A-B-C-D Trade - page 32
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
OK, breakout came 5 min early
Hit FE 100 and bounced. New Asian Low = 1.3194. This also can be considered an Extension-In-Progress. Mark new ABC.
Will leave you here as I try not to conduct live commentary often as it's not purpose of this thread.
Sorry FE levels off by 1 pip:
FE 100 = 1.3195
FE 127 = 1.3185 (hit)
FE 161.8 = 1/3172 (target)
As a footnote, we have 1-Hour chart 50-EMA at about 1.3181 providing current support.
Data release, rated high-impact: 11:00 GMT: Bank of England Interest rate Decision - expected to be unchanged. 11:45 GMT: European Central Bank Interest Rate Decision - expected to be unchanged.
Obviously, we mis-spoke and were a day ahead on the calendar with the data releases.
--------
First breakout per post only reached the FE 127 1.3185, with probe to 1.3183 which is near support of 50-EMA on 1-Hour.
Stop-loss should have been moved to at least break-even, or just above the FE 100. Some like a tighter stop and would place it just above the FE 127. Forex movements are large, thus it requires some room.
The pair ascended to near Asian high before its second attempt to float lower. 5-min ABC:
A = 11:50 high 1.3231
B = 12:40 low 1.3191
C = 13:50 high 1.3222 (78.6%retrace of A-B)
Asian Low = 1.3195
Probe = 1.3183
FE 100 = 1.3182
FE 127 = 1.3171
FE 161.8 = 1.3157 (target - hit) + spread and cushion = 1.3161
Entry SELL - 14:10 open price 1.3179
Stop-Loss Options:
- Just above 1.3183 + spread and cushion = 1.3187. Risk = 8 pips
- Just above Asian Low 1.3195 + spread and cushion = 1.3199. Risk = 20 pips
- Just above round number 1.3200 + 4 pips = 1.3204. Risk = 25 pips.
This price is also the 23.6% retrace fib of A-B.
Risk = 20 pips
Reward = 18 pips
-------------------
A little tricky with the duel lows of Asian Low and previous probe. Weighing the risk/reward, it was just close enough to trade even considering pips lost due to our entry rule (requiring close of breakout candle).
15/15 method was a winner as the breakout was clean.
1st chart is the 5-min.
2nd chart is the 1-min, which shows the micro-swings that lead to final halt at 1.3130, which was the FE 100.
A = 14:09 high 1.3195
B = 14:22 low 1.3154
C = 14:28 high 1.3170
FE 100 = 1.3129 (also near 1st ABC's FE 236.2 of 1.3128)
While we don't need to always monitor the 1-min chart, it does assist us often in understanding movement as well as possibly conducting a better exit in some trades.
Note: If we pulled the 2nd ABC off of the 5-min chart, we would start at the top of red candles and use that small pivot of blue candles. The result would have been the FE 61.8 at the same price of the 1st ABC's FE 236.2 (1.3128).
What all of these observations tell us is that the market will move in Fibonacci ratios. There will be numerous occasions when they correspond together.
Clean breakout of Asian High to upside. Fast break candle but still able to trade at 1:1 risk/reward ratio after its close.
Needed to exit prior to high-impact U.S. data release @ 11:00 & 11:30 GMT, which was accommodated.
15/15 method also successful.
A = 07:25 low 1.3118
B = 08:40 high 1.3171
C = 09:00 low 1.3162
Asian High = 1.3175
FE 100 = 1.3215 (target)
FE 127 = 1.3229 (hit)
FE 161.8 = 1.3248
Entry BUY = Open of 09:10 5-min candle price 1.3188 + spread = 1.3191.
Stop -Loss Options:
- Just below Point C 1.3162 + cushion = 1.3161.Risk = 30 pips
- Just below Asian High 1.3175 + cushion = 1.3174. Risk = 17 pips
- Just below Point B 1.3171 + cushion = 1.3170. Risk = 21 pips
Risk/Reward = 21/24
Ahead of U.S. Non-Farm Payroll data release at 12:30 GMT, we saw a probe to downside before market reaction provided tremendous energy upward.
