A-B-C-D Trade - page 323
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Indicator Stoch Candle OverBought-Sold, with input
Stoch_K = 16
Stoch_D = 10 (default)
Stoch_Slowing = 10 (default)
Upper_Level = 80 (default)
Lower_Level = 20 (default)
Indicator SQ9(Price)5760, with StartPrice = 1.6038 (historic high) and direction down.
FCT plot:
A = Sept 17th (2012) 12:00 high 1.3171
B = Sept 30th 20:00 low 1.2803
C = Oct 5th 12:00 high 1.3070
Point C is at the SQ9 2227.50 angle level, and is a 68.6% retrace of A-B.
The Stoch candles are red (overbought) at that point. Price declined and respected the FC -68.6, FC -50, and pivoted at the FC -31.4 on Oct 10th when candles turned green (oversold).
With RSI set on 4-period, we had bearish divergence at Point C. We refer to divergence using this setting as BAJA Divergence.
The Oct 4th 16:00 candle's peak registered a RSI(4) reading of 96. The Oct 5th 12:00 candle's peak registered 91.
As a footnote, the 2nd hit to the FC -31.4 had BAJA Bullish Divergence. All candles were green at that cluster.
We want to express our sympathy to the people that lost loved ones due to Hurricane Sandy, and sorrow to those still suffering.
Transportation operating at limited levels, mostly due to flooding and power outages. Millions remain without power. Wall street opened for first time this week.
Attached is a 1-hour chart of EUR/USD, with PSQ9 Mars 45-degree intervals. Two FCT plots utilize different Point A and Point C pivots. HAMA_T3 and Stoch Candle Overbought-Sold (default settings) are also featured.
a = Oct 25th 08:00 high 1.3022
b = Oct 26th 10:00 low 1.2881
c = Oct 30th 15:00 high 1.2983 (68.6% retrace of a-b and at Mars 225-degree.
A = Oct 22nd 14:00 high 1.3082
B = Oct 26th 10:00 low 1.2881
C = Oct 31st 11:00 high 1.3019 (68.6% retrace of A-B)
The smaller FCT had red Stoch candles at the Point c for the SELL, but did not decline to the first TP level at the -68.6. We always try to understand why a trade was not successful or did not perform according to plan.
In this case, one reason points to the inability to break through the HAMA_T3 zone, before further upside started at the European open.
The larger FCT had its Point C as the revisit to the smaller FCT's Point a. The Stoch candles were also red. The decline did reach the -68.6 during today's 14:00 period, and coincided with the bottom of the HAMA_T3 zone.
On a separate chart to reduce clutter, we can apply the indicator Gann_SQ9, with default settings. This will show the decline on the first FCT traveled 22.5-degrees to 1.2954.
The larger FCT sees price action at the 45-degree level (1.2962) currently after bouncing off the first FCT's lows.
The larger FCT and fib retrace plot has its 78.6% 1.3039 at the next Mars level up, the 270-degree. That of course would be another short opportunity, moving Point C to that location.
We attach this indicator again. If we adjust the setting of Stoch_K to number of candles of last swing, it will be more effective.
In our last example with 1- hour EUR/USD, the larger FCT's Point C was 73 candles in distance from Point B. Adjusting setting for Stoch_K = 73 results in red Stoch candles at that Point C.
The distance from Point b to Point c (smaller FCT example) was 53 candles. Changing the Stoch_K to 53 produced red candles at the Point c.
Use the trendline tool, which is found standard on the MT4 platform, to measure distance. To activate the count, double click on trendline drag point and drag to desired location.
We'll go back a couple of days to look at the breakout of the Asian Low. Prior to the Asian session, a FCT plot with 15-min view:
A = Oct 26th 09:00 high 1.2950
B = Oct 26th 10:30 low 1.2881
C = Oct 28th 21:00 high 1.2945 (78.6% retrace of A-B)
Notice we ignored the spike on Oct 26th 14:15. Using it would invalidate Point B, which is required for a larger triangle. Spikes like this (wick) is often not registered as it moved too quickly. The 5-min view will show the candle bodies right at the A-C trendline.
