A-B-C-D Trade - page 292
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Attached is EUIR/USD 4-Hour, depicting the decline from late Oct 2011 to mid-Dec 2011.
We have indicators Gann HiLo Activator Bars (GAB) in red and blue candles, and Heiken Ashi MA T3 (T3) in pink and green candles.
We featured this combination before, as a way to trade with the trend and stay calmer for the big moves. This example is a technique to trade the bounce off the mid-level (mean), which is the T3 pink and green candles.
The T3 candles are derivatives of moving averages. For the propose of this example, we left the input settings on default, but changed the colors since the GAB candles were the same.
We overlaid another indicator, the Keltner Channel (KC), for comparison and guidance on the extreme boundaries of price movement. We can see that the KC’s mid-channel mean is very similar to the T3 (pink and green candles).
We marked 5 areas that had price meet the mid-level mean. First, we need to qualify the set-up.
Price must start above the pink candle mean. Red candles must break down through the T3 pink candles. A discernible space between the red candles and pink T3 candles is required, prior to the pullback up into the mean level.
The bounce trade is on the first visit to the mean.
These SELL trades are in the direction of the down trend, and thus not counter-trend. The candle dates/time that had its high at the first revisit to the mean are:
Nov 2nd 08:00
Nov 10th 12:00
Nov 16th 08:00
Nov 24th 08:00
Dec 13th 08:00
This downtrend had another leg and last through mid-January. Try to locate another 4 points that had a retracement to the mean. 3 of them had bounces back down for relatively small gains, and 1 for a large gain.
Subsequent to that, a reversal occurred that peaked Feb 29th. There were 4 BUY opportunities to trade the bounce off the pullback to the green candle mean. List these 4 points.
Remember, price must have been below the green mean candles, and represented by red candles, PRIOR to the first pullback into the green mean. Space must exist between the blue up GAB candles and the green mean, prior to the pullback.
This technique is another way to trade S&R. It is an entry technique, and obviously must be accompanied by money management. The stop-loss is designed for the opposite end of the mean candles.
The TP methodology will depend on whether the trader wants to ride for the larger moves. A trailing S/L based on the T3, or reasonably close to it, can be used.
Obviously these are swing trades. An exit EA or script is an optional tool.
Try the EA:
EMA TrailingStop_V1.4 which is hereby attached.
Match up an EMA setting that closest aligns with the T3 you are using.
This Andrew's Pitchfork plot was last posted Feb 24th as price was at the Upper_ML2. Price subsequently bounced down.
Yesterday's low was at the next fib down, which is the Upper_ML1 (1.3094). The 1st attached chart is the "before" pic at that support level, with an entry of 1.3115.
The 2nd chart is a split-screen. On the right is an up-to-the-minute of the same daily APF.
The chart on the left is a 30-min with HAS and T3. We launched the EMA TrailingStop_V1.4 EA. To give us a visual idea of the EA's trailing S/L level, we applied a 13 EMA with shift = 2 (purple).
The attached 1-hour chart uses Planetary SQ9 Moon at 45-degree intervals.
We projected last week's levels in yellow, as the market often will continue to respect during new week.
We also placed a green dotted horizontal line at 1.3145 to mimic the Mars 90-degree, which acted as resistance.
As priced looked like it was breaking out of the 1.3150 area of resistance, it faced the diagonal extension of last week's Mars 135-degree.
This little exercise is a technique for application in the event an assessment needs to be made for exit, etc.
This SQ9(Price) plot uses Feb 29th peak 1.08552. We also drew a trendline (TL) in blue using Feb 23rd, 27th, and 29th dips.
Break of TL on Mar 2nd at 90-degree level. The SQ9 levels can be used for S/L.
The 4 white check marks label support level at 1.06478. This is also the 180-degree level of the plot.
This is SHORT opportunity if and when price rises to that level. The 158-degree level can be used as S/L, and the 225-degree for take-profit (TP). That would make reward/risk ratio about 2:1.
This is an alternative to chasing the market. Let it come to you.
If you didn't get in nearer to the bottom, perhaps due to lagging indicators, it might be too late.
Remember this week's high-impact data events, check your full economic calendar. Unless you have been trained in trading Friday's NFP, good idea to stay on the sidelines. We often see whipsaw candles of 100+ pips, super wide margins, and massive slippage.
Here's a 15-min view of short off the 180-degree level 1.06478.
S/L just above 158-degree of 1.06736, and TP target just above 225-degree of 1.05963. This type of trade can be pre-set per below.
S/L = 1.06760
Entry = 1.06430
TP = 1.0610 (hit 15:07 GMT)
R/R 42/33 pips and 1.3:1
This example period had data, and trader would have to elect staying in and have enough S/L to handle reasonable fluctuations, provided there were no surprises.
The pivot low 1.5895 also is the 61.8% retrace fib based on
Low = 01:45 1.05421 and High = 11:00 1.06675
This was a "textbook" trade. Price hit resistance as outlined, with S/L holding, and declined to TP target almost precisely.
Here's the follow-up on EUR/USD with a 30-min chart. Price made a double bottom at 14:40 U.S. open. That was also area of Mar 6th low. BAJA bullish divergence there (RSI set to 4-period).
We illustrated S&R by extending last week's Moon lines in yellow. The pivot bounced off last week's Moon 90-degree.
