A-B-C-D Trade - page 16
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Pulled fibs and see that 1.1911 is true support. Confirmation below this will spur short trades.
We filled on short at 1.1904
Target is FE 161.8 price of 1.1881
Stop-loss 1.1931 above last pivot.
We are awaiting break of 1.1891 (close of 5-min candle), and will see move hit our take profit.
Manually exited at 1.1882, just 1 pip from our target.
Note, spread of 3 pips = 1.1985 for + 19 pips net
Extension pivoted at the last session's low of 1.1923. Now, making another run downward. If we were still in our sell position, we are at least confident that it will revisit 1.1982 and potentially break below that. New ABC formed with new Point C at 1.1924.....which produces FE 100 of 1.1861.
OK, expansion went to 1.1976 which was the original FE 161.8. Small bounce up and strength toward new tight ABC target FE 100 1.1861.
Attached chart illustrates fib channel plotted last Friday (see previous post).
We can see this pair respecting the support and resistance of the channel. Should it continue to do so, the pair will reach the FE 100 prce of 1.1861 at 02:55 GMT (15-min candle).
Since there is no news or economic data, the market is trading off of the Asian stock indices activity and technical analysis.
June 7th Breakout of Asian high of 1.1956
A = 04:00 candle low of 1.1891
B = 07:00 candle high of 1.1956
C = 07:50 candle low of 1.1914
When it’s choppy, I use the Heiken Ashi Smoothed indicator candles to get a better look at the swings. If we look at the 15-min, we can see the ABC points
The attached is the 5-min, as we would wait for a close of the 5-min candle above the Asian high. ABC in red.
Entry 1.1961 + 3 pips spread = 1.1964
Profit Target FE 100 of 1.1979 minus 1 pip cushion = 1.1978
Reward = 15 pips
Therefore our Stop-loss must be controlled to be as close to a 1:1 ratio as possible.
We switch to the 1-min and see pivots of 1.1941 (09:23 GMT), and
1.1945 at 09:28 GMT.
Risk (using 1.1945) + 1-pip cushion = 1.1944 or 20 pips.
- this is also area of Ichimoku edge.
Risk reward = 20/15.
Alternative stop-loss was just below Point B, say 5 pips, would have made the risk 1.1951 or 13 pips. This would have been tight and increased risk of stop-out.
Not an ideal set-up if trading by ABC, due to the FE 100’s relationship to entry and therefore risk/reward.
If you’re trading basic 15/15 pips stop-loss and take profit, this turned out O.K. as it was a clean breakout
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As the C-D leg was trying to break Point B upon first approach (08:35 GMT), it retraced to from a new ABC Point C. This is what I refer to as a new tight pull.
Plotting the new ABC on 15-min (black fibs):
A = 07:50 candle of 1.1914
B = 08:35 candle of 1.1954
C = 09:15 candle of 1.1935
FE 100 = 1.197
FE 127 = 1.1986
FE 161.8 = 1.2000
Distance between A-B was 40 pips, so in a trend market such as the current situation, I target the FE 161.8 when A-B is 45 pips or less.
If trading beyond the FE 100 and trailing our stop-loss, we would move it to just below the FE 100 when it hurdles that level. We can also move it after pair extends above the FE 127.
This extension only made it to the FE 127.
So, what was the difference?
The stop-loss and entry were the same as the original pull. The reward projection to the FE 161.8 was better, although it was not realized.
Risk/Reward projection = 20/32
If exited at the FE 127 price 1.1986 minus 1 pip cushion, profit = 21 pips
Attached 5-min chart of EUR/USD shows the 2 breakouts from the previous sessions.
The first registered a Point B of 1.1960, whereas the Previous U.S. session high was 1.1973 (purple horizontal line). Due to the small size of A-B (38 pips), we normally target the FE 100 for profit in a trend market.
The extension hit the FE 100 price of 1.1982 and retreated 3 times. Therefore, we would have either broke even or taken profit at or near the FE 100, which was a nominal gain.
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The breakout of the Asian low of 1.1922 was a move-in progress. We wait for the pivot to establish Point B, which it did at 1.1914. This makes the distance to the FE 100 (1.1901) too small to trade.
IF a basic 15/15 pip trade was entered, irregardless of ABC, then it was successful. As long as the trader understands the market's movements and pivots, he/she would have stayed with the trade even after it re-entered the box. The Point C pivot was 1.1934 and not a top-out if 15 pips S/L was used.
In fact profit may have been adjusted slightly beyond the normal 15 pips since we can see the FE 100.
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Note that the Asian low was checked and the indicator Time_modified2 did not paint it correctly. This is due to my adjustment to conclude the previous session at the 59th minute candle. Thus, I draw a horizontal line for this purpose, since I can't get the yellow box to stay there after dragging the low to it's proper place.