A-B-C-D Trade - page 40
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Resistance at 1.2776.Short between now 1.2771 and 1.2776.
If the bounce trade did not exit at the 23.6% retrace fib price of 1.2762, position would have stopped-out.
EUR/USD forged above resistance of 1.2776 and at 1.2789.
When we look at the Daily EUR/USD chart, we can see the 50-EMA and the 61.8 fib provide some resistance at the moment.
The last example of the bounce trade was good in that it only retraced to the 23.6% fib. This often happens when a move is strong, as it was during the European session Sept. 1st.
****
Data right from 08:00 to 09:00, through the noon hour, provided upward pressure on EUR/USD sent it to 1.2855. The 14:00 U.S. data allowed market to give back some gains, sending pair into consolidation around 1.2800.
We use the Asian Low as Point A = 00:45 low 1.2662
Asian High as Point B = 06:45 high 1.2727
Last pivot on 15-min chart as Point C = 07:30 low 1.2700. This is also near upper edge of Ichimoku cloud.
Asian High = 1.2727
FE 100 = 1.2765
FE 127 = 1.2783
FE 161.8 = 1.2806
FE 236.2 = 1.2854 (hit - exactly)
This move was basically a runaway freight train to 1.2800. If a trader was able to fill at a decent price to have risk/reward remain at 1:1, trading to the FE 100 was a conservative profit.
When Point C (retrace of A-B) is 38.2% or less, it is a potentially good opportunity. This means that there is about 60% of the amount of pips from A-B for gross profit, when trading to the FE 100.
Although using a spreadsheet calc is best, we can easily estimate the 60%. Distance from A to B = 65 pips. Multiplied by 60% = 39 pips.
We also will know right away, that the best stop-loss is just behind Point C.
Risk = 38.2% + spread.
Reward = 60% minus pips lost on entry and spread.
I'm sure most are aware that The Mother Of All News, the U.S. Change in Non-Farm Payrolls, is this Friday Sept. 3rd 12:30 GMT.
There are also other high-impact data releases for Thurs, Sept 2nd. Check your economic calendar.
Very strong Swiss GDP number, much higher than expected, sent CHF pairs to downside (pro-Swiss Franc).
Made 22 pips with EUR/CHF. USD/CHF also big mover. Both pairs working on their 2nd ABC/wave.
Never conduct bounce trade in face of this kind of power/thrust.
Here is chart of this pair, with action after 05:45 GMT release of better than expected GDP numbers.
We had plotted 3 ABCs, one before the one listed below, and one after.
Here are parameters of ABC when data released:
A = 05:35 high 1.3017
B = 05:45 low 1.2976
C = 05:55 high 1.2996
FE 61.8 = 1.2970
FE 100 = 1.2955 (hit)
FE 127 = 1.2944
FE 161.8 = 1.2929
2nd arrow points to pull-back at 1.2996, which was 50% of A-B. Experienced traders can enter here, especially when fibo fan's 61.8% fib also captured.
Fibo fan:
High = 01:15 1.3040
Low = 02:15 1.3014
Quite a bit of data to dodge, unless one trades the news.
At 05:45, we had a surprisingly strong Swiss GDP.
07:15 = Swiss Retail Sales
09:00 = Euro Zone GDP
11:45 = European Central Bank Interest Rate Decision
12:30 U.S. Jobless Claims
14:00 = U.S. Factory Orders and U.S. Pending Home Sales
Arrows on the attached 5-min chart denote data releases.
*****
1) The breakout of the Asian High 1.2821 was a breakout-in-progress. The ABC plot resulted in FE 161.8 being hit at 1.2832. Point B was 1.2808 (08:15) and thus too far from Asian High.
With data scheduled for release at 09:00, we saw traders sell EUR/USD at 08:50, after it had reached the FE 161.8.
Minor data at 08:30 further clouded this set-up. Advanced only 13 pips before the pullback and subsequent inch up to 1.2838.
2) The 11:45, 12:30, and 14:00 were close together and made it difficult to squeeze in there.
Euro data sent pair down, after initial tussle between buyers and seller.
The U.S. data was simply huge whipsaw action.
3) We've included a 2nd ABC on the chart, which illustrates post-data (14:00) hit of the FE 127. Not much, 14 gross pips.
4) Fibo fan plot utilized very obvious plot:
Low = 07:45 1.2776
High = 12:50 1.2848
The diagonal fibo fan lines provided support and resistance levels after that high.
5) Retrace fibs from spike:
Low = 12:35 1.2794
High = 12:50 1.2848
We can see that after spike had reached its peak of 1.2848;
- The previous significant high was the last European session on Sept. 1st 1.2855. Automatic sell orders were waiting there. Markets like round numbers, therefore 1.2850 was general neighborhood.
- Daily chart had retrace fibs from:
High = Aug 18th 1.2922
Low = Aug 24th 1.2587
78.6% fib = 1.2850
6) We had retrace fibs plotted from:
Low = Sept 1st 1.2700
High = Sept 1st 1.2855
- We did not include this on the attached chart for better viewing of other fibs, etc.
- 12:35 and 14:10 lows were supported by this fib pull's 38.2%.
- The fibo fan's 78.6% caught the 14:10 low precisely.
- This explains why there was not a 100% retrace to the 12:35 low, per paragraph #5 above.
*****
All in all, from late Asian through European, trading was for intermediate/advanced traders. They know how to trade the news and/or side-step. At least this can be determined in advance with an economic calendar.
Otherwise, new traders can monitor and practice fib pulls and the market's adherence.
Here's a chart of the 15-min EUR/CHF at 05:45, ahead of the 07:15 Swiss CPI data release.
