A-B-C-D Trade - page 23
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1) The USD/CHF follow-up. The color on my Time indicator had the European Low wrong, but we entered correctly anyway.
The dominant pair EUR/CHF was too strong to the upside and prevented any further gains in our position. As per last post and strategy, we waited out the squaring of positions as New York closed.
We were willing to accept the pain of a slow Asian. Exited when USD/CHF refused to move past previous low of 1.1031 (FE 127) for +12 pips net. Attached si 15-min chart.
2) EUR/USD. THe attached 15-min chart shows both the false breakout to upside during Asian, and breakout to downside during European, with ABCs.
2A) Upward extension reversed at the FE 100 price of 1.2350.
A = 00:15 low 1.2313
B = 01:00 high 1.2337
C = 01:15 low 1.2326
US high = 1.2343
FE 100 = 1.2350
FE 127 = 1.2356
FE 161.8 = 1.2365
Entry = open of 03:30 1.2344 + 3 pips spread = 1.2347
Reward = 18 pips
Stop-Loss just below Point C since pullback was small, minus 4 pips for spread and cushion = 1.2322
Risk = 25 pips
Therefore the Risk/Reward was not palatable.
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2B) Breakout of Asian Low.
A = 06:15 high 1.2347
B = 07:15 low 1.2303 (distance A-B = 44 pips)
C = 07:30 high 1.2316
Asian Low = 1.2286
FE 100 = 1.2273
FE 127 = 1.2261
FE 161.8 = 1.2246
Stop-Loss = just above pivot 1.2304 + 4 pips = 1.2308.
Entry = 08:30 open 1.2281 (previous break candles not convincing).
Risk = 27 pips
Reward = 35 pips
We stopped out just above the FE 100, at + 4 net pips.
Notes:
Distance A-B (44 pips) about right at our divider for taking profit at either FE 100 or FE 161.8. You can make your own divider and/or compromise with target at FE 127 when its this close. In any event, we always move our stop-loss.
There was a subsequent pivot with high of 1.2292 but that was too tight with respect to entry price.
A 15/15 pip technique was a winner.
This occurred as I was typing my last post. We don't want to chase this breakout since it comes at the close of the European session.
The pair was moving too fast anyway, as illustrated by the spike of the 5-min candle.
We also had our ABC and Fib Channel plotted.
Want to add that we are in the mist of a week with many medium and high impact economic data. This is good as it moves the market.
The EUR/USD pair reacted to the 12:30 multiple release of:
- US Durable Goods Orders for May
- US Durable Goods Orders for May Excluding Transportation
- US Initial Jobless Claims June 19th
- US Continuing Jobless Claims June 12th
A full economic calendar can be found here:
Economic Calendar | DailyFX Forex Events Calendar
Tomorrow US GDP at 12:30 GMT.
We don't get to involved with predictions of data, etc. However, with data rated as "high" impact, we stay out for a bit.
Last example with USD/CHF should be reserved for intermediate traders that wish to trade on the news. We chose the pair as it is more docile than the dominant EUR/CHF pair, which can whipsaw.
Same with Yen pairs, which I do not trade much. We can see the long candle wicks during volatility. Yen pairs also can whipsaw due to the "carry trade" nature of the Japanese investment scene.
Carry trades are the attempts to take advantage of the low Japanese borrowing cost (interest rates), and applying funds to overseas investments that yield a higher return. A practice in arbitrage.
Here is a link that briefly explains the currency carry trade:
Currency Carry Trade
Using the tighter pull on downside breakout of US Low:
FE 100 = 1.2304
FE 127 = 1.2293
FE 161.8 = 1.2279
It Point A was replaced with the earlier and higher peak:
The FE 100 is about same as the FE 61.8 of tighter pull per above,
the FE 161.8 is about same as FE 100 of tighter pull per above.
Try plotting to see if you come up with same.
Sorry, got caught up on a phone call.
We stopped-out just above the FE 100 price of 1.2303, for + 6 pips.
Expansion bounced off 1.2300 area and now at 78.6 retrace fib of last high/low.
Practice drawing your Fibo Fans on the 1-Hour. One pointing down and one pointing up.
Attached EUR/USD 5-min chart. We had more than one option for Point A. As with last example, we monitor all and are ready to take profit at the FE 100 with most conservative pull. Alternatively, a trader can move stop just above the FE 100.
Recommend exit since just ahead of US GDP at 12:30 GMT. My previous announcement was incorrect as to the time of that data release, apologies. Always check the economic calendar, and there is one on this site (highlighting major data only).
A = 07:00 high 1.2350
B = 08:35 low 1.2299 (distance A-B = 51 pips)
C = 08:45 high1.2314
Asian Low = 1.2296
FE 100 = 1.2263 (target)
FE 127 = 1.2249
FE 161.8 = 1.2231
Stop-Loss Options =
1) Just above Point C 1.2314, as it was a small pullback, plus 4 pips = 1.2318. Risk = 31 pips
2) just above 1-min pivot 1.2309 + 4 pips = 1.2313. Risk = 26 pips
Entry = 09:00 open 1.2287
Reward = 21 pips (after 3-pip spread)
FE 100 hit precisely, at 09:05 5-min candle.
Notes:
As the 5-min 08:55 GMT breakout (candle) was moving very fast, we lost some pips awaiting its close.
A good way to keep things in order is to write down, or make a spreadsheet, on the various entry price levels and the risk/reward for each. This will speed up your decision. You'll also know when it's too late and pass on the trade.
If the 15/15 pip technique was used, it was a winner.
The pair reversed below the FE 100, as mentioned above. The reason is that it was extending based on another Point A. In this case there were 3 options for Point A (see 5-min chart). This stopped at the FE 127 of the middle Point A at 07:50 price of 1.2346. The projected risk reward upon entry was 26/18 net pips to the FE 100.
The most recent option for Point A, at 08:00 candle high 1.2339, would have take profit target at the FE 161.8 price of 1.2249. We move stop-loss behind each FE level as it goes down.This scenario would have produced a stop-out just above the FE 127 price of 1.2262 + about 5 pips to cover spread and cushion. The projected risk reward upon entry was 26/38 net pips.
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A bit confusingon where to plot Point A, but it's a good example of what goes through our minds.
While we can start out with the most recent Point A, with had the best risk/reward, at the very least, moving our stop-loss protects profits. If we exited per first pull with highest Point A, at the FE 100, it is still a decent profit of 21 net pips.
Practice drawing your Fibo Fans on the 1-Hour. One pointing down and one pointing up.
Fan pointing down =
June 21st 05:00 GMT high 1.2466
June 23rd 14:00 GMT low 1.2208
Fan pointing up =
June 23rd a400:00 GMT low 1.2208
June 24th 16:00 GMT high 1.2387
Retrace fibs =
June 24th 12:00 low 1.2261
June 24th 16:00 high 1.2387
These fibs provide S&R as guidance for our positions.
Significant when breakout of Asian Low, as described on last post, neared the low of 1.2261. There would normally be a bounce here. Thus this is further guidance on last trade, for exit.
Extension didn't bounce exactly off that low, but slightly below, hitting the FE 127 per last post. This helps us understand why.
As European session jsut closed, breakout to upside possible, but caution in the wind. 1.2350 is Asian high above European high. It's also a round number, so we should wait for confirmation above. Not ideal, but a candidate.
FE 100 = 1.2361
FE 127 = 1.2370
FE 161.8 (target) = 1.2381
Pair bounced off 1-hour 23.6 fib price of 1.2357, which acts as resistance at least temporarily. See that post.