A-B-C-D Trade - page 53
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
Surprise U.S. jobs data released at 12:15 GMT. EUR/USD bounced off fib at 1.3878 and now retesting. If resistance broken, should extend to 138.2% of 1.3909. Next fib 161.8% = 1.3927. Round number respected by market of 1.3900 may provide bounce.ABC plot places FE 100 = 1.3912.Had to circle back on this. ABCd parameters for EUR/USD;A = 11:05 low 1.3798B = 12:20 high 1.3878C = 12:50 low 1.3833FE 61.8 = 1.3882FE 78.6 = 1.3895FE 100 = 1.3912FE 127 = 1.3934FE 161.8 = 1.3962Pair currently at the FE 61.8.
EURO/USD testing 1.3900.
Bear in mind it respected the regular 138.2% extension of 1.3870. This means that its regular 161.8% extension of 1.3909 is also valid resistance.
14:45 GMT bounce off session high 115.22 (first established at 10:05), and made its way to round number 115.00, which is a 38.2% retracement from low of 114.66 to high of 115.22. This is also area of 50% fib black fib mentioned on previous post.
EUR/USD exit point at regular extension 161.8 price of 1.3927.
Break point was 1.3878.
Not including spread, etc.
Oct 7th Euro session is filled with medium and high impact data, most notably BOE (11:00 GMT) and ECB (11:45 GMT) rate decisions and verbiage on possible easing.
Just after the Asia open at 00:30, positive Australian employment data neared a complete 100% retrace of up move on EUR/AUD spurred by the Oct 5th decision to hold interest rate.
Pair consolidated at its 161.8% regular extension based on fib retrace plot from Oct 5th 20:15 low 1.4228 and Oct 5th 08:15 high 1.4369. Investment in Australia is anchored by its rich commodities resources.
In contrast, AUD/USD snapped back during the very next session after Australia's Oct 5th rate decision. Today, this pair also reacted to employment news with spike pro-AUD.
Obviously, the reason for the contrast in these 2 pairs is the USD weakening versus the Euro. We'll expand our comments on US easing and the China factor in the next day or two.
Yesterday's highlighted EUR/USD trade opportunity exited at end of the Euro session as a preference against possible changing positional strategy for the new session, by new players. See last post.
A second ABC had the FE 161.8 right at top of extension, 1.3947. See if you can plot that.
CHF continues to strengthen against major pairs. It set a new low on USD/CHF. Having already tried intervention, the failed attempt to weaken the Swiss Franc is not intimidating traders going forward.
Look for price action on GBP/CHF as well as EUR/CHF based on today's Central Bank decision for each country. Both pairs in tight channel from second-half of U.S. through Asian.
Practice plotting fibs for these 2 pairs. Start with regular extensions (retracement fib tool), going up and down. When you see a pivot, plot the ABC.
For the wider retracement fibs: for EUR/CHF - use high of Oct 6th 06:30 1.3416 to low of 11:30 1.3320 on the 15-min chart.
For GBP/CHF - use high of Oct 6th 09:00 1.5375 and low of 12:30 1.5283.
These will provide S/R levels until high or low is broken. Make sure past price movement confirm these fibs, when plotting such.
Will be difficult to squeeze in a trade during the European session, while sidestepping data. However, if we spot an opportunity, we'll try to highlight it.
The U.S. Non-Farm Payroll (NFP) is Friday. Yesterday's ADP Employment figures is not connected to the NFP and not considered a precursor.
Here are the details with 3 CHF pairs after breakout of support.
Also need to point out that USD/JPY broke major support (pre-intervention low)and caused movement across the board.
USD/CHF +41 pips
Low = 16:10 .9599
High = 10:40 .9666
138.2% = .9573
161.8% = .9558 (hit 07:40)
GBP/CHF +46 pips
Low = 12:35 1.5251
High = 09:00 1.5375
138.2% = 1.5205 (hit 07:40)
161.8% = 1.5176
EUR/CHF +20 pips
Low = 02:30 1.3381
High = 06:50 1.3434
138.2% = 1.3361 (hit 07:40)
161.8% = 1.3348
All are gross pips. Note GBP/CHF has wide spread of about 8 pips.
