A-B-C-D Trade - page 267
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Here's the chart with same SDC plot, but with both Moon and Mars.
The Mars 0-degree is at the SDC upper channel where price has just arrived.
Chart on left is 30-min session colors, with MurreyMath1.0
Chart on right is continuance of 1-hour with PSQ9. Fib channel aligned to Moon 270 and Moon 315-degree lines.
We circled the 4 breakout points, SDC mid-channel, upper channel, Dec 16th high, FC 161.8.
Positive German data 07:00 & 09:00 at 1st 2 breakout points.
The 3rd breakout point was after a natural bounce off the Dec 16th high. Separately, trading bounce from the 100% fib back down to the 78.6 fib, captured a quick 20 pips.
The top hit during 14:00 was at the FC 161.8, and just above the horizontal 138.2 extension level. The 6/8th MML also there. Enough time passed to effect entry after data, as should wait at least 30 minutes after release.
Positive U.S. data at 13:30 drove reversal back down to the 78.6 thus far. Some traders scalp the bounce off the 78.6.
Total 3 longs, 1 short, plus 2 bounces with one short off bounce and one long off bounce.
Gold and aussie rose during Asian. Ahead are high-impact data releases at 09:00, 09:30, 10:15. The 10:15 relates to ECB lending. Check your full economic calendar.
AUD/USD hitting resistance at wide 50% fib 1.0207 on daily.
Here are previous SDC plots for both pairs on a split-screen.
Left is EUR/USD 1-hour PSQ9 with same SDC and FC plots. As with most instruments, price whipsawed after 10:15 EU data relating to cheap money for European banks.
This is viewed as depressing the value of the Euro during the day, at least. The close of the 08:00-09:00 was at the red Mars 90-degree. Price plunged to the Mars 0-degree and upper SDC channel.
The FC levels were still good throughout rise and fall. Note that price respected the horizontal 100% fib, which is the High of plot.
Chart on right is 1-hour XAU_USD with PSQ9. We added fib channel (FC) plot aligned to lower and upper SDC channel lines.
This allowed us to see candle bodies respect the FC 31.4 during the same candle periods as the EUR/USD prior and during 10:15 data.
Price declined to SDC mid-channel mean and bounce before hanging just below. Gray horizontal fib plot, as detailed, gave support at its 38.2%.
Mars 0-degree acting in prominent S&R role.
We labeled the 10:15 top, prior to the plunge, as this instrument generally mirrors EUR/USD.
Horizontal fib plot High = 10:15 1254.60 Low = 13:15 1234.60
DeMark red 9 appeared at pivot low (it lags by one candle), where 6/8th MML resided. A Doji candle also formed.
Pullback was small, to 38.2% (7/8th MML), and extension to the 127.2 of 1229.20 reached at 17:15.
Also labeled was 15:00, which produced negative EU and US data.
As a footnote, when we plot a FC aligned to the 7/8th MML and 6/8th MML, the 17:15 bottom is at the FC 61.8.
We labeled the 10:15 top, prior to the plunge, as this instrument generally mirrors EUR/USD. Horizontal fib plot High = 10:15 1254.60 Low = 13:15 1234.60DeMark red 9 appeared at pivot low (it lags by one candle), where 6/8th MML resided. A Doji candle also formed.Pullback was small, to 38.2% (7/8th MML), and extension to the 127.2 of 1229.20 reached at 17:15.Also labeled was 15:00, which produced negative EU and US data.As a footnote, when we plot a FC aligned to the 7/8th MML and 6/8th MML, the 17:15 bottom is at the FC 61.8.
Can you please add the indicators and templates you use for this system? Thanks a lot
Chris
Here is a small tool to cleanup chart.
place it under ../experts/scripts and drag to chart to cleanup.
/go?link=https://www.forexfactory.com/attachment.php?attachmentid=861493&d=1324507718
Hi Chris, we'll get back to you on that.
Meanwhile, this post focuses on GBP/USD 1 hour.
First Standard Deviation Channel (SDC) plot, sloping down:
Dec 5th 15:00 and Dec 14th 16:00
Second SDC sloping up:
Dec 14th 16:00 and Dec 21st 08:00
This tool is on every MT4 platform. For the parameter we use 1.62 as it is the closest setting for the Fibonacci Golden Ratio of 1.618.
