A-B-C-D Trade - page 315
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Here's a continuance of our 4-Hour Crude chart with SQ9 (Price) 22.5 Factor 56. Start price = 77.28 and direction up. This version is for the higher time-frame charts. Also on chart is GAB and HAMA_T3.
On Aug 17th, we highlighted the importance of the 360-degree level of 93.83, where price bounced up and off the HAMA_T3 during the Aug 16th 07:00 GMT period (1st arrow). This was the first pullback after a post-consolidation rise on Aug 15th.
Price advanced to the 450-degree, a move of 90-degrees up. The dotted vertical lines mark GAB Pivots, which are divergence points for reversals. The ones with the arrows are trade opportunities going in the same direction of the trend, and bumping against the HAMA_T3 as support or resistance.
Edit: Let's review what constitutes a GAB Pivot (again!)
It is a 2 bar formation using the Gann Activator Bars.
When the 2nd bar's high is higher than the 1st bar's high - and -
RSI (4-Period) on 2nd bar is lower than the RSI(4) of 1st bar.
SELL Entry at open of 3rd bar.
When the 2nd bar's low is lower than the 1st bar's low - and -
RSI (4-Period) on 2nd bar is higher than the RSI(4) of 1st bar.
BUY Entry at open of 3rd bar.
If we want to trade with the trend:
GAB color must be red for SELL opportunities and blue for BUYs.
The HAMA_T3 used for support and resistance, with it's candle colors in the same direction of trend/trade.
HAMA_T3 can also be used for S/L placement and trailing S/L.
In an eventful week of data, the ECB held rates today but also confirmed its bond buying program. That sent some whipsaw action to EUR/USD and other pairs/instruments.
Tomorrow is U.S. Non_Farms Payroll (NFP) and Unemployment Rate. This should negate any exaggerated movement until data release time.
Meanwhile a couple of high time-frame charts.
Here is is a daily chart on Crude Oil, with SQ9(Price) 22.5 Factor 56 set to a start price of $110.54 (March 1st high), and direction down.
Price had made a 127.2% extension to the upside to mark this high. That fib plot was Oct 4th 2011 low 74.92 and Nov 17th 2011 high 103.34.
After consolidation and a modest dip, price collapsed in May and accelerated to the June 28th pivot low of 77.28. This was one level away from the important 720-degree (76.07).
BAJA Bullish Divergence formed, and we swung up in a change in trend. A GAB Pivot formation was also realized.
The fib plot, at that point, took the Mar 1st 2012 high 110.54 and June 28th 77.28 low.
1) Price bounce down off the 360-degree level of 92.50 July 19th, and into the HAMA_T3, which was the conservative TP target.
We can quickly estimate the R/R when using one level up for S/L and 4 levels down for TP. After cushion, this is still above 3:1 R/R.
S/L = 93.58 (338-degree)
Entry = 92.50 (360-degree)
TP = 88.24 (450-degree)
At the time of entry, the previous day’s (July 18th) HAMA_T3 candle high target was at the 473-degree. As we know, the HAMA_T3 will adjust, which it did, and it ended up at the 450-degree when price converged.
Generally speaking, a move will have a higher probability to travel 90-degrees versus 112.5%. Therefore, the eventual 450-degree as the TP would not escape our reasoning.
The math on this SELL:
S/L with cushion = $1.50
TP with cushion = 3.70
Commission = 0.30
Net Gain = 3.40
Net R/R = 2.2:1
The next bar on July 24th was the 2nd bar of a GAB Pivot BUY.
This weekly chart utilzes GAB and HAMA_T3, along with a simple fib plot.
Low = Oct 2, 2011 High = Oct 23, 2011
Price made a 168.2% extension to the upside during April 1, 2011
This was a setup to trade the revisit of the High 129.41, for a BUY.
The arrow points to entry during the May 13, 2011 period when price touched the High (plus cushion).
TP at extension levels 127.2, 138.2, 161.8.
S/L options include just below 23.6% fib of 124.22 or half the distance between the 23.6% and the High, which is 126.82 (add cushion).
