A-B-C-D Trade - page 257
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Another way to use the fib channel (FC) tool is to align it with MurreyMathV1.0 (MML) levels.
The attached 15-min chart has session colors. The FC is aligned to the 7/8th and 5/8th. The dotted red horizontal line is the Asian Low 1.3444, and the FC 31.4
The pair plunged through the Asian Low during the 10:00 candle period. The first pullback occurred during 10:30, after hit to the FC 131.4 price of 1.3377. The gain was 67 gross pips.
We added the DeMark (with arrows) and Fractal indicators to show the pivot at the 131.4.
S/L just above 5/8th 1.3458, or just above 08:45 pivot high 1.3469.
Considerable consolidation after hit to 131.4. With this plot, we can understand why, as the 3.14 Pi ratio/multiple is significant within our methodology.
2nd thrust at 15:00 resulted in price to FC 200 and 1/8th MML.
The FC 131.4 is the same as an ABC plot's 127.2 extension using swings during Asian session. The advantage with the FC/MML is that we don't have to plot price swings.
Medium-impact EUR data released at 10:00, which was negative. This followed mixed EUR data at 09:00. Mixed U.S data at 13:30 and 14:55.
Tomorrow 11-24 is U.S. holiday.
Continuance of SDC plot that used Nov 1st 12:00 and Nov 10th 04:00. To get expansion levels pointing down, align FC to 2 SDC channel lines.
To get interior fibs starting from the mid-channel, align the FC to the SDC's upper and mid-channel.
We mentioned the 2nd hit to the mid-channel by the 08:00 candle. Price bounce down and a strong move ensued, respecting the FC levels. Bottom thus far is at the FC 161.8.
If FC plot is aligned to SDC's upper and lower channel, the current pivot low is the FC 31.4.
The EU/USD 4-hour SDC FC plot held up again. The 08:00 candle period saw resistance the lower channel.
The bounce came down to the 161.8, the support level previously respected by the Nov 23rd 16:00 and 17:00 candle.
*****
The 2nd chart is AUD/USD 4-hour with GannSQ9. We took the swings generated by that indicator:
Nov 3rd 12:00/Nov 10th 04:00/Nov 13th 22:00
- to use in ABC plot.
- use Swing A and Swing C in SDC plot.
Price hugged the SDC mid-channel en route down.
360-degree was FE 100 level.
Breach of mid-channel stalled at FE 127.2.
Lower SDC channel hit during yesterday 16:00 period. This is also near ABC's FE 161.8.
Bounce up contained by mid-channel as resistance area.
Happy Thanksgiving to those that celebrate it.
Attached is a 1-hour EUR/CAD with PSQ9, Moon set to 45-degree intervals and Mars at 90-degree intervals.
Try to find consolidation as the set-up for breakout or bounce trades.
This example saw price caught between the Mars 270 and Mars 0-degree, Sept 22nd - 23rd to end that week. Plot Fib Channel (FC) tool to upside with the 2 Mars lines. The new week had a small breakout to the upside on Monday 26th, hitting the FC 61.8 to the upside.
We can set our price alarm for the top of the channel (Mars 0-degree), in event a breakout occurs. This would be a set-up to trade the bounce down off the 1st revisit of the FC 61.8.
This presents the higher probability of a bounce down, and allows us to use a tight stop-loss for a good reward/risk (R/R) ratio.
The 2nd hit to the FC 61.8 did happen on Sept 28th 12:00. An automatic SELL trade parameter could also have been utilized.
The take-profit (TP) target includes retrace fibs using 1.38184 low and 1.39855 high. The 38.2% and 50% were hit.
Alternatively, trading back down to the top of the channel is also an option. This scenario would have a TP just above Mars 0-degree 1.39130.
Using a S/L of 15 pips and TP of 63 pips = R/R 4.2
Optional trailing S/L can move to break-even after hurdling 31.4.
Selecting prime set-ups like this 10 times per month, and winning only 50%, produces:
at 2% risk per trade = 32% return per month.
$25,000 account = $8,000/month
$10,000 account = $3,200/month
Using support & resistance (S&R) is different than using momentum indicators such as moving average, CCI, etc.
No single indicator is a stand-alone system. Back up the analysis with other confirmation. We've shown hundreds of examples of this. Sometimes it is referred to as clusters, such as fib clusters.
The attached chart plots indicator SQ9(Price) 22.5 Factor 56, which can be downloaded in the Gann Is The Man thread in the Indicators section.
Start price set to 1.42464, which is the Oct 27th 16:00 high. Start price should be "significant" pivot (high or low). Direction Up = False.
Indicator QTA (found in same Gann thread) is used to forecast swings in the future. First thing to do is turn on color of the plot points in order to drag to appropriate areas.
In the input tab of edit function, ExtObjectColor should be changed from none to a color of your choice.
There are 2 plots to make. One is a high-to-high, and the other is a low-to-low. The objective is to move the plots around until we can find a fib expansion cluster. The zig-zags show swings as guidance to find the highs and lows.