We have fibo fans pointing up and down. Their 78.6 act as trend lines and form a pennant.
Edit: had to come back to this now:
Also have ABC in event break of Point B.
A = 02:30 high 1.2997
B = 04:00 1.2974
C = 05:15 1.2985
FE 100 = 1.2970
FE 127 = 1.2961
FE 161.8 = 1.2947
In entered prior to 07:15 CPI release, need to exit before 07:15 to be safe.
Fibo Fan pointing down:
High = 01:15 1.3040
Low = 07:45 1.2942
Fibo Fan pointing up:
Low = 07:45 1.2942
High = 15:00 1.2995
Retrace fibs:
High = 01:15 1.3040
Low = 07:45 1.2942
******
And of course, remember U.S. Change in Non-Farm Payrolls at 12:30 GMT. This is probably the most traded data release. Very volatile, reserved for experienced traders.
Here's a cleaner 5-min chart of EUR/USD, with ABC plots for both the CHF CPI and the U.S. Non-Farm Payrolls (NFP).
1) CHF CPI - 07:15 GMT release:
A = 07:25 low 1.2808
B = 07:50 high 1.2832
C = 08:30 low 1.2817
Asian High = 1.2835
FE 100 = 1.2841
FE 127 = 1.2847 (hit)
FE 161.8 = 1.2856 ( reached 1.2854) - target
Entry BUY = 09:10 open of 5-min candle at 1.2838 + spread (we use 3 pips to be conservative for tutorial, which can also cover any slippage) = 1.2841.
- Reward (projected) = 15 pips
Stop-Loss Options:
- Just below Asian High 1.2835 + cushion = 1.2834. Risk = 7 pips
- Just below Point B 1.2832 + cushion = 1.2831. Risk = 10 pips
- Just below 5-min pivot 1.2825 + cushion = 1.2824. Risk = 17 pips
- Just below Point C 1.2817 + cushion = 1.2816. Risk = 25 pips.
Comments:
Market sold off as pair was near round number 1.2850, just ahead of the FE 161.8 and ahead of U.S. Non-Farm Payrolls.
*********
2) U.S. Change In Non-Farm Payrolls - 12:30 GMT release:
A =12:55 low 1.2820
B = 13:05 high 1.2849
C = 13:15 low 1.2833
FE 100 = 1.2863
FE 127 = 1.2871
FE 161.8 = 1.2881 (hit)
Break of Point B occurred with the 13:25 candle, and it closed at 1.2848, just below Point B.
Next candle moved fast and closed at 1.2857. If we waited for this as confirmation, as per our rule, entry effected with open price of next candle at 13:35 price of 1.2857. Add spread = 1.2860 for Entry BUY.
That leaves projected reward of 21 pips.
Stop-Loss Options:
- Just below Point B 1.2849 + cushion = 1.2847. Risk = 17 pips
- Just below 5-min pivot 1.2845 + cushion = 1.2844. Risk = 20 pips
- Just below Point C 1.2833 + cushion = 1.2832. Risk = 32 pips
Comments:
Whipsaw action upon release saw pair go in both directions as market seemed undecided. Once things calmed down, entry opportunity based on ABCD technique made this actually tradable for experienced traders.
At 14:00 had U.S. ISM, which turned out to be negative for USD. If trader stayed in, target met. Otherwise, exit was at FE 127 1.2871 just prior to announcement.
The USD lost ground on this pair, despite Non-Farm Payrolls number coming in better than forecast.
3) 1-Hour Chart
A = 07:00 low 1.2808
B = 10:00 high 1.2854
C = 11:00 low 1.2814
FE 100 = 1.2860
FE 127 = 1.2872
FE 161.8 = 1.2888 (hit)
Comments:
Although the ABC was not conforming (Point C not the usual fib ratio retrace of A-B), market players still bailed at the FE 161.8, during the European session.
Trust everyone in the U.S. had a nice 3-day weekend.
1) Before we get started on EUR/USD, we point out that we are monitoring EUR/JPY with the channel fib tool for tutorial. Attached is the 15-min chart.
Fib Channel:
1) 02:30 low 107.68 to 12:45 low 106.53
2) 05:45 high 107.74
If it breaks point #2 diagonal fib, we have the next fibs for resistance, 61.8, 100, 127, 161.8, etc.
We also plot retrace fibs:
High = 08:00 107.37
Low = 15:15 106.35
23.6% = 106.59
38.2 = 106.74
50 = 106.86
61.8 = 106.98
Now we have horizontal and diagonal fibs to guide us for exit in event of a breakout to upside.
Edit: Often it will pivot to form an ABC as further assistance.
Trust everyone in the U.S. had a nice 3-day weekend. 1) Before we get started on EUR/USD, we point out that we are monitoring EUR/JPY with the channel fib tool for tutorial. Attached is the 15-min chart.Fib Channel:1) 02:30 low 107.68 to 12:45 low 106.532) 05:45 high 107.74If it breaks point #2 diagonal fib, we have the next fibs for resistance, 61.8, 100, 127, 161.8, etc.We also plot retrace fibs:High = 08:00 107.37Low = 15:15 106.3523.6% = 106.5938.2 = 106.7450 = 106.8661.8 = 106.98Now we have horizontal and diagonal fibs to guide us for exit in event of a breakout to upside.
Edit: Original attempt to attach chart was no successful. Here it is.
Since then, pair has moved out of channel after European session closed. However, lack of thrust/volume may keep it from breakout to upside.
Our ABC has 106.59 as Point B, and one attempt to close above that (5-min candle) failed. 106.59 is also the 23.6% retrace fib of European high/low.
We'll also look for pivot that may forms another ABC to upside, or the possible break of this one.