A-B-C-D Trade - page 320
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These are 2 pics of a FCT plot on the Contract For Difference (CFD) SPY in a 4-hour view. All times are GMT + 3 hours.
A = Sept 14th 16:30 high 148.10
B = Sept 26th 16:30 low 142.95
C = Oct 5th 16:30 high 147.15 (78.6% of A-B) SELL OPPORTUNITY
Chart 1 pic taken Oct 8th while resting at the FC -68.6.
Chart 2 just taken after price plunged further, and through the FC -31.4 after a brief pause (which can be seen on the 1-hour). It is now probing below the 88.6% of B-C.
Lurking traders at the 100% level (BUYS).
Chart 1 is the3 continuance of our SPY plot and commentary. The Point B horizontal level had lurking BUY orders which triggered shortly after our last post yesterday Oct 10th.
The overnight trading produced a gap up upon the opening of today's U.S. session. Price found resistance at the 16:30 (GMT +3 Hour) HAMA_T3 candle.
As additional assistance on the SELL off Point C, note that MurreyMath1.0 had its 7/8 there at 146.88.
Continuance of last plot on this pair. After achieving the FC -68.6 level, price made a decline to the A-C trendline, probing about 10 pips below it.
The subsequent ascent hit the FC -68.6 (1.2918) during the 10:00 GMT period, before meeting resistance at the 50% retrace fib (1.2952) of leg B-C.
Here is AUD/USD with FCT plot:
A = Oct 8th 06:00 low 1.01483
B = Oct 9th 03:00 high 1.0246
C = Oct 9th 15:00 low 1.01740
Point C not quite at the 78.6% of A-B, therefore if that was the entry criteria, it would have had to take place on subsequent touches of the A-C trendline occurring 17:00 and 23:00 periods (1st arrow).
Other trade opportunity points are marked with arrows at:
1st touch of the FC -31.4 Oct 10th 08:00 period (SELL). This was also the Point B (high) horizontal level.
1st touch to Point B trendline Oct 11th 03:00 period (SELL). This was also near the 138.2 extension level of A-B.
The 2 shorts were small trades and the R/R (as always) must make sense.
We illustrate 2 plots covering a move up and then down, on the 1-hour view. All times GMT + 3 hours.
a = Sept 26th low 67.85
b = Sept 27th high 69.29
c = Oct 2nd 21:30 low 68.13 (78.6 retrace of A-B)
Price made a 138.2% extension of A-B, rising from Point C, to the Point B trendline.
The 2nd plot sloping down:
A = Sept 27th high 69.29
B = Oct 2nd 21:30 low 68.13
C = Oct 5th 16:30 high 69.79
Price declined and bounced off of the horizontal level of Point B.
The Point B trendline contained that bounce, while GAB remained red beneath the HAMA_T3.
The move proceeded to make a strong move to the downside to the 168.8 horizontal extension, which is intersected by the FC 131.4 (Oct 10th 19:30).
This example shows an alternative stop-loss method that would increase reward/risk ratio. The FCT plot on the daily chart for GBP/JPY:
A = Apr 20th high 131.78
B = June 1st low 118. 77
C = Sept 19th high 128.82 (entry)
This plot was chosen because Point C was closest to a 78.6% retracement of leg A-B.
The Point A had other peaks. The highest peak was on Mar 31st 133.48, which makes Point C a 68.6% retracement of A-B. That is still valid within our trigger zone of 68.8 to 86.6. As previously mentioned, given the choice, we feel that 78.6 is most optimal.
At the time of entry the first and most conservative take-profit (TP) target was the FC -68.6 price of 124.97. This intersected the MurreyMath1.0 4/8th level.
Adding cushion TP = 125.05. This made net reward = 370 pips
Now, lets measure our risk. When we enter a SELL at the 78.6, the S/L would be placed just above the 88.6 of 130.30. In this case, that was 162 pips with cushion.
Recap:
S/L = 130.37
Entry = 128.75 (with cushion/slippage)
TP = 125.05
The R/R = 370/162 and ratio of 2.3:1.
*** The alternative S/L we alluded to is placement of S/L between MML levels as seen on the daily. Switch to a lower time-frame to see that level, or just divide price difference in half.
The yellow trendline marks that level at 129.70. Add cushion and we have about 129.77. This lowers S/L amount to 102 pips.
