A-B-C-D Trade - page 17
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We have to be careful with the current probe of the Asian high on EUR/USD as it's the end of the London equities session.
Here are my fib pulls.
The black is major ABC and red is tight ABC.
We can see the pair hitting the black FE 161.8 price level of 1.2004 and now bounced down to 1.1991.
The red fibs have the FE 100 at 1.2046, which is also the black fib FE 236 level.
Once again, we must exercise caution as as it's the end of London and traders may be just squaring their positions.
Quite period ahead of the Asian session. We pulled retracement fibs on the 1-hour high of 09:00 GMT price at 1.2215 and 02:00 GMT price at 1.1876.
Pair bounced off of the 32.8% retrace fib of 1.2005 or thereabouts.
This defines a consolidation range of:
High 1.2005 and low 1.1876.
Breakout from these 2 price levels should produce good profits. We must draw ABC pattern on a lower time-frame such as the 15-min or 5-min charts to ascertain profit targets.
European low of 1.1902 and high of 1.2007 are also breakout levels.
- the market likes round numbers, so we'll go with 1.1900 for the European low.
EUR/USD 30-min chart. Heiken Ahsi (standard).
Fibo Fan: 15:30 GMT high of 1.2007, and 19:00 low of 1.1921.
Fibo Fan: 14:30 GMT low of 1.1913 and 21:00 GMT high of 1.1977.
Fib retracement: 19:00 GMT low of 1.1921 and 21:00 GMT high of 1.1977
These are the swings we need to look for when using these tools.
If we shorted this pair near the top (I got a Tweezer Top alert) of 1.1977, we need to determine exit point. The retracement levels of 38.2, 50, 61.8, 78.6 are candidates.
We then look at the diagonal fibo fan support lines that coincide with the horizontal retracement fibs.
Attached is the 15-min chart with the Heiken Ashi Smoothed (HAS) indicator candles. It was quite clear where the ABC swings were.
Note that we can't see the wicks since these candles use a different set of calculations. To quickly get around that, just mouse over the points to confirm with your data window.
Should our strategy be to exit a portion of our position at the FE 100, and trend the balance, using the HAS can assist us in staying in the trend.
As the extension ascended, moving our stop based on each fib hurdled protected profits. After some pause at the FE 161.8, it blasted to the FE 236.2 fib. Tightening our stop-loss after hurdling the 161.8 can come in the from of using the last pivot of 1.2021. Once it approached the FE 236.2 and stalled, a red HAS closed at 1.2044.
Subsequently, a spectacular retrace started after the European close. At the moment it has stalled at the FE 100 price level of 1.2007.
If we pulled retracement fib form Point A to the top of the extension, 1.2005 is the 50% retrace.
We look at the 1-Hour chart. Simply pull the Fibo Fan from the low to the high. The tool will draw diagonal retracement fib levels.
The 61.8 Fibo Fan fib is at the same location of the 50% retracement fib. This gives us some insight on where to target profit on a retrace trade.
If we did not enter a retrace trade near the top or was somehow undecided, we can wait for an ABC to develop.
The attached 5-min chart utilizes normal candles. It is quite clear where the swings are. Dotted black line is trend line that was broken.
Because the pullback (from B-C) was so small, stop-loss just above C (1.2047) was acceptable. We'll use 2 pips plus 4 pips spread and cushion for this example = 1.2053.
Entering on the break of Point B price 1.2034, and considering A-B was less than 45 pips, we target the FE 161.8. Labels also include the FE 100.
Entry after 5-min candle closed below Point B, entry on opening of next candle at 17:05 GMT = 1.2028.
FE 100 = 1.2007 + 4 pips = 1.2011 Risk/Reward 25/17
FE 161.8 = 1.1982 + 4 pips = 1.1986 Risk/Reward 25/42
The retrace eventually came back down to the Asian high (purple horizontal line).
This method would eliminate guessing where the top is and has a safety mechanism in that Point B would have to be broken.
Switch to a chart with the HAS to see the small retraces better. We can now see the small retraces on the uptrend. None of them produced a break of a Point B.