Key pair was USD/CHF which hit its 161.8%. Monitoring that pair can assist in exit for other pairs. When it hit the 161.8, we did wait to see if it will go further. After failing to confirm (close) below that for 4 candles, we knew to exit other pairs too. This is cross-currency pair correlation.
There was negative low-impact EURO data at 06:45 and negative low-impact GBP at 07:00.
Oct 7th EUR/USD 15-Min Chart
ABCD plot:
A = 13:00 high 1.4028
B = 15:15 low 1.3909
C = 15:30 high 1.3936 (38.2% retrace of A-B)
Asian Low 1.3898 (red horizontal line)
FE 61.8 = 1.3864 (hit 16:30 candle)
Retrace Fib Plot:
Using session Euro session high (Swing A) to Euro session low Swing B):
138.2% = 1.3864 (hit)
****
We placed vertical lines below the chart, overlaid on the trend indicator “forex freedom bars”, only showing an arrow for the European Central Bank rate decision at 11:45 (which held rates)
We’ve been spending less time with details of breakout technique as that has been beaten into you in the early part of this thread
This breakout ABC cleared the numerous data releases. The above plots both arrived at 1.3864 as a fib level, providing the profit target. That was achieved for a +35 gross profit potential, depending on trader’s entry price, and excludes spread
The larger the swing from A to B, the higher the probability of extension halting at the “minor” FE 61.8. In this case, A-B was 119 pips. This is larger than our normal A-B examples, but we wanted to showcase it for that very reason. Using a small A-B also worked, just play with that plo
We incorporated the regular extension recently. We felt doing so earlier would add confusion and complexity to the early part of this thread. This extension is widely used by traders and considered standard.
It also comes in handy if a trader is unsure of the ABC plot. The more you use it, the more you will learn how the market respects it. You’ll have to try different plots for each trade scenario. A good hint is that if you are unsure of the plot, use the session high/low. This tool works for all time-frames.
We also plot it on previous sessions. Observe it on the 1-Hour chart, for example. You should see a plot that was applied more than one day ago still being respected. We included an example of that recently on a CHF trade.
We repeat session hours that we use for charting and are comfortable with. The Asian open is the Tokyo open for their stock market.
Asian session = 00:00 – 07:59 GM
European session = 08:00 -15:59 (U.S. session overlaps this)
US session = 16:00 – 22:59 (remainder of U.S.)
The indicator TIME_modified2 colors each session and makes it easier to view.
More on other pairs later, including CHF crosses highlighted due to interest rate decisions by BOE and ECB. Other GBP and EUR crosses also moved post-decision, but we thought it would be interesting to change it up to a flight-to-safety currency.
Friday is the U.S. Non-Farm Payroll (NFP), the largest regularly schedule market mover data.
Results for Oct 7th European Session.
USD/CHF +26 pips
High = Oct 6th 10:30 .9666
Low = Oct 6th 16:10 .9599
138.2% = .9692 (hit Oct 7th 16:30)
-or use previous Asian High to Low plot (Oct 7th).
GBP/CHF + 70 pips
High = Oct 7th 06:50 1.5297
Low = Oct 7th 07:40 1.5183
138.2% = 1.5340
161.8% = 1.5367 (hit 13:00)
EUR/CHF + 47 pips
High = Oct 7th 06:50 1.3434
Low = Oct 7th 07:40 1.3359
138.2% = 1.3463
161.8% = 1.3481 (hit Oct 7th 13:00)
Gross profit, before spread, cushion, and slippage. Measured from High to extension fib.
GBP rate decision released 11:00 GMT
EUR rate decision released 11:45 GMT
Practice plotting ABCs on these to see if you can arrive at/near peak of each extension.
US NFP data released at 12:30 GMT was much worst than forecast, -95K versus -5K. The previous was revised to -57K.
US Unemployment Rate came in unchanged at 9.6% versus forecast of 9.7%.
As a foot note, unemployment is projected by an outside entity to be 9% through 2011.
USD/JPY set new 15-year low of 81.73.
USD/CHF near completion of "M" pattern.
EUR/USD recovery after initial dip.
EUR/JPY choppy back up, tugged in both directions.
Markets essentially priced in QE2. All that's left is for it to actually happen. More later on comments by former Fed Chief Greenspan and others, on U.S. economy and use of QE.