A-B-C-D Trade - page 202
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Observations on XAU_USD (mimics gold futures):
BAJA bearish divergence on daily.
1st peak Aug 10th RSI(4) = 95
2nd peak Aug 18th RSI(4) = 83
Low = Aug 8th 1682.40
High = Aug 9th 1779.80
161.8 extension = 1840
If we don't wait for 4-hour EFT trigger, we entry just below 161.8 fib.
Short = 1838
S/L = 1843
TP1 = 1817
TP2 = 1810.50
TP3 = 1783
XAU_USD at 1836, can start layering entries
XAU_USD tight plot being respected:
Low = Aug 18th 23:30 1823.33
High = Aug 19th 00:45 1836.55
161.8 = 1844.72
138.2 = 1841.60
127,2 = 1840.09
Price currently 1838.50 after bouncing off the 161.8
Earlier pullback from 1837 level got down as far as 1830.79. Having a plan to move stop-loss to break-even is always prudent, otherwise you'll require a good amount for stop-loss.
Ascertain new pivots that form and make any adjustments to trail stop or take-profit.
As Asian and European stock indices followed U.S. declines with 2% losses, gold continues to soar reaching 1869. Looks like the Dax testing support and headed toward 5300.
US30 (mimics Dow Futures) at 10,366
EUR/USD tested 1.4270 low, probing to Moon 0-degree 1.4258 before bouncing up to 1.4344.
Let's review this instrument's price movements now, on attached 1-hour with MML.
We had identified the 161.8 = 1840.
Next level up was 200% extension fib of 1877, derived from the same fib plot. Price hit this during 10:00 period, probing slightly higher to 1878. Same location as MML8/8th.
This 2nd peak at 10:30 concluded a BAJA bearish divergence on the 30-min chart, with RSI(4) readings of 92 and 88 (07:30)
Retrace came down to the 161.8 of 1840, for + $37 gross.
Trailing stop: If trailed below 1869, would have stop-out 11:45 candle period.
***
The 2nd chart is a split-screen. Left is the same chart of XAU_USD. On the right is 1-hour chart of GER30, which tends to mimic the German DAX.
We inserted arrows at the 10:00 hour pointing to the peak on XAU_USD. The next candle period was the start of a fast retracement.
The GER30 also turned starting at 11:00. It is obvious that gold and related instruments are trading in response to the stock markets' performance.
The shock of the U.S. stock market plunge on Thursday reverberated through Asia and Europe/U.K. Investors were not just fleeing to safety, it was a stampede.
Lions that did not take caution got gored.
Attached is a 15-min chart on XAU_USD retrace. Top was 200% fib of $1877, while MML 8/8th price was $1875.
We omitted fibs but will discus at the end.
Left X labels previous 07:45 pivot high price of 1869.10.
Right X became resistance after retrace bounced off $1850 (round number).
$1852 was good exit, as that represents about $23 Reward vs $8 risk, a ratios of 2.8:1
After that pullback to $1869, price went on to make a 127.2 extension to $1842, probing to $1840 (which was 161.8 fib of original extension up).
The pullback candle at 11:45 closed just about at the 61.8 retrace fib.
Price made another large pullback to $1864 at 13:15, which was just prior to 13:30 U.S. open.
The U.S. session proceeded to push price back down to the 138.2 extension of $1838. This was due to positive gains by the U.S. indices such as the Dow Jones 30 and S&P 500.
The retrace levels from the top, based on using 1830 as Low:
38.2% = 1860
50% = 1854
61.8% = 1850
78.6% = 1840
One option to calculate Stop-Loss placement was to plot fib:
Low = 10:15 1864.30 and High = 10:45 1878.05
138.2 extension to upside = 1883.30
If the entry was 1875, this represents about $8 in S/L risk for trade. Match up with the retrace price levels to get R/R ratios.
.
Attached is 1-hour EUR/USD with PSQ9 and MML.
BAJA bullish divergence:
1st dip = Aug 18th 14:00 Low price 1.42702 RSI(4) 8
2nd dip = Aug 19th 07:00 Low price 1.42578 RSI(4) 31
2nd dip was 1st candle that dropped below price of 1st dip.
2nd dip had lower price but higher RSI(4) reading. That is divergence.
Moon 0-degree also at 2nd dip's low.
Yellow retracement fib plot:
High = Aug 18th 1.44508
Low = Aug 19th 07:00 1.42578
Premium exit points that had S&R clusters include:
61.8% fib 1.43771, where Moon 90-degree intersects
78.6% fib 1.44095, near MML 4/8th 1.44043, near wide 138.2 (white)
Using High = Aug 17th 13:00 1.45162, we have 50% retracement fib 1.43871 near recent Aug 18th support area and wide 127.2 fib (white). This plot is not shown to keep chart free of too much clutter.
Pair made a full 100% retrace to High of 1.44508 at 14:15.
Fibo fan plot High = 1.45162 Low = 1.4278 had its 78.6 catch this top.
To stay in trade with less jitters, some traders can opt to use the HAS candles or histogram version. Candles stayed blue all the way up after initial pullback, even on the 15-min.
Using divergence, HAS to stay calm, and targeting fib level(s) for exit, is different from using HAS for entry and exit.
Here is the view of last post with chart set at 15-min interval. HAS candles applied. Fibs hidden by turning color black, which allows user to retrieve.
We can't see all of the wicks when using HAS candles. After market refused to close below the MML 0/8th, price started to reverse.
