A-B-C-D Trade - page 316
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Fib plot High = 1.3485 and Low = 1.2041, sees its 78.6 retrace level at 1.3175, which is about the high for this move thus far.
The Ichimoku cloud just above this, as we approach end of week of tremendous bull reactions to events. Risk is now "ON", and instruments such as oil and gold, along with other commodities are rising.
U.S jobless data negative, further increasing concerns and reaction by FED. Its QE and Operation Twist" involves asset purchases of Mortgage Backed Securities.
The first split-screen chart utilized the MultiInstrument4 indicator to plot correlation between various currency pairs or in this case, GOLD.
As discussed before, GOLD often leads EUR/USD and therefore can be used as a sort of leading indicator. (Note GOLD charts are GMT+3)
On the left chart using a 1-Hour time-frame, we have GOLD displayed in gold line color as well as the basic candlesticks. Red is EUR/USD, and purple is Crude Oil.
During the Sept 17th 17:00 GMT period, we can see GOLD break the Sept 14th low support of 1764.70. Crude also followed suit and broke its own support a the same time.
Looking at the chart on the right, a 1-Hour of EUR/USD, we see the revisit to last week's high, during the Sept 17th 13:00 GMT period.
On the GOLD break date/time, EUR/USD was in it's 4th hour of decline, but still above its 1.3083 support. That was the Sept 17th 12:00 pivot low, and marked with a white trendline.
It wasn't until (this morning) Sept 18th 07:00 GMT that EUR/USD broke that support.
***
The 2nd chart uses a 4-Hour on the right side, with GAB and HAMA_T3 as support for those that preferred a tighter S/L trail on the swing or position trade.
The 4-Hour 12:00 GMT HAMA candle, previous to the current one, had a low of 1.3036. Depending on your broker's feed, it may vary to 1.3031, for example.
This is the low range of the HAMA_T3 support zone, and the S/L would be placed just below it, plus cushion.
EUR/USD has been testing this support. When plotting retracement fibs using Low = 1.2854 and High = 1.3171, the key levels include 38.2% = 1.3050, 50% = 1.3012.
The 50% fib coincides with the 1-Hour Ichimoku cloud bottom border, and can be considered the next support level.
As we near the end of the U.S. session, doubtful enough thrust develops to exceed both support levels as outlined above.
Price is still well above the 4-Hour Ichimoku cloud (not shown).
EUR/USD proceeded to make a retrace to its 78.6% fib of 1.2922 during the Sept 20th 12:00 period.
Attached is a split-screen with Ichimoku on both the 1-hour and 4-hour charts. We have eliminated the interior color for the bullish cloud, for better viewing. As usual, we also removed the colors for the 3 moving average lines.
The 1-hour on the left shows price shying away from the cloud's bottom border on Sept 18th, as we had mentioned. Notice how well it respected the cloud's lower border as resistance thereafter.
We marked a few swings that had formed GAB Pivots. The last swing up also had BAJA Bullish Divergence, with the Sept 20th 2 dips occurring on the 09:00 and 13:00 periods.
***
The 4-hour on the right displays the fib plot per our previous post, with the Low during the announcement of QE3, and the High at the revisit of that thrust's peak.
As price declined, it struggle in the HAMA_T3 zone, and tested the 50% fib. A bounce up ensued but was contained by the 1-hour Ichimoku lower cloud border, as well as the 4-hour HAMA.
On the 4-hour, we drew a dotted vertical line with arrow pointing to a GAB Pivot at the close of the Sept 19th 16:00 period. This was an entry SELL opportunity trading in direction of the HAMA_T3 trend.
The 1-hour also had a GAB Pivot at the close of its 16:00 period. The bars hugged the lower cloud border after entry before the subsequent decline.
S/L options included the Sept 19th 04:00 period's High 1.3084 and the 23.6% fib 1.3096, plus cushion.
Entry at the open of the 20:00 bar 1.3054. Risk = 35 to 47 pips per above S/L options.
Take-Profit (TP) targets included fibs below the 50%.
61.8 = 1.2975 + cushion = 1.2980 (Reward/Risk = 74/47 and ratio of 1.6:1)
78.6 = 1.2922 + cushion = 1.2927 (Reward/Risk = 127/47 and ratio of 2.7:1)
We can see the Sept 20th 08:00 bar touch the 4-hour Ichimoku just above the 78.6% fib.
***
This was a short in the direction of the 1-hour trend, but was counter to the 4-hour trend. In keeping with conservative counter-trend instincts, the 4-hour Ichimoku cloud provided support near an exit fib.
(Note that if we move the Low to the Sept 5th 08:00 pivot low, the 9-20 low and support is the 38.2% fib.)
Fib plot: Low = Mar 12th 1.5601 High = Apr 30th 1.6300
After a 138.2% extension on June 1st, price consolidated and chopped around until the bullish speculation and news.
We can see the short opportunity after price rebounded up to the Low (1.5601) on June 7th. Price retraced 61.8% to 1.5394 on June 8th. Trading to that fib exit level gained 200 pips.