This chart uses indicator Time_Modified2, with the yellow box representing the Asian session 00:00 - 06:59. A horizontal black line marks the session low.
After attempts to break the Asian Low of 1.2914 at end Asian and first minutes of European, it succeeded during the 07:15 period. Next bar entry = 1.2911.
The FCT plot gives us the bigger picture, and we can see the decline off its Point C.
S/L options include:
- the top of the 07:00 HAMA_T3 candle (1.2929) + cushion. This made risk about 21 pips.
- the 07:00 high of 1.2924 + cushion = 1.2928. Risk = 17 pips
Traders need to target the -31.4 level at the very minimum to make the R/R worthwhile. 1.2892 + cushion = 1.2896. Reward = 15 pips.
The 08:15 was a long-legged doji candle. The market was leery of the day's low (Point B) of 1.2881.
Even in the 5-min time-frame, price stayed below the HAMA_T3. This can be used to exit in the event price moved against the position.
Those that stayed in but used the 5-min HAMA, was stopped out with about 5 pips profit near mid-channel (FC -50) at the 09:10 period.
In hindsight, price did not rise above the Asian Low on a subsequent upswing, and made a revisit to the FC -31.4 level.
At best, this trade scenario was about 1:1 R/R. We wanted to show a marginally successful result, and how the trader can assess the price action with S&R provided by the FCT.
This was a move-in-progress off the above detailed FCT. A tighter plot could have been used, but the slope was steep and the triangle very small. An extension below Plot Line B would be necessary for the R/R.
Assessments outside of the plot lines (extension) are more vague. Which extension ratio is strongest?
Here is today's breakout of the Asian Low with FCT plot on the 15-min view. This uses the A-C trendline to configure the diagonal support below the Asian Low.
A = Oct 31st 07:15 low 1.2945
B = Oct 31st 11:15 high 1.3019
C = Nov 1st 01:30 low 1.2951 (Asian Low and 88.6% retrace of A-B))
The breakout to the downside occurred immediately at the European open. The move was strong and it made a 127.2% extension, which intersected the FC -131.4.
A larger triangle such as this is required when assessing S&R outside of the plot lines.
Trading off the 127.2 extension (BUY) was successful back up to the -31.4.
***
Note: Trading a BUY off Point C did not reach the -68.6. When using the 5-min HAMA, price dropped below that for a stop-out at 1.2961 for a small 8-pip profit.
AUD/JPY made a revisit to the Oct 25th and Aug 21st highs 83.47/56.
The 01:00 PPI missed consensus and pair became under pressure. Only issue holding back more dramatic move down is tomorrows U.S. Non-Farm Payrolls and Unemployment Rate.
Today's peak had GAB Pivot formation on 1-hour and 4-hour time-frames. The 1-Hour HAMA_T3 acting as support and breakout level.
The 15-min will show 06:00 bounce off last significant intra-day low of 83.31 (yesterday 21:00). That bounce up is currently contained by the 15-min HAMA_T3.
Support below at 83.07 and then 82.78. These represent the 31.4% and 50% retrace levels.
We made adjustments to colors of the recently attached indicator Stoch Candle Overbought-Sold. Caution as there is at least one more version of this that has a difference in sequence for color inputs.
#
0 Green
1 Red
2 Green
3 Red
4 Orange
5 Orange
6 Orange
7 Orange
If you add to chart, the standard Stochastic indicator, which would display on the bottom, adjust settings to match the default settings of the Stoch Candle Overbought-Sold.
KPeriod = 30
DPeriod = 10
Slowing = 10
Levels = 80 and 20
Now, you can see that when the cross-over version is above the 80 level, the candles turn red. The opposite is true at 20 when candles are green.
The purpose is to compare the 2 indicators. You will see that the cross-over version can cross-over several times in choppy conditions.
To eliminate that visual confusion, we made the above pertinent candle settings orange color. Our preference is not to see bear candles going upwards, and bull candles going downward. We only want colors when the situation is OB/OS.
In place of the cross-over, we combined the Stoch Candle OB/OS version with the HAMA_T3 to denote trend and trend change.
All OB/OS indicators can always become more OB or OS. Therefore, we have to combine that type of tool with other methodology.
