the Asian session high or low. The indicator time_modified is used to color the 3 sessions.
From May 25th, there were 11 trading days, of which 10 had breakouts at direction of initial thrust after the European open. The June 6th breakout to the upside was relatively small and counted as a losing scenario.
Money management dictate exact gains on win opportunities. Some of these options are detailed at the beginning of this thread and occasionally featured thereafter.
Tools include the various S&R ones such as MurreyMath1.0, PSQ9, SQ9, etc.
Fib plots measure higher probability S&R for TP as well as S/L. Fib expansion plots (ABC tool) get a little more specific.
And last but not least is determining Risk/Reward prior to entry.
Note that indicator may not stretch colored box of the 1st hour of a session properly.
Attached is EUR/USD 1-hour with PSQ9(Price) StartPrice of 1.26229 direction down.
After the aforementioned pivot at the 45-degree en route down, price declined further to the June 6th low 1.24400 support level (red horizontal line).
The 135-degree level of 1.24549 was also there, and was the peak level during the June 1st U.S Non-Farm Payrolls.
BAJA bullish divergence also evident at today's low.
Now comes something new.
Insert ATR (Average True Range) indicator using default 14-Period setting, which is standard on the MT4 platform.
Plot fibs directly on the ATR, using the June 7th 19:00 peak to the June 8th 07:00 dip.
Go to fib tool's fib levels tab. Program the fib ratio per below.
Level = 0 Description = 0
Level = .50 Description = 50
Level = 1 Description = 100
Look for long moves by the ATR, apply fib plot, and pinpoint when ATR hits the 50% level for potential pivot. Use with other tools, especially S&R and RSI(4).
This example produced a pivot at today's (June 8th) 13:00 candle.
To the left on the attached chart, we have an arrow pointing up on the June 5th 17:00 candle. The ATR fib plot for this example was June 4th 00:00 June 4th 10:00.
On May 17th, this 30-min chart of USD/CAD was attempting to stay above the HAMA_T3 candles for an uptrend.
We measured the ATR high/low May 16th 18:30/May 17th 04:00 with fib retracement tool.
To see the ATR levels, input in the fib retracement tool, for each of the 3 levels (of 0, 50, 100):
Description =
0 %$
50 %$
100 %$
The ATR reached the 50% retracement after the 12:00 candle closed, registering .0013. The 50% level is now shown as .00125, since each level is labeled.
The open of the next candle at 12:30 was at price of 1.01360.
When we mouse over the 12:30 HAMA_T3 candle, the high is 1.0134, which is shown in the data window as Value 2. This means we are using the T3 candles as support to rejoin the uptrend.
S/L options include lows of the 08:30 candle (1.01148) and 06:00 (1.01037).
TP options can be measured using various S&R techniques as covered in this thread. This example can be the T3, when price dropped below it 07:30 closing at 1.01977.
TP = 1.01950
Entry = 1.01400
S/L(1) = 1.01100
R/R = 55/30 and ratio 1.8:1
***
Note that the RSI(4-Period) crossing its 50 level can be used as trigger entry as well as give direction of trade.
***
The 2nd example is 15-min GOLD. Fib plot of ATR from May 3rd 18:45 high to May 4th 03:15 low. The 50% retrace level is about 2.14.
Once again we have the HAMA_T3 to guide for trend. The May 4th 15:30 candle closed with an ATR reading of 2.1357. The open of the next candle at 14:00 would be the proposed entry at $1635.50 plus spread.
Now let's use the fib retracement tool and plot on the candles.
Low = 15:15 $1628.80
High = 15:30 $1640.10
The 50% price retrace is $1634.50.
As we can see on the chart, price action respected that 50% level by keeping candle bodies above it. We are still above the T3 candles and this BUY entry has some reasoning to it.
S/L options include bottom of 15:45 T3 candle, $1630.10 plus cushion.
Price subsequently spiked up and made a 150% extension, marking a high of $1645.70.
R/R about $8.50/$6.00 or less gain depending on exit price of course.
***
The use of the ATR captures the return to midpoint in volatility. The examples thus far uses rising ATR when it reaches the 50% fib retrace.
We can measure ATR from low to high and be just as effective using the hit to its 50% retrace on the way down.
We had previously posted examples of the ATR 50% retracement technique with the HAMA_T3 for trend and rejoining trend. This is an entry trigger technique.
Now, we have examples of using this combined with an OB/OS indicator, in the RSI(4-Period). The pivot points listed below, B = Buy and S = Sell, also indicate OB/OS readings. All entry signals were followed by enough reasonable gain to call them winners, except for the last one.
5-25 11:30 (S) (78)
5-29 08:30 (S) (86)
5-30 09:30 (B) (7)
5-30 21:30 (B) (18)
5-31 10:00 (S) (79)
6-01 08:30 (B) (7)
6-05 08:30 (B) (3)
6-06 08:00 (S) (91)
6-06 20:00 (S) (81)
6-07 21:30 (B) (29)
Review of rules:
Measure ATR swing with fib retracement tool.
When a 30-min candle closes at or past the 50% ATR retrace level, entry is upon open of next candle. Let's call the previous candle the "confirmation candle" or C.C.
The C.C. must be OB/OS. You can elect which parameters of OB/OS to use, whether it is 85/15, 80/20, 75/25, etc.
Direction of ATR does not denote direction of trade.
Money management must be added, including exit strategy.
We'll keep an eye on the 4 major currency pairs, as they relate to this technique, along with GOLD and SPY (Spyder Index CFD) which tends to mimic the S&P 500.
Attached is EUR/USD daily with BumaSoft Bradley Siderograph. Settings that differ from default are:
middle_term_multiplier = 3.0
future_bars = 150 (or whatever number of days you prefer)
We have insert this indicator twice, one "inverted" = true, which can be changed in the input tab. This simply means that the siderograph is flipped upside down.This type of tool inverts frequently.
We drew vertical lines at points where inversion occur. Yellow "X" marks which siderograph prevailed during those periods.
Now let's look at the yellow vertical line on Feb 16th, 2012. The top siderograph shows price declining. The bottom siderograph shows price rising, and corresponding with actual price action.
The siderograph is able to project into the future. Therefore, we can anticipate turns at certain "bends" on the siderograph.
The bottom siderograph has its highest reading as -89, which can be seen in the data window, when we mouse over it on Feb 26th.
This set-up is assisted by fib plot and RSI(4) OB/OS.
Fib plot Low = Jan 16th 1.26248 and High = Feb 9th 1.33212
Feb 26th is a Sunday, and the candle was small, not able to rise beyond the 127.2% extension level of 1.35106.
The RSI(4) reading on Friday Feb 24th was 91 and overbought.
These combined tools signaled a SELL opportunity. Price subsequently was rejected at the 127.2 after several days, and declined to the round number 1.3000 and near the 50% fib level.
***
As additional guidance, we need to mention turning on the moon feature:
include_moon = true
This allows user to see the small turning points of the siderograph. They are very accurate, but also numerous. They will also get inverted often, which is harder to predict.
Here are a couple of plots on 1-hour charts.
EUR/USD start price/time = June 1st 12:00 GMT
Prices (height) = 7200 (for 5-digit broker)
Times (width) = 360 default
GOLD = May 30th 14:00 GMT
Prices = 10800
Times = 360