S/L options included at high of June 6th HAMA candle 1.5661 + cushion. Risk about 75 pips. R/R = 200/75 and ratio of 2.6:1.
***
Today during 08:00, price made a revisit to the aforementioned Apr 30th High of 1.6300. Lurking SELL orders there plummeted price downward. This was also the 127.2% extension level on swing 1.6270/1.6162.
S/L options include just above the 138.2% fib of 1.6311 + cushion, making risk about 20 pips. A little larger cushion for these significant round numbers. Market makers can often hunt down the tight stops.
Switching to the 1-hour for this short-term (day trade) trade on a Friday, we can use the HAMA_T3 zone as guidance with our TP target. Remember that the HAMA would ascend.
At entry, the HAMA high was 1.6240, and at the 61.8 fib. This initial location would change as the HAMA catches up to price. The first merge of price and HAMA occurred during the 11:00 period. The close of that period was 1.6259 + cushion resulting in the TP about 30 pips. R/R = 1.5:1
This level is also the 38.2% retrace fib based on Low = 1.6162 and High = 1.6309, which was the last significant swing (as seen on the 1-hour).
We've covered this before, but it's been a while.
Plot points for the Andrew's Pitchfork: Jan 13 (2012) Feb 24, and July 24.
Now, take the Fib channel tool and align A-B to the APF's lower and middle forks (blue). Change input of "fibo levels" to include 31.4. This by the way is PI.
A horizontal fib plot (white) from the Feb 24 to July 24 high/low, as previously mentioned, produced a 78.6% retrace. This intersects with the fib channel's 31.4% and nailed the peak of Sept 14th.
Chart 2: Zoom-in shows currently, price has declined back down to the middle fork and the horizontal 61.8% retrace fib. The first hit to the middle fork/61.8 occurred on Sept 20th, and the bounce up 128 gross pips.
This area is also support provided by the HAMA_T3.
Plot points Dec 1, 2010, May 2, 2011, and Oct 4, 2011.
Confirmation came on the Feb 1, 2012 hit to the middle fork, and decline.
For the fib channel tool, we added the ratio of minus 31.4%, input fibo levels expressed as -.314.
The attached chart shows adherence to the -31.4% on Apr 4th, 2012, and a small bounce off the lower fork May 9th.
Price declined further below the lower fork. We have hits to the 31.4% and 50% expansion levels. Additional assistance provided by a BAJA Bullish formation with those 2 dips.
Price ascended and the HAMA_T3 turned green (bullish trend) after hurdling the 31.4 en route up.
The TP options included the lower fork (hit June 15th), and the -31.4% level (hit Aug 2nd). The hit to the -31.4% also contained BAJA Bearish Divergence, and thus can be confirmation for exit as well as entry.
Currently, price has settled back down onto the lower fork.
And here is AUD/USD with a APF plot sloping downward. Plot points Feb 29, 2012, June 1, and Aug 9.
Align fib channel to APF's middle and upper forks. The Sept 14th revisit of the Aug 9th high was right at the 31.4% expansion. Price bounced down to the upper fork.
Plot points are GMT unless otherwise specified.
Sept 17th 15:00
Sept 20th 07:00
Sept 21st 09:00
Confirmation hit to the middle fork on Sept 21st 20:00.
Fib channel aligned to upper and middle forks.
Hit to the 31.4% expansion Sept 24th 02:00, with bounce up back to the middle fork 03:00.
Here's a 1-hour chart where we combined the HAMA_T3 with fibs and the indicator Planetary SQ9 (PSQ9).
The high/low 1.30466/1.29264 had pulled back 23.6% on Sept 24th Asian. The PSQ9 225-degree and the HAMA_T3 acted as resistance.
Price went on the make a 127.2% extension, during the 08:00 hour, to the down side, where the PSQ9 180-degree resides. Bounce up touched the HAMA during 11:00.
This was an opportunity to trade the pullback, at the HAMA_T3 low. The 05:00, 06:00, and 07:00 had HAMA lows ranging from 1.29610 to 1.29540. The 23.6% retrace fib price was 1.29548.
Allowing for cushion on this SELL, entry = 1.2950. The TP at the 127.2 = 1.28937 + cushion = 1.28987.
S/L just above HAMA_T3 high, about 1.29760 + cushion = 1.29810.
R/R = 51/31 and ratio 1.6:1
Chart on the left is the same 1-hour with PSQ9. The chart on the right is recently posted 4-hour with GAB, HAMA_T3, and Ichimoku.
On the 4H, we labeled Sunday's (Sept 23) bar as the 2nd bar of a GAB Pivot.
It bumped up against the HAMA_T3 resistance zone, and thus was a SELL opportunity at the open of the next bar on Sept 24th 00:00. Entry = 1. 2966.
On the 1H, we can see that the HAMA_T3 contained the aforementioned 23.6% pullback.
This observation can keep trader in the trade with some confidence that price may decline further, and especially with the 127.2% extension/PSQ9 180-degree level in mind.
That level is also the 88.6% retrace fib area as plotted in the 4H (blue).