We brought it into the FCT technique as additional confirmation (option) at Point C entry, as well as assistance with exit at TP levels.
Using this indicator on default setting for Stoch_K will have its limitations. Therefore, we suggested using the number of bars from the swing B-C. This is for analysis and possible additional confirmation for the reversal at Point C.
USD/CHF 1-hour with:
PSQ9 Mars at 45-degree intervals
HAMA_T3
Stoch Candle Overbought-Sold
FCT plot:
A = Oct 25th 08:00 low .92897
B = Oct 26th 10:00 high .93855
C = Oct 30th 15:00 low .92993
Point C was revisit of Mars 315-degree and area of Point A.
Stoch candles oversold. BUY entry .9304 and trade to -68.6 (.93280) was at HAMA_T3 zone. TP = 24 net pips
S/L options include just below Point A for 18 net pips risk. This would be the tightest.
Because there was no slope to the channel, the R/R is less than a situation with an upslope. This trade had a R/R of 1.3:1.
Subsequent price action saw dip/peak of 31.4% on both side of Plot Line A-C, prior to large gain to the upside on speculation and actual NFP event.
Daylight Savings Time adjustment in most locations of U.S. took place Sunday Nov 4th. The United Kingdom had theirs Oct 28th. Japan and China does not practice DST.
Link to DST site: Worldwide stock markets map shows the current open closed holiday status and current time for stock exchange- 24 hour format
or cut and paste: worldtimezone.com/markets24.php
***
Charts on a couple of Yen pairs attached.
Chart 1 is NZD/JPY 4-hour with PSQ9 in 90-degree intervals.
FCT Plot:
A = Oct 25th 12:00 high 66.17
B = Oct 31st 04:00 low 64.98
C = Nov 2nd 12:00 high 66.77
Horizontal Fib Plot:
Low = Oct 23rd 12:00 64.61
High = Oct 25th 12:00 66.17
The FCT's Point C is a 138.2% extension of horizontal Low-High.
The PSQ9 Mars 180-degree is right at Point C.
BAJA Bearish Divergence at Point C.
Stoch Candle Overbought-Sold (30/10/10) turned red 2 candles prior to arrival at Point C.
Currently, price has declined to the mid-channel FC -50 level and is in the HAMA_T3 zone.
***
Chart 2 is a 4-hour of USD/JPY, with the same indicator Stoch Candles OB/OS and settings 30/10/10.
A = Oct 25th 20:00 high 80.37
B = Oct 30th 04:00 low 79.27
C = Nov 2nd 12:00 high 80.67
This Yen pair also turned red at Point C, which is the 127.2% extension of A-B, and declined to mid-channel FC -50 and HAMA_T3 zone.
BAJA Bearish divergence at Point C, which could also be seen on the daily time-frame.
***
Last Friday's U.S. NFP produced spikes in Yen weakness.
When intra-day trading the breakouts of the highs on these two pairs, the upside gains were short-lived. However, if the trader was trained to trade these types of data events, understanding the technicals would be an advantage.
Last note would be to keep an eye on a potential "pennant" formation. Take the Sept 9th low and line up the subsequent lows for the bottom trendline. The daily time-frame can be an easier view. The Plot Line a-c (orange) is the top trendline.
***
Our Oct 27th post observed a pennant (sometimes called a wedge) for EUR/USD.
Attached is a zoom-in on that on a 4-hour chart. Plot points:
We labeled the swings:
1) Sept 10th low 1.2760
2) Sept 17th high 1.3171
3) Sept 30th low 1.2803
4) Oct 17th high 1.3138
5) Oct 26th low 1.2881
Upper trendline swings 2-4
Lower trendline lows of swings 1-3
We aligned the Bearish FCT plot points to:
A = Swing 2
B = Swing 3
C = Swing 4
SELL trade from Point C had exit option at the FC -31.4, which turned into Swing 5.
SELL at break of trendline 1-3-5 (08:00 candle @ 1.2889) has now touched the FCT's Plot Line B during today's 12:00 candle period low of 1.2766.
Maximum S/L would be just above the FC -50 about 1.2945, but sloping down.
Using max S/L, net R/R about 125/60.