This means the QTA takes a plot of and project extensions based on fib ratios. Similar to horizontal or diagonal fib plots, this is vertical and predicts "time" of turning points.
In this example:
Low-to-low = Nov 1st 12:00 and Nov 10th 04:00
High-to-high = Nov 4th 1200 and Nov 10th 04:00
The first cluster is Nov 16th 00:00 and 04:00. Although we prefer that they line up on the same candle, this one-candle spacing can be acceptable.
The reason this is an interesting cluster is the support level provided by the SQ9 indicator, which is the 135-degree. Additional confirmation is the BAJA bullish divergence, which uses RSI(4) set to 4 period. The 04:00 candle is virtually a Doji.
The take-profit (TP) target can be the next level up, which is the 112.5-degree (indicator label rounds to 113).
As usual, reward/risk must be considered and programmed. One option is to place stop-loss (S/L) just below -31.4% of the distance below the 135-degree, to the 158-degree.
We can use the fib channel tool to measure. Pull plot from 158-degree up to 135-degree. Input expansion ratio of -.314, and place S/L just below that.
If traded back up to the 113-degree, the R/R was 3:1. We can easily make a fast calculation by reasoning that the S/L is about 1/3rd (31.4%) of the distance between levels. The TP is a full level and would be 1.
The conservative TP would be the 61.8 level, and just under 2:1 R/R. Fast calculation is risk 1/3rd reward 2/3rd (61.8% nearly same as 66%)
Trading to the 31.4 would be just under 1:1 R/R.
*****
The 2nd QTA fib cluster was Nov 18th 16:00, which had support at the FC 31.4. This turning point did produce profit, to the FC 61.8.
The 3rd QTA fib cluster was Nov 24th 12:00, with resistance at the -31.4. Turn down went to 158-degree, paused, and dropped to near 180-degree to close out the week.
We did not provide other confirmation for the 2nd and 3rd clusters, for this example.
****
Note that we used the version SQ9(Price) 22.5 Factor 56, instead of SQ9(Price) which had small interval levels maxing out at 720. You'll have to plot both to understand difference.
The beginning of a new week should have a few things to do, to set up the S&R picture, etc.
Before we get into that, make sure you are aware of the session times. This link is to a world map with major stock markets with open and close periods, and world clock.
Worldwide stock markets map shows the current open closed holiday status and current time for stock exchange- 24 hour format
worldtimezone.net/markets24.php (cut 7 paste if you can't use link)
The 3 sessions of course is European/U.S./Asian. We posted the indicator TIME_modified_2. The session times can be altered, to change with daylight savings.
We use charts are that are set to GMT.
European session is London 08:00 - 16:30 GMT
U.S. is New York 14:30 - 21:00 GMT
Asian is Tokyo 00:00 - 06:00 (stretching indicator to 07:59 is O.K.)
Some traders watch the financial channels such as bloomberg and CNBC. Catch up on the news, especially on anything major that might have happened over the weekend.
We also use forex news web sites, such as fxstreet.com.
Monitor economic calendar, using sites such as dailyfx.com.
***********
No major economic data this morning is scheduled. Let's look at GBP/USD.
The attached 1-hour has PSQ9 Moon lines at 45-degree intervals. The new week is partitioned by the offset in location of the dotted Moon lines.
We can see nice compliance between Moon 315 and Moon 270-degree lines thus far. Price also respected levels during later part of the previous week.
Price is rising during the 08:00 opening hour of the European session.
Some traders know how to scalp (we use the word "shave") between the S&R. We will say that this example is to wait for further price action to confirm S&R levels.
We'll also look for consolidation range. If found, and like recent examples posted, we can measure with the fib channel tool, to determine expansion levels.
From there, we can determine whether to trade a breakout or bounce.
The USd losing ground in early trading of new week. Attached is a continuance of our AUD/USD plot with Gann_SQ9, SDC, and ABC.
Price gapped up at open and now at upper SDC channel.
Just got word that Australia canceled its next bond sale on better than expected budgetary developments. This only means, there should be some movement off this news, in addition to other reasons.
Plot of fib channel (FC) from -1/8th to +1/8th. Last week's dip was to -31.4.
Gap up at open of new week. Short channel until European open, and rise to 3/8th (same as FC 100).
We can clearly see next resistance level at the FC 131.4 level of Nov 24th.
Moving plot up one level is good too.
***
A Euro/U.S. summit this week in U.S.
IMF making headline news, since recent announcement of their involvement to assist in Euro Zone debt woes.
Market reacting to rumors of IMF/Italy package, which may have been denied by IMF. It's all fluid right now, so we need to pay attention in the event there's panic, etc.
Here's a 15-min chart with session colors and MurreyMath1.0 (MML).
Breakout of the Asian High (1.55239) during 09:15 period. Should trader be long, monitor 1-hour for more S&R.
Plot extension levels with standard fib tools, or fib channel tool. Not shown is fib plot using Asian Low/High. Its 127.2 of 1.55418, just hit, and seeking more.