Fib plot using High = 1.32079 Low = 1.30953
produced 161.8 = 1.32775 (hit 15:30)
We can see each yellow Moon level respected en route up. The market can respect both last week's and current week (red) Moon levels.
Plots on larger time-frame charts:
Chart 1 is continuance of APF plot on EUR/USD daily, and shows price rising above the horizontal 38.2% fib.
Chart 2 is GannBox_144 on EUR/USD daily. Start point Oct 27th high 1.42464. Prices (height) = 36000 for 5-digit brokers and 3600 for 4-digit
Times (width) = default 360
The blue 1/2angle_2 was the resistance for downtrend after start point.
When we change the height to 72000, the red 1/1 angle will be the resistance.
Chart 3 is a weekly APF plot with AML_v1.1 for interior fibs:
Handle = July 13, 2008 high
Upper corner = May 1, 2011 high
Lower corner = June 6, 2010 low
While the objective and preference is to have the red 1/1 angle as the immediate trendline for support or resistance, the 36000 setting had better compliance.
Here's the same 30-min EUR/USD with HAS and HAMA_T3.
We had inserted an Exponent Moving Average (EMA) set to 13, since that is the default on the EMATrailingStop_v1.4 EA. However, that is too tight and did not resemble the HAMA_T3 mean candles (green).
We changed the EMA setting to 24, which is show in purple on the attached chart. This still did not survive the early Asian session 38.2% pullback.
This means you would need to
make EA setting to exit only on profit, or
watch for that manually, or
use a trailing stop EA that follows the HAMA_T3 closer. An exit EA using the HAMA_T3 can probably be programed, but we haven't seen one for free yet.
Using a Parabolic SAR or ATR to trail are other options.
Here are the answers to the quiz on the 4-hour chart consisting of the Gann Activator Bars (GAB) and the Heiken Ashi Moving Average T3 (HAMA_T3). This technique can be described as “trading off the pullback to the mean” (bounce off the mean). Not to be confused with trading the reversion “to” the m
4 SELL entry point candles during downtrend marked by yellow vertical lines:
Dec 29th 20:00
Jan 5th 08:00
Jan 12th 00:00
Jan 16th 16:00
Where price pulls back and up into the pink T3 “mean”, in the data window, we look at the GAB candlhigh price and the HAMA_T3 Value 2 price. That is the meet point, that denotes entry.
4 BUY entry point candles during uptrend marked by blue vertical lines:
Jan 20th 08:00
Jan 27th 00:00
Feb 8th 16:00
Feb 20th 08:00
The pullback down into the green mean can be confirmed in the data window. Look at the low price and the HAMA_T3 Value 2.
The brief downturn and analysis of 2 SELL entry points:
Feb 10th 20:00 = a downtrend had not established itself yet.
Feb 14th 08:00 = O.K.
Most recent downtrend (chart 2):
Mar 5th 12:00 = SELL. Price meet point = 1.3242. Move declined about 140 pips.
*****
Using the HAMA_T3 allows for placement of stop-loss at the opposite side of the mean candles. Mouse over one of those mean candles, and check the price range in the data window. This is the range for the Mar 5th 12:00 period. Must add spread/cushion.
Value 1 = 1.3280 (stop-loss)
Value 2 = 1.3242 (entry)
The risk was about 50 pips including spread/cushion), and the reward (TP) up to 140 pips. Let’s say exit took place at the close of the Mar 6th 08:00 period, and1.3132, when RSI(4) registered 12.
Reward = about 100 pips. R/R ratio = 2:1.
No particular reason for selecting this pair or time. The swings on this 4-hour chart were from the high of Sept 21st 04:00 to Sept 30th 08.00.
Once again we loaded the Gann Activator Bars (GAB) and the Heiken Ashi Moving Average T3 (HAMA_T3).
The technique trades the pullbacks. This is similar to trading pullbacks based on Fibonacci plots. Usually they are pullbacks to 38.2%, 50%, and 61.8%.
With the GAB HAMA_T3, we get a visual of the pullback area in the form of the HAMA_T3 candles.
In this example, we also made a fib plot in white:
High = Sept 22nd 08:00 .8948 and Low = Sept 22nd 16:00 .8768
The yellow arrow points to entry at the bottom of the pink HAMA_T3 candle on Sept 23rd 00:00, and price of .8857. This price can be seen in the data window in "Value 2", and is also the High price of the GAB candle.
That was also the 50% pullback level on the fib plot.
We labeled take-profit (TP) levels at the
TP1 = 0% fib = (Low) .8767 Reward = 90 pips
TP2 = 127.2-138.2 fibs = .8718 to .8698 Reward = 147 pips
TP3 = 161.8 = .8655 Reward = 202 pips
The range of the entry candle was 61 pips. Stop-loss placement just above the top of that candle. Risk = 65 pips.
After extending to the 138.2 fib, another pullback was seen with the blue GAB during Sept 27th, but was contained by the pink HAMA_T3 candles, which acts as resistance.
Combining these 2 indicators, allows us to smooth out price fluctuation.
Trader can wait for the entry candle to close first, or enter at the HAMA_T3 candle price point.
Price reversed after this downtrend, extended up and away from the HAMA_T3, and pulled back during the Oct 6th 12:00 period.
That BUY scenario saw price ascend 150 pips, .8801 - .8952