A-B-C-D Trade - page 220
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EUR/USD, here's a little trick to adjust as market moves.
We had fib channel align with the SDC's lower and mid-channel. Now, double click on the FC's lead (bottom) line to make the 3 dots appear.
Drag that down until the 2nd FC line aligns with the SDC's lower line. This will produce more fibs.
The 08:00 candle dip had the FC 61.8 act as support. Subsequent bounce up was contained by FC 100% (same as mid-channel).
***
The yellow fibs are simply Low/High plot that saw price close at the 61.,8% retrace fib.
Other fibs:
High = 18:00 Low = 04:00
200% = 08:00
High = 05:00 Low = 08:00
50% = 10:00
Here's 1-hour using indicators MultiInstrument(4) and CurrencyPairsCorrelation.
Start new XAU_USD chart. Go to chart properties (right click) and zero out color for line graph. On chart toolbar, change chart to line graph. That means it will be blank, no line graph. We'll set colors per below.
Settings for MultiInstrument(4):
Input tab:
symbol 1 = leave blank
symbol 2 = SPX500
symbol 3 = XAU_USD
symbol 4 USOIL
Color Tab:
#0 = Yellow
#1 = Magenta
#2 = none
#3 = none
#4 = default black
Settings for CurrencyPairsCorrelation (CPC):
Inputs tab:
symbol1 = XAU_USD
symbol2 = SPX500
Colors tab:
#0 = Yellow
#1 = Magenta
#2 = default Green
#3 = default Red
#4 = default Green
#5 = default Red
***
Cross-over of CPC occurred on Sept 14th 09:00 as marked by blue vertical line. This means BUY SPX500 and SELL XAU_USD
As of now Sept 16th 11:00, we program MultiIndicator(4) to go back 48 candles (control bars). The trend line tool has a counter.
Look at the data window at the upper right that keeps score. The pair SPX500 - XAU_USD = +3562.
Sept 16th 03:00 was 2nd dip of bullish divergence with CPC, signaling exit option.
EUR/USD and EUR/GBP has erased gains from U.S. session euphoric spike up due to coordinated Central Bank action.
SPX500 at 1205, whereas yesterday 13:00 open was 1190. That was spike candle.
We posted the SDC on the daily US30. Now we want to post a daily chart with the SDC sloping down.
1) May 2nd
2) Aug 9th
Align fib channel to SDC's upper and mid-channel.
This new chart is on the right of split-screen, and yesterday's daily chart is on the left.
****
2nd chart is US30 on 1-hour interval. SDC plot:
1) Aug 9th 02:00
2) Aug 31st 14:00
Those are the last 2 significant swings moving low to high.
****
The pivot we are looking at, that shows up distinctly on all 3 charts, occurred on Sept 12th 12:00 (bottom).
The 1-hour chart has that right at the 100% fib channel expansion (FC100).
The daily chart on the left has that low at support by the FC 161.8.
The FC 161.8 also aligned with the Aug 9th pivot low.
ABC FE 236.2 also there.
The daily on the right also utilizes horizontal fibs. We have the divergence indicator replacing RSI, but is set at the same 4-period. BAJA bullish divergence occurred at this pivot.
The SDC mid-channel (mean) is line above FC 31.4. If price rises Sunday/Monday, it will hit that at a price of approximately 11775, which is the blue 88.6% horizontal retrace (based on High = 11945 Low = 10444).
Resistance at the FC 31.4 prior to any move further up.
The 1-hour used a tighter SDC plot for intra-day analysis. We can see price hit the FC 31.4 on Sept 5th prior to "reversion to the mean" (returning to mid-channel).
The 2nd push down got as far as the FC 100 as discussed above. The reversal bounced off the SDC lower channel. Now we see price trying to return to the mid-channel.
This is a continuance of our 1-hour plot that aligns fib channel to Andrew's Pitchfork plot's middle and upper channel.
We also have wider white horizontal fibs:
High = Sept 2nd 12:00 1202.80 and Low = Sept t6th 04:00 1137.40
Directional fibs (yellow):
Low = Sept 14th 05:00 1154.10 High = Sept 14th 19:00 1202.40
The cluster of wide plot's 127.2 and directional plot's 138.2 converged with fib channel's 138.2 during today's 13:00 candle (U.S. open).
Prior to that move, price was support at 08:00 by High.
Recap:
This APF plot was developed and posted Aug 8th after price hit the upper fork line. We also identified pivot bottom of Aug 12th at the Upper_ML1.
After price breached upper fork Sept 14th, we advised that aligning fib channel tool will provide S&R going upward.
Practice and you can get the feel for plotting S&R. It's not a stand-alone, and it's not a system. Marry it up with other tools that work for you and your style.
Examples are the above fib cluster, and the BAJA bullish divergence at the Sept 12th bottom where price met the APF's Upper_ML1.
Here's a zoom-in on the fib cluster during today's 13:00 period. Target level of horizontal was 1220 for the short, minus about 1.50 for cushion = 1218.50 entry.
S/L can be 1.50 above 1220 = 1221.50. Risk = 3.00
Trading the short, down to the 100% fib channel 1204 = about 12.00 net including deductions for spread & cushion.
R/R 4:1
We're going to use an old plot for the Standard Deviation Channel (SDC).
1) July 12th 04:00
2) July 27th 00:00
Apply fib channel to SDC's upper and lower lines. Result is the 423.6% expansion channel line caught the Sept 12th Low and price's subsequent walk up that line.