Quite period ahead of the Asian session. We pulled retracement fibs on the 1-hour high of 09:00 GMT price at 1.2215 and 02:00 GMT price at 1.1876.Pair bounced off of the 32.8% retrace fib of 1.2005 or thereabouts.This defines a consolidation range of:High 1.2005 and low 1.1876.Breakout from these 2 price levels should produce good profits. We must draw ABC pattern on a lower time-frame such as the 15-min or 5-min charts to ascertain profit targets.
European low of 1.1902 and high of 1.2007 are also breakout levels.- the market likes round numbers, so we'll go with 1.1900 for the European low.
Want to follow up on this post.
Attached 15-min chart illustrates ABC pulled (blue) on last pivots displayed by the Heiken Ashi Smoothed (HAS) indicator candles.
Since 1.2005 was the 38.2% retrace of that monster move on June 4th high and June 7th low, we know the next pause will be at the 61.8 fib area of 1.2086.
A = 08:15 GMT low of 1.1938
B = 10:30 GMT high of 1.1986
C = 11:15 low of 1.1960
FE 100 = 1.2009
FE 127 = 1.2022
FE 161.8 = 1.2039
FE 236.2 = 1.2075
Let's say we were apprehensive about the FE 100 price 1.2009 being just past the breakout level of 1.2005. We should be.
We then proceed to to 5-min in order to get a tighter ABC pull (purple).
A = 11:15 GMT low f 1.1960
B = 12:20 GMT high of 1.2018
C = 12:30 GMT low of 1.999
FE 100 = 1.2057
FE 127 = 1.2073
FE 161.8 = 1.2093
Since the 1.2005 breakout level was considered major (38.2% fib), can target the higher FE fibs. Looking at both fib pulls, the one in common is the 1.2073/75. This should be our target.
Stop-loss just below pivot C of 1.999
Worst case for exit would be the 5- min opposite colored Heiken Ashi Smoothed candle, with closing price of 1.2060.
About a 50-pip trade.
Also attached is the 15-min chart with the HAS.
Cheers
Woke up to my price alarm as EUR/USD made an early attempt to breakout of Asian high.
As per recent post, there was a previous high nearby (European blue box) of 1.2073, so we wait and give up some pips on the front end. It retreated and formed a new ABC.
The 2nd ABC (black) had a 78.6% retrace and thus targeting its FE 100 was not a good risk/reward, only 14 pips with stop-loss of 27 pips.
2nd ABC:
A = 1.2008
B = 1.2086
C = 1.2025 (pic mismarked a D)
FE 100 = 1.2105
FE 127 = 1.2127
FE 161.8 = 1.2154
Entry would have been 1.2192 at 13:20 GMT, so only 9 net pips after spread and cushion.
A 15-15 pip technique would have been successful as extension hit the FE 127.
Conversely, if we used the 2nd ABC (black) to trade, and we moved stop to just below the FE 100, we would have profited at the FE 127 price of 1.2126 for a net + 21 pips
Note that the 1st ABC was actually successful if we used Point C as the stop-loss. The red price label shows location of the FE 100 at 1.2109.
B = 1.2056
Entry = 1.2070 (09:15 GMT 5-min candle open) + 3-pip spread = 1.2073
FE 100 = 1.2109
Profit = 36 pips
Stop-loss below C price of 1.2008 minus about 5 pips = 1.2003
Risk = 70 pips
Scaling for that many pips would leave us with less leverage and number of lots to trade. If 70 pips = 1% then the profit of 36 pips = one-half %
Not my style, so 1st ABC was a losing trade.
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Extension is trying to reach the 78.6 horizontal fib, which we had plotted with high of June 4th 09:00 and low of June 7th 02:00.
We added new Fibo Fan from high of June 4h 09:00 GMT to low of June 9th 05:00 GMT.
The 78.6 Fibo Fan fib is the reason the current extension if pausing since this is considered resistance.
If it breaches this, we move the Fibo Fan to low of June 10th 0:00 GMT.