Let's quickly spell out the 1st move downside:
A = 07:40 high 1.3203
B = 09:15 low 1.3177
C = 09:20 1.3189
Asian Low = 1.3175
FE 100 = 1.3163
FE 127 = 1.3156 (hit)
FE 161.8 = 1.3147 (target)
Entry SELL = 09:45 1.3174
- Reward = 27 pips
Stop-Loss Options:
- Just above Point C 1.3189 + 4 pips = 1.3193. Risk = 19 pips
When targeting the FE 161.8, we move our stop-loss to just behind the FE 100 after confirmation (close of 5-min candle). Since the exit would be a BUY order, we must add the spread and any cushion.
Therefore, this trade stopped-out 5 pips above 1.3163 = 1.3168, for a +6 pip profit.
---------------
Breakout to upside was driven by reaction to U.S. Non-Farm Payroll data released at 12:30 GMT.
Taking the swings after announcement:
A = 12:25 low 1.3171
B = 12:30 high 1.3217
C = 12:35 low 1.3192
FE 100 = 1.3238
FE 127 = 1.3250
FE 161.8 = 1.3266 (target)
Entry BUY = open of 12:45 candle 1.3223 + spread = 1.3227.
-You may have some slippage due to announcement and resulting volume.
- Reward = 39 pips
Stop-Loss Options:
- Just below Point B 1.3217 + cushion = 1.3216. Risk = 11 pips.
- Just below Asian High 1.3203 + cushion = 1.3202. Risk = 25 pips.
- Just below Point C 1.3192 + cushion = 1.3191. Risk = 36 pips.
----------
Next post will address techniques utilized in attempt to "trend the balance".
Looking at the 5-min chart again. We show the original ABC with FE levels (black).
We also plotted a secondary ABC (purple) that provided further guidance at possible exit levels beyond our original target.
Using the Heiken Ashi Smoothed (HAS) indicator, we can follow the uptrend without getting spooked out of the trend too early.
FE 100 = 1.3300
FE 127 = 1.3313
FE 161.8 = 1.3329 (hit)
The first red HAS candle that turned red occurred at the close of the 14:25 candle with closing price of 1.3319.
Alternatively, as we can see on the chart, exit could be taken at one of the FE levels.
Certainly, it would be prudent to take some or a majority of profit at the original profit target (last post) of 1.3266. Therefore, the attempt to gain more, is often referred to as "trending the balance (of lots)".
The downside risk in using the HAS is that if we wait for an opposite colored candle to close, we can lose some or a large portion of the profit.
This is where the second ABC pull comes in, giving us some idea for exit levels.
Note on the attached chart, we had regular candle and switched to the HAS. Therefore the swings marked by the purple lines won't look correct on the HAS candles due to its different math.
Not a lot of volatility during week's opening due to lack of high-impact data release or news, but that assisted us in capturing a good entry price on the breakout to the downside.
We list other fib pulls in order to provide a bigger picture for the last European-to-European sessions. We can see the obvious large move upwards on August 6th. The retracement fibs assist in support and resistance, as shown on Chart 2.
The market can respect more than one set of ABC pulls. We can plot and monitor on another computer without cluttering our trading computer and its charts.
Retrace Fibs for support & resistance (Chart 2 – Black Fibs)
Low = Aug 6th 10:15 1.3163
High = Aug 6th 14:05 1.3333
23.6 = 1.3291
38.2 = 1.3266
50 = 1.3245
61.8 = 1.3224 (hit)
78.6 = 1.3195
Larger ABC Pull (Chart 2 – Blue Fibs)
A = Aug 6th 14:05 high 1.3333
B = Aug 6th 16:45 low 1.3266
C = Aug 9th 06:30 high 1.3307
FE 100 = 1.3240 (target)
FE 127 = 1.3222 (hit)
FE 161.8 = 1.3199
Intra-day ABC Pull (Chart 1)
A = 06:30 high 1.3307
B = 7:05 low 1.3269 (same as Asian Low break price)
C = 07:45 high 1.3293 (61.8% retrace of A-B)
Asian Low 1.3269
FE 100 = 1.3255
FE 127 = 1.3245
FE 161.8 = 1.3232 (target – hit
Entry SELL = Open price of 10:20 5-min candle 1.3267
- Reward = 31 pips after spread & cushion
Stop-Loss Options:
- Just above Point B 1.3269 + spread & cushion = 1.3273. Risk = 6 pips
- Just above 5-min pivot 1.3286 + spread & cushion = 1.3290. Risk = 23 pips
- Just above 5-min pivot 1.3289 + spread & cushion = 1.3293. Risk = 26 pips
- Just above Point C 1.3293 + spread & cushion = 1.3297. Risk = 30 pips
--------------------
Daily Chart (Chart 3):
We can see the pair had cleared the FE 100, failed to close above the 78.6 fib, and retreated to rest on that FE 100 level as support for time being.
