A-B-C-D Trade - page 314
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Pursuant to post #3130, we show the updated price activity and respect of the SDC plots.
The gold colored major plot (1st plot) had its lower channel intersect the plot slopping down (white) using plot points Aug 8th 00:00 GMT and Aug 15th 04:00.
The rise in price met the dotted blue channel line on Aug 21st 04:00 period, which is the half-way point between the SCD mid and lower channel. We detailed use of fib channel tool to plot this.
A second application of the fib channel tool is displayed in white. We aligned it to the 2nd SDC sloping down, and its mid and upper channels. The 50% expansion level is in dotted white, and intersected the blue 50% level of the 1st SDC.
The 04:00 candle period closed at 1.05096. The next candle was a doji, and a subsequent decline occurred and made its way to the 1st SDC's lower channel, probing to the 2nd SDC's mid-channel. RSI(4) divergence there at that pivot low.
Note: An alternative BUY exit target was the 2nd SDC's upper channel (1.04870), which was hit during the Aug 21st 00:00 period. .
And here is the hit to the 100% expansion of the 2nd SDC.
Since we did not input that 100% ratio (to have less clutter for in example), we simply dragged the white fib channel's lower plot line (the one with 3 dots*) to align with the SDC's upper channel. Make sure not to disturb the fib channel's upper plot line.
This means the 50% expansion is the same as the 100% expansion prior to the move.
Price bounced down off that level, and also respected the blue 50%, before declining to make another hit to the 1st SDC's lower channel.
* To move fib channel, locate the plot line with 3 dots (double click to see dots). Drag the middle dot.
3-chart split-screen. 15-min session colors upper left with revisit of Asian session High for SHORT.
Lower left is 1-hour GAB & HAMA_T3, with entry at HAMA_T3 resistance 05:00 GMT period.
Chart of right is the same 4-hour just posted with the 2 SDCs. Entry at resistance provided from 2nd SDC's upper channel and 7/8th MML.
As illustrated here before, there often is a play after price makes an extension and returns to the high or low. That technique is detailed in the second opportunity below.
We have a 15-min chart on the left with session colors, HAMA_T3, and Murreymath1.0 (MML).
Chart on the right is a 4-hour with GAB, HAMA_T3 and master fib plot.
Low = Aug 20th 16:00 1.23369 High = Aug 21st 12:00 1.24864
On Aug 22nd 12:00 period, price made a 38.2% retrace, which was supported by the HAMA_T3.
This was a BUY opportunity, with stop-loss option just below the HAMA_T3 candle LOW price of 1.23890.
Take-profit (TP) target at extension levels 127.2, 138.2, 161.8.
Price probed slightly above the 161.8 on Aug 23rd 12:00 and declined.
The second opportunity was a BUY when price returned to the HIGH 1.24864 during Aug 24th 12:00 period.
This can be seen on the 15-min chart, as marked by the blue horizontal trendline and arrow. The TP target is the 127.2 (not shown) or the 138.2 extension levels, which is also marked on the 15-min.
The red dotted horizontal line on the 15-min is the 6/8th MML. We can also see that this area is the European session highs..
The bounce up off the HIGH had lurking BUY orders which can be seen in the form of a very quick little spike up. This means the market is moving fast and if we don't allow enough cushion, we may not fill our order.
S/L no more than 20 pips, and can be just below 2/8th MML (see 15-min). Reward about 45 net pips.
This technique trading the bounce off that HIGH is very popular. The fib plot in this example is clear. It is confirmed by the pullback ratio and the extension ratios. Those two elements/confirmation SETS UP THE TRADE.
Last note: this came very close to the end of the week, which requires caution. We don't want to get stuck over the weekend on a day trade.
Going back 5 years, we can see that there were only 2 instances when price closed a weekly candle 100 pips above or below the HAMA_T3 and did not trend in that direction. In other words, 2 false signals over 5 years.
These occurred in Aug 1, 2010 and Dec 5th, 2010. The Dec 5th penetration did manage to gain 200 pips, but would not qualify as a trend.
How do we use this info? First, we need to understand that the S/L would be just beyond the HAMA_T3 by at least 100 pips. On occasion, there are probes beyond that 100-pip margin, as can be seen with the candlewicks.
We then must have a good reward/risk target, or at least ride the trend until that is achieved. As with smaller time-frames, we can use fibs, and other S&R to target TP.
This would essentially be trading a moving average cross-over. It differs in that the HAMA_T3 adds another dimension.
Some would trade the pullbacks into the HAMA_T3.
This pair is currently in the HAMA_T3 zone. There is bullish sentiment, but from a technical standpoint, it must fight through this resistance. Odds are it will obey its historical behavior. If it closes a weekly candle more than 100 pips above the HAMA_T3, it will be a change in trend (CIT).
The week will end in a whimper as Bernanke/FEDs did not pose with an aggressive stance on potential QE3.
Attached is a 4-hour chart of GBP/USD with a Standard Deviation Channel (SDC) plot. The plot points were low-to-low Aug 2nd 16:00 and Aug 10th 12:00, as marked with white "X".
That set up the BUY when price met the lower channel during the Aug 16th 04:00 period. That pullback was a 61.8% retracement from the last swing high/low.
