A-B-C-D Trade - page 327
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4-hour EUR/GBP with indicator Golden Section. We used this as described earlier, for the fib channel function.
We used right channel with ratio of .686. This means we wanted to align the fib channel plot to the right border of the rectangle at that ratio.
After watching price respect this plots level, we can assume it is good enough to keep.
As always, we should duplicate plot with the MT4 fib channel tool, or at the very least, draw trendlines to match the rectangle. This will allow us to keep or redraw the plot manually, in the event the indicator changes it's plot as price and swings change.
This plot was based on 2 dips Nov 21st 04:00 and Nov 27th 12:00. The 2nd dip is centered in the rectangle. That is represented by the diagonal -100 channel line.
That -100 line is aligned to the right border of the rectangle based on our input of .686. This channel line was touched and acted as support during the Dec 4th 08:00 and Dec 5th 12:00 candle periods.
After price plummeted today, we can see diagonal support at the 0.0 (zero) level now. That level is always aligned to the bottom of the box directly beneath the 2nd dip.
EUR/USD 4-hour
Here's the last few cross points in our pullback methodology using the ADX Cross and the HAMA_T3. We removed those indicators for a cleaner view, and just used arrows pointing to the cross candles.
Pullback dates/times (GMT) ADX arrow at HAMA. Entry would be effected at the open of the next candle period.
Oct 3rd 04:00 BUY at open of 08:00 candle period
Oct 15th 16:00 BUY 20:00
Oct 25th 08:00 SELL 12:00
Nov 1st 20:00 SELL Nov 2nd 00:00
Nov 21st 04:00 BUY 08:00
Dec 6th 08:00 SELL 12:00
We'll review trade management and R/R later.
Webinar on stop-loss hunting........by interbank dealers
at fxstreet.com NOW (03:00 GMT)
It might be recorded for viewing at later date.
The attached 4-hour is the final view prior to the week's close. We have the Fib Channel Triangle (FCT), MurreyMath1.0, HAMA_T3, and white horizontal fib plot from A-B.
The set-up involved the determination of the diagonal trendline (yellow) using the aforementioned peaks. There were a few highs, but May 1st to either Sept 19th or Oct 19th was the idea.
Understanding that our trigger zone includes retrace level 78.6 - 88.6 (some might take 68.6), we have an intersection with the yellow trendline neat the 88.6 of 1.3084.
Stop-loss for swing trade just above high 1.3138 (100% fib).
Price met resistance at the 7/8th MML 1.3123 and made it's decline, pushing through the HAMA_T3 zone after a pause.
The exit levels are also in dotted aqua blue, making this chart a little difficult to read. The first exit level -68.6 (1.2976 ) was touched during Dec 7th 12:00 candle period as previously noted.
Move dropped further ahead of NFP and whipsawed upon that data release. Candlewick at the 3/8th MML, and near previous Nov 28th support.
Such a high impact event with NFP will widen the brokers' spread and potential take out tight stops. Most move to the sidelines, unless they were specifically trained.
Acknowledging our new friend down under, we review attached 4H AUD/USD with Fib Channel Triangle (FCT) plot:
A = Nov 27th 00:00 high 1.0489
B = Dec 3rd 00:00 low 1.0392
C = Dec 6th 12:00 high 1.0514
Point C is at the 127.2 fib extension of A-B. This is another trigger zone for the FCT.
Price declined and touched the -50 (mid-channel) on Dec 7th 08:00 during the 08:00 period, and ahead of Non-Farm Payrolls (NFP).
That pivot low was also at the Gann_SQ9 45-degree (not shown).
Remember that trading extensions (as trigger) is counter to the slope, and time erodes Reward/Risk.
This example was R/R 2:1 if S/L placed just above the 150% extension level, and 3:1 if using the 138.2% fib for the S/L.
Another way to plot the FCT is to position the A-C plot points to a peak and a dip or a dip to a peak.
Point B would be in between A-C as usual. For price movement upward, Point B would be on top. Vice-verse for declining price activity. However, the S&R would still work if Point B was in opposite side of price movement.
In this example on 4H EUR/AUD:
A = Nov 15th 16:00 high 1.2398
B = Nov 22nd 08:00 low 1.2370
C = Nov 28th 12:00 1.2334
We can see the massive decline come back onto the trendline Plot Line B, and bounce. The subsequent NFP pushed price further down into the space between Plot Line B and Plot Line A-C.
Some pairs opened the week with a gap. In this case, a gap down. The gaps are usually closed, as in this case. Price continued upward and currently meeting resistance at Plot Line B.
The attached EUR/USD is a continuation of our last chart, in a 1-hour view. We can see the blue Bearish FCT from the top near the aforementioned trendline, where the swing short trade occurred.