Initial pullback due to previous resistance level near MML 2/8th. Once this was violated, the HAS stayed blue to the top.
Yellow fibo fan shows top at the 78.6 ray.
If you monitor the PSQ9 Mars and Moon lines, you'll see them acting consistently as S&R. In this example the diagonal Moon 90-degree was support Aug 18th 11:00, and today at 1530 and 17:30.
On last Friday's Money in Motion program, one of the featured trades was the Singapore Dollar/ Yen (SGD/JPY) on a BUY position.
They based opportunity on lurking and/or de facto BOJ intervention in an attempt to keep Yen from getting too strong. They also point to double bottom.
Attached is 4-hour with PSQ9 (chart is GMT +3).
Fibo Fan: High = July 8th 12:00 66.76 Low = Aug 1st 12:00 63.99.
Horizontal fib plot (yellow): High = Aug 4th 12:00 66.04 Low = Aug 3rd 16:00 63.55
Aug 10th saw hit to 132.8 extension to downside. BAJA bullish divergence formation there.
Pair retraced 38.2% to 63.91 fib on Aug 16th 00:00, which was intersected by fibo fan's 50% ray (white).
Zooming in on the 1-hour, we saw Friday price closed on the Moon 0-degree after bouncing down from 63.25 resistance. Week ending price was 63.15, and if no gap assumed entry is 63.20 with spread.
Stop-loss should be below Aug 11th pivot low of 62.60. With cushion, risk about 75 pips, and price of 62.50.
Profit targets:
Mars 0-degree 63.71 and R/R = .7:1
38.2% retrace fib of 63.91 which was previous resistance R/R 1:1
50% retrace fib 64.32 same as 127.2 extension of B-C and R/R 1.5:1
138.2 extension of B-C 64.47, near Mars 90-degree and R/R 1.7:1
61.8% retrace fib 64.73, same as 161.8 extension B-C and R/R 2:1
Obviously, if BOJ intervenes, we'll likely see spike up. However, that can be followed by spike down, a whipsaw.
The other trades discussed were BUY USD/CAD and SHORT EUR/GBP. If time allows, we'll post those charts.
Current volatile environment requires reminder on money management. Must also understand option allowing an exit of portion, while trending the balance.
Attached is EUR/USD 4-Hour with period separators turned on to partition weeks. PSQ9 and Sunday High/Low (range) in lime green bracket.
We have 4 weeks with white horizontal fibs on the left and 4 weeks with blue fibs on the right.
1st week of June 5th contained a Head & Shoulders formation, ending the week at the right base. Top also had BAJA bearish divergence. The Sunday High was the top of both shoulders.
The end of that week was the Low for the extension plot that bottomed out at the 161.8 in week #2. A BAJA bullish formation was there to catch the reversal on June 16th. Week #2 ended with price back up to the Sunday range.
Week #3 saw price drop at onset as the 50% pullback before extending to the 138.2, near Mars 90-degree. A BAJA bearish divergence registered at this reversal point.
Price declined 88.6% of the last up-leg and bounced up to the Sunday High before closing out the week at the 78.6 of last leg up.
Week #4 opened by dipping down to the 88.6 of last leg up, to make a near double bottom. BAJA bullish divergence here once again. Based on plot using Week #3 high, pair made a 127.2 extension to upside and consolidated there to end the week.
Week # 5 of July 3rd opened by gapping up 8 pips before dropping below the Sunday range, and proceeding to plunge 375 pips.
Week #6 had a tight 29-pip Sunday range. Using week #5 high/low, price made a 200% extension to the downside, where it was also met by the Moon 180-degree. A BAJA bullish divergence caught reversal (July 12th 04:00 candle).
Pair pivoted with16:00 candle, ascended to the 200% extension, and above the Sunday range. This level is also the 61.8 retrace of last week’s high to this week’s low. Understanding location of those 2 fibs painted an exit level option for any Sunday High breakout trad
Price dropped back down to the blue 127.2 and Mars 180, and consolidated there to end the week.
Week #7 started with price dropping below Sunday range to complete a 61.8% retrace of the week #5 leg up. Price rose above Sunday range and met resistance at week #5 high price, prior to making a 138.2 extension, to the blue 61.8.
Week #8 of July 24th opened by dropping slightly below the Sunday Low, but meeting support at previous end-week pivot low during the Friday12:00 candle. This was a 38.2 retrace of the last ratchet up.
Price rose above the Sunday range to the blue 88.6 fib. BAJA bearish divergence caught this top. Using week’s low/high up to that point as plot, price declined to the 138.2 extension to the downside, near Mars 270 and Moon 270
****
The subsequent 2 weeks of July 31st and Aug 7th had gains to the downside below the Sunday range, and last week of Aug 14th saw price stay above it. In all cases, price action respected the Sunday ranges.
When a gap occurs at the opening of a new week, the previous Friday’s close is respected by the market. Note that our data feed starts Sunday at 21:15 GMT, while others may start earlier. Therefore we may see a gap when other do't.
We applied the MT4 rectangle tool in the insert “shapes” tabs, to bracket the Sunday rang
These are largely swing trades. Therefore, management of such may often require movement of stop-loss while trader is away from the trading platform.
Explore scripts and EAs that might accomplish this task. Otherwise, a tag-team taking different shifts will have to monitor the trade. This opinion means that we believe a simple trailing stop is not very effective.