Entry = 1.5635 + cushion = 1.5642
S/L = 1.5576 - cushion = 1.5570 (Aug 10th pivot low) Risk = 72 pips
TP Target = 1.5785 - cushion = 1.5778
This target is the 161.8% extension of B-C Swing Aug 14th 08:00/ Aug 16th 04:00.
Potential reward = 136 pips.
Net Reward/Risk = 136/72 and ratio of 1.9:1
We have the SDC as a guide, in the event price approached its upper channel resistance. TP hit Aug 16th 16:00 period.
__________
A 2nd hit to the lower channel occurred during the Aug 28th 00:00 period, as marked by arrow. It was not quite a 61.8% retracement, halted by the lower channel support.
We inserted the indicator Gann_SQ9. The swing up from that touch of the lower channel was a move to the 90-degree. This was one exit option.
To make this plot manually, use the indicator SQ9(Price), since the automated version will have adjusted by the time you read this post.
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2nd chart
What if we plotted the SQ9(Price) from the Aug 16th 04:00 bar (first BUY trade)?
It would show a gain to level just above the 180-degree of 1.58861, and a decline down to the 90-degree of 1.57603. This is the 2nd BUY point.
U.S. holiday today. Attached is a daily chart of QQQ, with indicator SQ9 22.5 Factor 56. Gann Activator Bars (GAB) and HAMA_T3 also used.
Start price is Mar 28th high 68.50, direction down. A revisit of this high occurred on Aug 20th.
Since the space between SQ9 levels is 92-cents (0.92), we can use half of that as the stop-loss, plus cushion = 50-cents.
Conservative TP target at SQ9 22.5-degree level 67.58 + cushion.
S/L = 69.00 ( or slightly more to get above round number + cushion)
Entry = 68.43
TP = 67.65
Reward/Risk = 78/57 and ratio of 1.4:1
The HAMA_T3 is also in neighborhood as support, moving up as price consolidated.
Update on our double SDC plot. The 2nd SDC sloping down (white) has been very accurate for S&R.
We marked the beginning of the week (Aug 24th), where price pulled back. The fib extension went on to make a 161.8 to 1.02742 during the Aug 30th 16:00 period. This intersected the 150% expansion of mid and lower channel of 1st SDC (orange color sloping up).
The pullback was nearly 38.2%, and respected the 7/8th MML (MurreyMath1.0).
Fib plot: High = 1.05441 Low = 1.03773
Entry point at pullback or break of Low.
Take-profit (TP) targets at extension levels, with SDC as guidance for S&R.
The 138.2 intersected the 5/8th MML (1.03136)
Last week on Aug 28th , covering EUR/USD, we hinted at caution based on the weekly picture with the HAMA_T3. There was also a lot of speculation for the FED to make a more aggressive statement for QE3 (which did not happen).
At that time the previous week’s (Aug 19th) wick high price was 1.2691. Since it adjusts during the then-current week (Aug 26th) of our post, the final wick high was 1.2686. This resistance held its ground and price did not penetrate to the upside.
We had noticed that a change in trend (CIT) was more likely when price closed a weekly candle 100 pips or more past the HAMA_T3 high/low. This can prevent a premature long for swing and position traders. For day traders, the bounce down off the HAMA_T3 resistance may stop them out.
****
On the attached weekly chart, we overlaid the Ichimoku. We can see price is still below the cloud, indicating it is still in a down trend.
We labeled 2 recent GAB Pivots, the 2-candle formation with RSI(4-period) divergence.
The 1st one was at the close of the Apr 29th candle, when it was contained by the HAMA_T3 zone. The GAB was red. This is a SELL, going in the direction of the down trend. Price subsequently made a 161.8% extension, off the B-C swing plot. Low/High of plot Jan 8th/Feb 19th.
The 2nd GAB Pivot at the close of the July 22nd candle, was a counter-trend pivot with BAJA Bullish Divergence. Red GAB, but direction up. Trading up to the HAMA_T3 would be the conservative option. Reward/Risk about 130/70 pips.
Trading to Low of fib plot was another option, as that level was still in the HAMA_T3 zone.
We attach a 1-Hour USD/CAD with Gann_SQ9, which automatically adjusts to swings. We also applied GAB and HAMA_T3.
The last swing low was Sept 4th 13:00. We can see price respect each Gann level en route up.
We placed an arrow pointing up at the Sept 5th 10:00 bar, when the HAMA_T3 contained the pullback. That was also at the Gann 22.5-degree level of .98689. With cushion ENTRY = .98750.
This BUY take-profit target includes 45-degree level .98938 and 67.5-degree level .99187 (just hit during 14:00 period). Deduct cushion.
Stop-loss options include placement just below the 09:00 HAMA_T3 candle low of .98630 plus cushion = .98580. Risk = 17 pips
Reward/Risk considered as usual and makes the 67.5-degree target more reasonable.
TP1 (45-degree) = 15/15 and ratio of 1:1
TP2 (67.5-degree) = 40/17 and ratio of 2.3:1
Trade just ahead of CAD Rate Decision 13:00 which may influence early exit.