To take it another step, lets place a 2nd fib channel (yellow) onto the chart. Align it with the 261.8 and 314.2 of 1st fib channel. Attached chart zooms in on this. The 2nd FC's 200% is the same as the 1st FC's 423.6. That's the confirmation.
Horizontal fib plot (green):
High = Sept 7th 08:00 1.41327 Low = Sept 12th 04:00 1.35080
This is another example of continued multiplication of these ratios. We now can see more S&R for the move up after price marked the low. There was also a 1-hour BAJA bullish divergence at that low.
EUR/USD made a 61.8% horizontal retracement. Look a little closer and we see a candlewick, during Sept 15th 12:00 period, that probed up to the yellow 100% channel expansion. That was also the Sept 9th high.
That wick sure looked random, but it was not. A bounce trade opportunity was there. Therefore, you can profit going up on a swing trade and trade the bounce down, due to your understanding of S&R.
We applied the Golden section_v3.2, and turned on the pitchfork.
The APF plot was:
Handle = Aug 19th 04:00 low 1.42578
Upper corner = Aug 23rd 08:00 high 1.44989
Lower corner = Aug 25th 12:00 low 1.43264
We aligned the fib channel to the APF's lower fork and pivot low from Sept 1st 12:00 1.42250
Fib arc/circle (white) with parameters set on 95. Plot from
High = Aug 30th 04:00 Low = Sept 6th 1.41065
Price trapped between fib channel's 261.8 and 314.2 most of ascent through 9-16, and in between fib arc's 61.8 and 78.6 rungs.
Realistically, confirmation of S&R with this combined use of tools was only evident when price made a 2nd hit to the 78.6% fib circle rung during the Sept 13th 08:00 candle. That was also area of the yellow 314.2% fib channel.
We switch last chart to 1-hour and zoom in at the bottom and subsequent upswing.
There was a BAJA bullish divergence, with 2nd dip on Sept 12th 04:00 candle. This pivot was near the FC 314.2.
We plotted horizontal fibs (blue) High = 1.41327 Low = 1.35080
Price rose to hit the FC 261.8 Sept 12th 13:00, and was 2nd pivot demonstrated between S&R.
Note the white fib arc/circle will not read out the same when dropping to 1-hour. We now focus on the other S&R.
The "X" marks the Sept 13th 08:00 low that reacted to support at the FC 314.2. We mentioned that this should be enough confirmation of the S&R plots.
If the trader did not enter at the bottom, the subsequent opportunities at S&R presented themselves.
Arrows place at Sept 13th 17:00 for SELL, and Sept 14th 06:00 for SELL Exit and/or BUY.
The SELL came at the blue 38.2 retrace fib and FC261.8, and also featured BAJA bearish Divergence.
The BUY was at the FC 314.2 and was a 78.6% retrace of last 2 swings. BAJA bullish divergence there.
The indicator Golden section_v3.2 generated an Andrew's Pitchfork with the above mentioned pivots.
The bounce up off of the FC 314.2 made a direct hit to the APF's middle fork (circled pink on chart). It was also a return to the blue 38.2 fib, which offered exit level as well as another SELL.
These swings were not small. 147, 156, 113 gross pips respectively. The point is that the stop-loss would be relatively small, and offer superior reward/risk ratios.
From a more complex set of plots to the very simple. Attached is a 1-hour chart that applies the script DayBorders, which plots lines to identify the opening price for the last calendar day. This may be a better visual aide for you.
The script draws a vertical line on the Sept 15th and 16th open. It also draws a horizontal line at the open price level.
We added the white horizontal fib plot Low = 1.37023 High = 1.39357
We also highlighted last pivot range on Sept 15th, 1.38951 down to 1.38636 as reversal zone (green box).
On the bottom we have a trend indicator, Forex Freedom bars, along with usual RSI(4) and EFT histogram version.
**
Sept 15th contained the euphoric spike up due to the coordinated Central Banks intervention. As time passed, we can see the RSI(4) make lower highs.
The EFT fell below the zero line and the shorter term FF bars were red.
At 01:00 period, we had a pivot up, with the 05:00 candle being rejected near the Sept 16th open price level (yellow). This is the same level as the 23.6 horizontal fib. Lurking SELL orders here.
The 05:00 candle closed below this "reversal zone", and its RSI(4) fell below 50. If SELL entry at 06:00 open, and when volume kicks in, fill about 1.38568 (not including any slippage).
When we look left, we can see the spike candle and the low pivot prior to the spike. The is a good maximum TP, especially when its close to close of the week.
A safe fib level is the 61.8 of 1.37915. TP (reward target) = 60 net pips
The stop-loss had 2 distinct options:
1) Tight = just above the Sept 16th open candle high plus about 7 pips spread/cushion = 1.38869 for risk of 30 pips.
2) Just above reversal zone, pivot high of 18:00 candle, and round number of 1.39000 = 1.39050 for risk of 48 pips.
Reward/Risk =
1) 60/30 and ratio of 2:1
2) 60/48 and ratio of 1.25:1
TP hit during 07:00 period.
Note: Using fib extension plot to target TP is also very effective and covered extensively here. The 161.8 was near the 61.8 TP target. The 200% caught the 08:00 pivot (see 15-min).
This trade lasted 2 to 3 hours, depending if you entered at 05:00 or 06:00. You can keep it simple and cherry pick only these set-ups.