This allows us to use the fib channel tool, and set expansion levels based on the most common fib and square ratios.
This example also has the RSI set on 4 period. Overbought/oversold levels set at 85/15, although 80/20 is fine.
When plotting a SDC, we want to have the current or recent candle at or near the upper or lower channel. This means we can anticipate price "reversion to the mean", which is to say it should move back to the mid-channel as a regression to the mean price.
In the first SDC plot, we see that the Dec 14th 15:00 candle closed 1t a RSI(4) reading of 12.69, to denote oversold. The next candle, which is the 2nd plot point is the 16:00 candle. It probes slightly below the lower channel, which is O.K.
BUY entry at the open of the 17:00 candle has price at 1.54428 + spread = 1.54458. The take-profit (TP) target is the mid-channel. This was hit during the Dec 15th 10:00 period, at the price of 1.55207.
S/L placed just below 16:00 pivot low of 1.54102 + cushion = 1.54052.
Risk = 40 pips
Reward 75 pip
R/R ratio = 1.9:1
Since the TP target is on a slope, exact price cannot be accurately pinpointed in advance. However, we can mouse over the mid-channel directly above the entry point to get price at that time.
This estimate at least allows us to gauge the risk/reward ratio. Obviously, we want the R/R to be more than 1:1. In this case, the mid-channel price was 1.55374.
Trading counter-trend of the SDC slope direction will see TP shrinking. The opposite is true when trading with the trend, with TP increasing. We can estimate when (date/time) the TP will drop R/R below 1:1 by simply mousing into the future mid-channel price.
***
The second SDC had the Dec 21st 08:00 candle close at RSI(4) reading of 96.22 for overbought. The candle period high was not quite at the upper channel, but deemed acceptable.
SELL entry at the open of the next 09:00 candle price of 1.57476.
We had aligned a fib channel plot to the first SDC to get expansion levels. This can be used (or another S&R tool) for S/L placement. Therefore, above the FC 100 + cushion = 1.57774.
Once again, we mouse over the mid-channel directly below entry point to read price of 1.56410 to estimate our TP target. This is also counter-trend, and we can expect TP to change.
Price declined to the mid-channel during the Dec 21st 16:00 period, marking price of 1.56521 + spread = 1.56551.
Risk = 30 pips
Reward = 92 pips
R/R Ratio = 3:1
***
Why was the second trade larger in R/R ratio?
They were both counter-trend trades, with shrinking TP as time elapses. The first trade took 18 hours, while the second trade took 7 hours.
***
Your homework is to plot a SDC where it will give you a trade going upward in the direction of the trend, using the start point of the 2nd SDC of Dec 14th 16:00.
The 2nd plot point must be in oversold, below a RSI(4) reading of 20. The candle also must be at or very near the bottom SDC channel line.
Calculate R/R and document every aspect per above. It's easy to locate. We'll post answer tomorrow.
Can you please add the indicators and templates you use for this system? Thanks a lot Chris
Here are template with the 3 indicators.
As far as the other tool, they fib channel tool is found in the channel section of the MT4. Click "Insert", "Channels", "Fibonacci".
The horizontal fib tool; click Insert, Fibonacci, Retracement.
Both can be added to your tool bar. Right click on tool bar. When tools come up, select them and move them over.
Make sure to check time for each session is correct, and always adjusted to Daylight Savings Time when they change. A link to stock market open/close times is here:
Worldwide stock markets map shows the current open closed holiday status and current time for stock exchange- 24 hour format
In GMT, we like to use;
Asian 00:00 through 07:59 GMT
European 08:00 through 16:29 GMT
U.S. 14:30 through 20:59 GMT
In the beginning of this thread, the session color charts are used in the breakout of the Asian High/Low. We used both the regular fib tool (retracement) and the ABC version (expansion).
USD losing ground at European open. Breakout of Asian High on these pairs, such as EUR/USD, AUD/USD, and GBP/USD.
Attached is split-screen EUR/USD. Left is 15-min session colors. Right is same 1-hour PSQ9 with FC. Added SDC plot using Dec 20th 14:00 and Dec 21st 15:00.
We can see price rise since 06:00. The SDC upper channel is resistance, along with 6/8th MML. Currently at horizontal 127.2.