On the agenda and everybody's focus was the U.S. FOMC meeting, which had a scheduled release time of 18:15 GMT. I posted a data calendar link a few weeks ago, and there is one on this site.
Although the interest rate was projected to remain the same, there was tremendous uncertainty about any possible verbiage coming from the Feds.
Last Friday's disappointing jobs report (U.S. Non-Farm Payroll) created a scene whereby many traders preferred to stay on the sidelines.
Attached 15-min chart:
A = 00:15 high 1.3219
B = 03:15 low 1.3135
C = 08:30 high 1.3185
Asian Low = 1.3135 (same as Point B)
FE 100 = 1.3101 (target - hit) set take profit for 1.3105
FE 127 = 1.3078 (hit)
FE 161.8 = 1.3049
Entry SELL: 12:15 open of 5-min candle price 1.3134. If we wanted a little better confirmation, the next candle's open was 1.3127.
- Reward = 29 pips net after 4 pips for spread and cushion.
Stop-Loss Options:
- Just above Asian Low 1.3135 + spread and cushion = 1.3139. Risk = 5 pips
- Just above 5-min pivot low 1.3147 + spread and cushion = 1.3151. Risk = 17 pips
- Just above 5-min pivot high 1.3157 + spread and cushion = 1.3161. Risk = 27 pips
Profit target hit at 13:55, well ahead of the 18:15 FOMC data/news release. We believe the downward movement was related to the unwinding of positions ahead of the release.
The attached chart shows the large spike up at the 18:15 candle, coinciding with the release. It went straight to the Asian high area before retracing.
Attached are 3 charts from EUR/USD Aug 11th.
The first 5-min chart deals with an ABC formation during the Asian session in GMT time, and the fib lines are marked in black. We detected downward pressure on the 1-hour, when the pair took out support, and decided to monitor.
A = 0:05 high 1.3159
B = 00:45 low 1.3088 (break point)
C = 03:50 high 1.3127
FE 100 = 1.3055 (target - hit)
FE 127 = 1.3135
FE 161.8 = 1.3010
FE 236.2 = 1.2956
--------------------------
Chart 2
The ABC for breakout of Asian Low (blue fibs):
A = 05:40 high 1.3116
B = 07:00 low 1.3031
C = 09:00 high 1.3076
Asian Low 1.3031 (same as Point B)
FE 100 = 1.2991 (target - hit) set take profit for 1.2995 to include spread & cushion.
FE 127 = 1.2968
FE 161.8 = 1.2938
FE 236.2 = 1.2975
Entry SELL: Open price of 09:50 candle 1.3021.
- Reward = 26 net pips
Stop-Loss Options:
- Just above Asian Low 1.3031 + 4 pips spread & cushion = 1.3035. Risk = 14 pips.
- Just above 1-min pivot high 1.3046 (09:43) + 4 pips = 1.3050. Risk = 29 pips.
- Just above 5-min pivot low 1.3050 + 4 pips = 1.3054. Risk = 33 pips.
- Just above Point C 1.3076 + 4 pips = 1.3080. Risk = 59 pips
Risk/Reward 29/26 or 14/26
-------------------------
The pair took out all of these fibs. We can see each FE level act as support and resistance. As the extension worked its way down, it respected these fibs.
-------------------------
Chart 3 1-Hour
We kept our retracement fib plotted to the:
Low = July 30th 10:00 1.2980
High = Aug 3rd 10:00 1.3261
The associated retracement fibs provided support & resistance. We had also added the 138.2 and 161,8 retracement levels. These 2 levels represent the overshoot of the low. We can see as of this post, the pair respecting the 138.2 fib price of 1.2873 as support.
There was also the 50-EMA on this chart, which acted as resistance during the pullback on Aug. 10th U.S. session.
The price level that caught our eyes was the 61.8 retrace fib 1.3087. This is also the price area that the pair bounced off of on Aug. 10th 14:00. Therefore, once we saw the break point for the first ABC during Asian at 1.3088, we knew it could be a significant breakout.