If we want to use SQ9 for S/L (not shown), we can apply SQ9(Price) 22.5 Factor 56 that we adjusted for this type of instrument and time-frame. It is attached.
The start price would be the LOW 107.42, and of course direction up.
The SQ9 360-degree is 126.80, which is essentially the same as our split of the 23.6% fib and the High.
If conservative TP taken at the 127.2% extension fib level of 135.39, it coincides with the top of the HAMA_T3 (resistance).
Price arrived during the June 17th period. Gross gain = 6.00 while S/L = 2.60. Net R/R about 1.8:1.
Here is the daily view of the revisit to the High on May 18th.
There was room beowteen the High and the HAMA_T3 resistance. As mentioned, count the levels of the SQ9 for a quick R/R assessment.
S/L one level down.
TP to HAMA_T3 = 3 to 4 levels up, at time of entry.
After cushion R/R is above 2:1
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).
Last week's candle close slightly more than 100 pips above the HAMA_T3 candle.
Week of Sept 2nd closed at 1.2794.
Previous week's HAMA_T3 (Aug 26th) high was 1.2686
Entry for BUY was at open of this week 1.2794 plus spread.
S/L = 100 pips below last week's HAMA_T3 low: 1.2440 - 100 = 1.2340
Risk = 454 + spread = 457 pips.
Obviously, this is a position or swing trade. The RSI(4) is rather high at the moment (83) and a pullback is likely into the HAMA_T3 soon.
We want to also keep an eye on the most recent significant pivot high of 1.3485 (week of Feb 19th), as resistance.
Using SQ9 (Price) 22.5 Factor 56 indicator, we see the 180-degree level of 1.3044 matching up with pivot lows during Feb/Mar/Apr.
A day trader can use this assessment that there is a change in trend, as a guide for direction of trade compliance.
Traders desiring a smaller S/L can use the 4-hour chart with HAMA_T3.
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Correction: Our previous post should reference the 2 occasions in which there were false signals as Aug 1st and Aug 19th (not Aug 5th).
Here is the 4-hour view of EUR/USD. We marked the spike due to negative U.S. Non-Farm Payrolls (NFP) last Friday.
Also marked are entry points, on Aug 22nd 12:00 and Sept 6th 00:00, in direction of trend, and in compliance with GAB Pivot rules.
Price has sustained itself above the Ichimoku clouds since Aug 21st.
EUR/USD withstood whipsaws during the 08:00 period due to some exits/sells ahead of German court ruling on ESM.
The 4-hours with HAMA_T3 shows foundation for support that held its ground. The day trader with a smaller stop-loss might have been stopped out.
***
The 2nd chart is 1-Hour USD/CAD with GAB & HAMA_T3. We also applied Gann_SQ9.
The declined from the Sept 5th high, broke support in the .98568 region (67.5-degree), made rest stops at the 90 and 135-degree levels before yesterdays pivot at the 180-degree.
The double bottom and bounce up just touched the 45-degree of .97617 during the last candle period. The HAMA_T3 changed colors starting with today's 11:00 candle.
Switching to the 4-hour chart, the HAMA_T3 upper resistance zone is .97700. This is generally the same area as the previous 135-degree level where price consolidated.
In case some of you missed it, the FED announced QE3 today.
Fed launches QE3
If we look at the 15-min EUR/USD, we can see the whipsaw during the 16:30 period, before price continued its move up.
The 4-Hour with HAMA_T3 held as support.
Chart on the left is a 15-min with session colors, HAMA_T3, and MML. We can see the whipsaw from yesterday's FED announcement of QE3. Price had support provided by HAMA_T3 during the strong bull move.
The right side contains 1-hour and 4-hour charts, both with GAB, HAMA_T3 and Ichimoku.
While the 1-hour HAMA_T3 was too tight for this week's whipsaw reactions, the 4-hour HAMA_T3 held it's ground.
The 4-hour labels the 3 high-impact events of this week: NFP, ESM, and QE3. All bullish for EUR/USD.