A-B-C-D Trade - page 294
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Can add divergence indicators to the Gann Activator Bars and Heiken Ashi Moving Average T3. MurreyMath1.0 is also on attached 4-Hour EUR/USD example.
White vertical lines point to recent signals generated by combination of these indicators. Entry would be the next candle after divergence, and it trades pullbacks off the T3.
Feb 15th 00:00 - SELL
Feb 15th 08:00 - SELL
Feb 21st 00:00, 12:00 - BUY
Feb 22nd 00:00, 12:00 - BUY
Feb 27th 16:00 - BUY
Mar 5th 20:00 - SELL
These signals also had MurreyMAth1.0 levels for additional S&R. The RSI Divergence was set to 4.
The CCI Divergence cannot be adjusted (unless you go into the code). It has an alert.
You can elect to only take signals when Gann Bars are the color of the direction of the trade, after period closes.
Here's a pair involving CAD, which is sensitive to oil price fluctuations due to their oil reserves.
Oil has been rising lately, especially in view of the FED and other countries stay in easing mode, or are projected to launch additional waves of easing measures.
Obviously, Japan is a country heavily dependent on oil.
We pair up the smoothing indicators with SQ9(Price) on the 4-hour time-frame. Choosing a significant low or high is important. We selected the large dip on Mar 6th 16:00, price of 80.373.
Enter that as the start price and default direction up, for the SQ9(Price) inputs.
If the trader did not get in near the pivot bottom, he/she can enter the trend change after blue Gann Activator bars surface above the HAMA_T3 (green on our chart).
This occurred after price hurdled the 90-degree SQ9 level during the Mar 8th 00:00 period. The T3 candles started to turn color after that, to reflect the uptrend. Trader can also wait for GAB to gap further away from the T3 prior to entry.
We marked 2 pullback opportunities with white vertical lines:
Mar 9th 12:00 (near/at the 180-degree level of SQ9)
Mar 12th 12:00 (at the 225-degree)
Currently, price is fighting resistance at the 360-degree level 84.00.
The HAMA_T3 comes with alarm functions. If you saw the first pullback with the naked eye yesterday (Mar 13th) during the 00:00 period, it was an earlier entry compared to the one confirmed by the RSI divergence indicator on the Mar 14th 00:00 period.
The next bar's open price for SELL entry was the 04:00 of 1.05547. The 5/8th MurreyMath1.0 (MML) level also there.
S/L just above the 04:00 HAMA_T3 candle price of 1.0581 + cushion made this a risk of 30 pips.
TP target included the 4/8th MML level of 1.0497 + cushion. Reward = 50 pips
R/R = 50/30 and ratio of 1.7:1.
Price subsequently dipped to 1.0484, prior to rising back into T3.
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The move off the RSI Divergence generated signal also made it to the 4/8th MML, during the last hour (06:00).
Attached is a continuance of yesterday's 30-min chart with Moon and wider fibs.
Fib plot used that swing from 13:00 low 1.30507 and 15:30 high 1.31215.
The 127.2 fib from that plot intersected the Moon 270-degree today at the low of the 05:30 candle period, price of 1.3033. The RSI(4) also was oversold at 10.
This BUY opportunity had S/L option at the wide fib's 127.2 of 1.3020 (white) plus cushion. Risk = 20 pips.
For TP target(s), we drew a pink line at recent high on Mar 13th 23:00 1.3089. This level is just below the next Moon, which is the Moon 315-degree.
A more conservative TP was the wide 0%, which was the Low of the plot, 1.3077.
With some cushion at TP levels, the math is shown below. By 11:00, both TP were hit.
TP2 = 1.3089 (R/R = 2.6:1)
TP1 = 1.3077 (R/R = 2:1)
Entry = 1.3035
S/L = 1.3015
Subsequent to this, price dropped down to the wide 127.2 and bounced.
****
Both the CAD/JPY and AUD/USD examples posted saw continued gains in direction of trend.
****
Will be gone fishing and beachcombing until Tuesday. Have a nice weekend.
The attached chart is the same template with Gann Activator Bars (GAB), Heiken Ashi Moving Average T3 (HAMA_T3), and MurreyMath1.0 (MML).
We drew white vertical lines pointing to the first pullbacks in a trend. As mentioned, trading the pullbacks is also measured by Fibonacci ratios and usually done at the 38.2%, 50%, and 61.8% levels. To a lesser degree, it can pullback at the 23.6%.
Traders can opt to apply a little cushion on entry, or use the fib ratios as guidance. In the first example, the pullback was short of the HAMA_T3 candle low by 11 pips. However, the pullback ratio was 23.6%, one of the key ratios.
We marked the 161.8 extension level that it reached, prior to a second pullback.
The yellow zig-zags with the fib ratios on pullbacks and extensions describe each move.