Recap:
S/L = 129.77
Entry = 128.75
TP = 125.05
R/R = 370/102 and ratio of 3.6:1.
Since this is plotted in a higher time-frame and the distances between points are large, using this alternative S/L has a lower risk than a much smaller ABC triangle.
***
TP hit Oct 9th 12:00 period.
Since this trade was in the direction of the slope down, the -68.6 would increase the TP as time elapses.
Using a trendline alert or EA can take advantage of this if the trader is not monitoring the trade. The Chin Breakout Alert is one indicator. There are EAs that require purchase, that can be used to trigger exit in this kind of example.
Those that exit partial position, can trend the balance using the HAMA_T3 or their favorite trend tools.
Aligning Point C to S&R is a good way to use the FCT technique. Here is another example, using Planetary SQ9.
See the Gann Is The Mann thread for instructions on how to acquire and use this free indicator.
USD/CHF 1-Hour FCT plot with PSQ9 Mars 45-degree intervals.
A = Oct 3rd 07:00 high .93973
B = Oct 5th 14:00 low .92744
C = Oct 10th 02:00 high .94311
Horizontal fib plot from Point A to B.
A bounce down at the 88.6 on Oct 9th 07:00, which is at the Mars 45-degree level, gained to the -68.6.
Market proceeded to make a 127.2% horizontal extension to the upside (127.2 fib = .94307). This is Point C as illustrated on the attached chart. The Mars 90-degree is right there. BAJA Bearish Divergence formation also evident.
This SELL opportunity was counter the slope of the channel. It respected each support level en route down: -68.6, -50, -31.4, and the Point B trendline was just hit today during the 11:00 hour.
S/L options include placement just above the 138.2 extension level.
Here's an example using PSQ9 Mercury 90-degrees as Point C for the FCT. That was also the 161.8 extension level of the A-B leg. There was a double-top, with declining RSI(4).
The 90-degree angle is often used for turning points, but like everything else, needs to be combined with other tools or S&R. Mars is a fast planet, and is considered sensitive enough for S&R.
A = June 17th 20:00 high 1.27463
B = July 24th 16:00 low 1.20411
C = Sept 17th 12:00 high 1.31708
The decline from Point C made a precise hit to the FC -68.6 on Sept 20th during the 12:00 period.
The FC -50 was touched on Sept 20th 20:00. This intersected the horizontal 31.4% retracement level of B-C.
Currently, price is near Point C horizontal level 1.31708 as next resistance.
This is another example with an older triangle.
A = Feb 29th 04:00 high 1.34844
B = Mar 15th 00:00 low 1.30027
C = Mar 27th 08:00 high 1.33844
Point C was a 78.6% retracement of AB, and just about at the Mercury 90-degree level.
We saw declining peaks on the RSI(4) as the A-C trendline held as resistance before the collapse to the FC -31.4 April 5th.
Price made 3 hits to that FC -31.4 level prior to ascending back up to the AC trendline on April 26th (1.32618). This was another SELL opportunity, which subsequently saw a large move down to the FC 100 on June 1st ( 1.22866).
Forgot to post this example of CFD GOLD 4-hour with PSQ9 Mars at 45-degree intervals. This involves 2 FCT plots, and all times are GMT + 3 hours.
The junior FCT plot is labeled in small caps and in yellow color:
a = Oct 1st 04:00 low 1762.50
b = Oct 5th 04:00 high 1795.10
c = Oct 10th 16:00 low 1756.00
Larger plot is in aqua blue color:
A = Sept 26th 16:00 low 1735.90
B = Oct 5th 04:00 high 1795.10
C = Oct 15th 16:00 low 1727.70
The larger plot's Point C retreated from the established low and remained above the Mars 180, prior to rising.
That Point C was a downside extension to the -168.6 of the smaller plot.
It was also a horizontal 138.2 extension of Oct 12th/15th high/low 1771.90/1740.80.
The BUY, even if entered at the Mars 180 level of $1733, saw gain back up to the yellow a-c trendline. This is also the horizontal 38.2% fib (per Oct 12th/15th plot) of $1752.
The S/L options included
1) The horizontal 161.8 of $1721
2) We can also measure the distance between the Mars 180 and one level below, the Mars 135-degree. Take 31.4% ($1725) below Mars 180 as the tightest S/L option from that plot.
3) The yellow junior plot's -178.6 of $1724.
Generally, with the various S/L options, we can keep the R/R to about 2:1.