We mentioned the consolidation at the horizontal 31.4% fib (white). Price proceeded to make a steep dive down and settled almost precisely with a 100% retracement.
The yellow Bullish FCT plot is almost identical to the levels of the horizontal fibs, since it was a 100% retracement. For the horizontal fibs, we included the same ratios of 31.4, 50, and 68.6.
Therefore, form the bottom, price moved up to first make a gain of 31.4% of the distance from top to bottom. This is labeled as -68.6 on the Bullish FCT, which is the same as the horizontal fib of 68.6.
In other words, since it was a 100% retracement, we don't need to plot the Bullish FCT if we had the horizontal fib plot in place. Those that prefer to be most precise can always make the new FCT plot.
Often, traders will tighten their trailing stop by dropping down in time-frame. In this 1-hour view, we can see the HAMA_T3 candles act as support while the uptrend plays out. At some point, it will pullback again, and decisions need to be made prior to, or after the pullback.
Currently price at the -50 (mid-channel) of Bullish FCT and 50% of horizontal fib plot. This ascent was at least partially fueled by the 10:00 German Zew data.
We'll post our money management ideas/methodologies using the HAMA_T later. Some will choose to use the ATR, Parabolic, or some other form of MA, to trail the S/L.
***
Conversely, trader can enter on the trend change as reflected by the 1-hout FCT. The entry can be at the breach of a candle above the HAMA_T3 zone (some wait for candle to close).
Others will use the breakout of a trendline from a previous peak, such as the Dec 7th 16:00 period high of 1.2950.
Entry at the pullback on the 1-hour HAMA_T3 is yet another method.
EUR/USD advanced another level to the 68.6% retrace level of the last high/low. It is represented as 31.4 on our last 1-hour chart, and the TP of 1.3036 was triggered during the 12:00 period.
This attached chart has the SQ9(Price) overlaid, with StartPrice of 1.2879 (Dec 7th Low). Its 135-degree is basically in the same area as the 68.6% retracement level.
We can see the HAMA_T3 act as support throughout this up move.
Since FOMC is just ahead, good time for conservative traders to move to the sideline.
This was posted a few days ago. We now post the chart and trailing S/L method.
EUR/USD 4-hour
Here's the last few cross points in our pullback methodology using the ADX Cross and the HAMA_T3. We removed those indicators for a cleaner view, and just used arrows pointing to the cross candles.
Pullback dates/times (GMT) ADX arrow at HAMA. Entry would be effected at the open of the next candle period.
Oct 3rd 04:00 BUY at open of 08:00 candle period
Oct 15th 16:00 BUY 20:00
Oct 25th 08:00 SELL 12:00
Nov 1st 20:00 SELL Nov 2nd 00:00
Nov 21st 04:00 BUY 08:00
Dec 6th 08:00 SELL 12:00
**************
We had already reviewed sizing the number of lots to trade, but will post it again soon. Money Management includes trailing the S/L.
Follow up on EUR/USD trading pullbacks using ADX Cross and HAMA_T3.
We need to correct one of the times. The Nov 21st 04:00 should read 08:00 as the cross candle period and the BUY at the open of the 12:00 candle period.
As universally understood, and perhaps less practiced, money management can be key. It can alter a good technique and make it a loser. It can make a mediocre system into a consistent winner.
These entries saw less than 200 pips in trend since the HAMA_T3 candles changed color.
The trigger is the ADX Cross (not shown), which will sacrifice pips on the front end. However, since the technique trades the pullbacks, this aspect is basically counter-balanced.
The attached chart labels the approximate number of pips the trades gained, prior to reversing through the HAMA_T3.
The trader first needs to read the range (low-high) of the cross HAMA_T3 candle period. The 4 price values are displayed in the data window. The range of the first signal on Oct 3rd was 34 pips. We then add cushion, let’s say the total S/L would be 40 pips
In each of these examples, price pulled away from the HAMA_T3 zone. The trader needs to set:
- The number of pips gained when S/L is tightened.
- Where to tighten S/L. Example: move to opposite end of HAMA_T3 candle, trailing by 5 candle periods.
- Subsequent tightening event(s) of S/L.
Be careful not to curve fit with back test. It usually is unreliable. High-impact economic data can widen the spread and take out tighter S/L.
If the regular candle, at time of ADX cross, is too large, the signal can be ignored.
Each pair will have different volatility in number of pips. Therefore each pair shall be assigned a number of pips for maximum trend prior to entry, max cross candle size, and number of pips gained prior to tightening S/L.
The Take-Profit (TP) levels can be derived from S&R tools such as SQ9 (various versions), MurreyMath1.0, fib retracement, etc.
Here's a 30-min chart with session colors and HAMA_T3.