In the second example, the first hit to the T3 was at the 23.6%. It went further up and bounced off the 50% pullback level.
This was also the 4/8th MML, which can act as additional resistance. When a MML is this close to a pullback ratio and/or HAMA_T3, the stop-loss should be placed beyond it. This move went on to extend to the 138.2% fib.
The third example had a 38.2% pullback to the T3 during the Mar 19th 08:00 period. Price made a 161.8 extension during 12:00.
***
Notes: Prior to these trends, price must have spent time on the other side of the HAMA_T3. Therefore, trading ONLY the first pullback provides the highest probabilities.
In the pic, we can see how a trader can enter at the breakout of a new trend, or at the first pullback. The word pullback is interchangeable with retrace, of course.
There must be discernible space between price and the HAMA_T3 prior to the pullback.
You can add other filters for entry, as you choose. Don't make it too complicated, such as using 15 different filters, or you'll never pull the trigger or become confused.
We were ask a familiar question again. It is what can a person expect to earn to make a living trading. The best way to put numbers to it should be to focus on the return on the initial account balance.
We display various scenarios below. The key is the Reward-To-Risk Ratio (R/R). If a trader selects high R/R trade opportunities, the win ratio doesn't have to be very high to be successful.
That kind of plan must be realistic of course. For example, we can't simply imply that each move we trade shall have a 3:1 result.
Let's use the last example from the last post.
Based on entry at the pullback. Price was 1.3140, and T3 price (Value 2) was 1.3139. Thus, it was virtually the same. Add cushion and spread, entry should be 1.3145.
The Take-Profit (TP) options include the 3 key extension levels, and the 5/8th MML. Price got within 8 pips of the 161.8, marking a high of 1.3164. That exceeded the 5/8th MML of 1.3245.
That 12:00 bar closed at 1.3240. The RSI(4-Period) closed at overbought 88.
Let's use that closing price as our exit price. This makes the profit on the trade 95 pips.
The stop-loss (S/L) is placed just below the 08:00 T3 bar LOW of 1.3106. Add cushion and it is 1.3103. This made risk = 42 pips.
The R/R for this trade was 2.2:1
******
This example shows how we need to have a plan. It applies knowledge of Fibonacci as it relates to pullbacks and extensions. We also had supporting tools to further confirm pullbacks and extension levels.
******
Others that choose to enter at the breakout can use the T3 to keep them calm, as it is a trend indicator and remained in the same uptrend color.
They also would understand what the market is doing, when they measure the various legs of the move with their Fibonacci tools.
Switching to the 1-hour for entry trigger, we can enter at the opening price of the Mar 16th 13:00 bar, or 1.3128. This was the first GAB detaching from the T3. After spread/cushion, this made the actual R/R 2.5:1.
******
Here are some examples of returns, based on 2% risk per trade. As mentioned, the balance can be any amount. It is the other factors that we should focus on.
Account ---------R/R----------#Trades Per Month ------Win % ----Average Monthly Return
$100,000 --------2:1------------------10---------------50%-----------------10%
$100,000 --------2:1------------------10---------------60%-----------------14%
$100,000 --------3:1------------------10---------------50%-----------------20%
$100,000 --------3:1------------------10---------------60%-----------------28%
*****
We've had a simple spreadsheet calculator posted on google docs, since many do not have excel. Here is the name of the link:
docs.google.com/templates?view=public&authorId=04799716085986534465&pli=1#
You must be a member of google for access. There are more than one calculator. Use the one named Forex Risk/Reward Trade Calculator.
Or you can conduct a search using key words fxbaja calculator.
30-min EUR/USD chart with indicator time_modified to separate the 3 major sessions. Kept the theme with the HAMA_T3, but uses regular candles.
Bold red horizontal line extends Asian Low for better viewing. Breach occurred during today's 11:30 candle period. Real-time, we monitor the 15-min for trigger and 30-min (or higher time-frames) for support/resistance (S&R) guidance.
Sharp pivot at 12:00, due to GBP event. At 14:00 was negative U.S. Existing Home Sales, which cause a whipsaw.
Price pulled back 61.8%, and proceeded to extend to the 138.2 fib, which was also occupied by the 8/8th MML. This area is also yesterday's European low.
The trailing stop-loss, placed just above the HAMA_T3 candles, held through the pullback.
This breakout to the downside had 2 ways to trade it, as it pertains to the 2 exit scenarios.
1) At the 12:00 pivot low of 1.3211 and near 5/8th MML, prior to economic data/event.
2) At the 138.2 extension of 1.3183.
1) Use of the 5-min chart.
Entry = 1.3235
S/L = 1.3259 (initial) placed 5 pips above HAMA_T3. Risk = 24 pips
TP = 1.3216 (at 5/8th and after spread) Reward = 19 pips
2) Use of 30-min chart.
Entry = 1.3235
S/L = 1.3270 (initial) placed 5 pips above HAMA_T3. Risk = 35 pips
TP2 = 1.3185 (at 8/8th and after spread) Reward = 50 pips
AUD/USD 1-Hour chart.
SQ9(Price) indicator using start price Feb 29th high of 1.08552, direction down.
Previous fib extension from Mar 9th/12th high/low made it to the 127.2 (1.0422) Mar 15th, as marked on left.
The first revisit of that low occurred yesterday (Mar 21st) during 14:00. That touch was Swing B of an ABC pattern, and price proceeded to retrace 61.8% forming Swing C.
As with the content herein, the breakout of B is a trade opportunity. The fib expansion tool on the MT4 will measure the FE (fib extension) levels.
These levels can be set to the major ratios of 100, 127.2, 138.2, and 161.8.
Reviewing the ratios, they simply are the extension percentages from Swing C and past Swing B, forming Point D, in the A-B-C-D pattern.
For example:
The FE 100 is 1.03794. The 100 represents that leg C-D is 100% of the distance (in pips) of leg A-B.
FE 138.2 means leg C-D is 138.2% of leg A-B. It is 38.2% larger.
Price pulled back at each of the key FE levels, 100, 127.2, 138.2, thus far.
****
Overall, the bigger picture saw initial move down from the Mar 1st high pivoted on Mar 6th. The pullback was 50%, and near the SQ9 180-degree. The extension to that Mar 15th pivot was also 127.2%.
This pivot happens to be near the 360-degree level. The 180-degree area on Mar 19th was a key support level during the month of Feb.
Recognition of this allows an experienced trader to enter at that point on a SELL. Use of one 22.5-degree SQ9 level for stop-loss, above the 180-degree, held up in both entry scenarios on Mar 8th and 19th.
The R/R for both scenarios were large.
The Mar 8th decline was 3.5 levels (SQ9), with .5 (half-level) S/L. That equates to R/R = 7:1.
The Mar 19th decline also went 3.5 levels, but entry was just below the 180-degree. Generally, it had the same R/R.
***
Trading the ABCD pattern with entry near Swing C, at the 338-degree (rounded from 337.5), saw price decline 2.5 levels to the FE 138.2.
The S/L was just above the 315-degree, which made it half-level. The R/R = 5:1.
***
These are larger and smaller examples of high R/R trade opportunities. Obviously, there is no guarantee that price would decline to these levels. However, the win ratio doesn't have to be very high if you're working with 3:1 or better R/R.
Using these effective tools would enable traders to have a good idea of S&R, and thus form strategy to maximize gains and control risk.
Split-screen EUR/USD with 15-min session colors on the left side, and 1-hour GAB HAMA_T3 on the right side.
The 1-hour chart points to the 07:00 bar that broke out to the upside. When we look closer at the 15-min, we can see price pivot just ahead of the European session open at 08:00.
We drew a red horizontal line at the price level of 1.32500 to denote the Asian session High registered during 07:30. Now we have the set-up for a breakout of the Asian High.
The stop-loss (S/L) options include the 5-min pivot low during the 08:00 candle period, 1.32330. Risk = 17 pips + spread/cushion = 20 pips (or a little more as you choose).
To assess the take-profit (TP) options, fibs can be plotted on the:
1-hour using Low = 1.31323 High = 1.32116
15-min using the Asian Low/High 1.31895/1.32502
A cluster of fibs and the 3/8th MML on the 15-min was seen at the 1.32730 level.
The next level up is the 15-min plot's 161.8% extension 1.32881, and the 1-hour plot's 200% of 1.32909.
Note, EU data at 07:45 and 09:00. Breakout of Asian High occurred during 08:30 period. Moving to the sidelines ahead of the 09:00 limited trader to TP1.
Trading to (TP1) 1.32730 = R/R of 1:1
Trading to (TP2) 1.32881/909 = R/R of 1.8:1
***
This was a set-up that can be assessed within 5 minutes. There was plenty of time after price marked the Asian high during 07:30, pivoted, and re-approached.
Just takes practice. Always have a plan, and understand the R/R.
The last example had a very tight time window. If a trader feels uncomfortable with that, trader would simply pass. This is called restraint or discipline. There's always the next opportunities.
Never be in a position where you feel you must force a trade.
That example also highlighted the awareness of time. It was natural for price to pivot ahead of the European session, as the longs were taking profit. We've featured this aspect numerous times.
The link we provided, will show that daylight savings for Europe takes place Mar 25th. This is critical when conducting breakouts of the Asian Session high/low, of course.
Japan, China, and India do not observe daylight savings time.
When using the indicator time_modified, the session times must be adjusted accordingly.
Here's the link again:
worldtimezone.com/daylight.html