A-B-C-D Trade - page 56
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Attached 5-min EUR/USD chart plots:
Fibo Fan;
High = 00:35 1.4003
Low = 07:15 1.3885
ABC:
High = 09:25 1.3958
Low = 10:25 1.3894
138.2% = 1.3870
161.8% = 1.3854
We placed an arrow at the 61.8% retrace fib 1.3934 of High-Low.
We spoke about the possibility of entering at the 61.8, but with other confirmation. We had the 23.6% fib of 1.3937 from the previous pull for last trade.
The Fibo Fan's 61.8 diagonal fib also caught this pivot.
The advantage of entering at the 61.8% is that we have multiple exit points (fibs) prior to the LOW.
These fibs are:
38.2% = 1.3919
23.6% = 1.3909
0 (Low) = 1.3894
Right now, pair having trouble dropping below support of 1.3884, which is the 138.2 from last trade and plot.
The Fibo Fan's 38.2 is also support.
O.K., this extension exceeded our expectations and hit its 161.8% regular extension.
Notice that on the way down, it respected the previous (blue) 138.2 and 161.8 from the last trade.
A natural bounce also occurs at these 2 extension levels. Yes, traders lie in wait just to trade these fib extension levels for quick bounce profits.
This one was nice as it squeezed in between data periods.
Unbeknownest to us at the time, the driver for USD strength, ahead of the CAD interest rate decision data, was the surprise rate hike by China.
Canada held rates, as anticipated, but announced a forecast of slower economic growth. This sent USD to even stronger extensions.
EUR/USD dove sharply south after initially European session 161.8 regular extension, per previous post.
Readjusting the LOW to 1.3854 produce a regular extension of 1.3791, which was reached in quick fashion.
From here, we use new fib retracement plot of:
High = 12:00 1.3878
Low = 15:00 1.3767
138.2% = 1.3722 (hit and testing now after 25-pip bounce)
161.8% = 1.3695
We'll be back with chart of these plots and long-term chart analysis.
There is a slew of FED speeches through 23:00 GMT. U.S. stocks got hammered today due to USD spike.
We'll feature EUR/GBP this time as the U.K. had negative 08:30 data and further details/extent of budget cutbacks, which were anticipated.
15-Min chart
Fib retracement tool:
Low = 23:45 .8741
High = 04:15 .8766
161.8% = .8781
261.8% = .8806 (hit 08:30)
423.6% = .8847
1st ABC:
A = 23:45 low .8741
B = 04:15 high .8766
C = 05:45 low .8753
FE 100 = .8778
FE 127 = .8785
FE 161.8 = .8794
FE 236.2 = .8812
2nd ABC:
A = 05:45 low .8753
B = 08:30 high .8806
C = 09:00 low .8780
FE 61.8 = .8813
FE 100 = .8833
FE 127 = .8847
EUR/USD testing resistance level after several attempts failed to confirm. Area of 1.3834/44 has several fibs.
1-Hour regular fib extension plot has
138.2 = 1.3878 (same as Asian ABC's FE 161.8 )
161.8 = 1.3909
EUR/USD – Oct 20th -15-Min Chart
1st Fib Retracement, pull from:
Low = 08:15 1.3801 to
High = 12:00 1.3872
138.2 = 1.3899
161.8 = 1.3916
261.8 = 1.3987 (hit 15:30)
ABC from the breakout of the Asian High:
A = 06:00 low 1.3753
B = 07:45 high 1.3820
C = 08:15 low 1.3801
Asian High = 1.3820
FE 100 = 1.3867
FE 127 = 1.3884
FE 161.8 = 1.3809
FE 236.2 = 1.3956 (hit)
2nd ABC (red fibs):
A = 08:15 low 1.3801 (same as Swing C from 1st ABC)
B = 12:00 high 1.3872
C = 13:30 low 1.3823
FE 100 = 1.3892
FE 127 = 1.3910
FE 161.8 = 1.3837
FE 236.2 = 1.3985 (hit 15:15)
2nd Fib Retracement Plot (blue fibs), pull from:
Low = 13:30 1.3847 to
High = 14:00 1.3922
138.2 = 1.3960
161.8 = 1.3983 (hit 15:00)
***
Once we cleared immediate reaction to the 08:30 GBP data, there wasn’t a high-impact data release for the balance of the European session, and until the U.S. Beige Book at 18:00.
Despite the lack of data, we still saw volume and volatility. This is partially due to the previous day’s surprise rate hike rom China. EUR/USD made up its losses almost entirely as of the end of the European session. You’ll see the almost identical candles in length on the daily chart.
Traders resumed their anticipation of U.S QE2 and continue to price it in, going long on this pair. Meanwhile, the U.S. attempts to keep verbal intervention up by “talking up” QE2. They know that they cannot take actual action until after the FED’s meeting and the November elections.
We’re a little behind on posting the promised long-term chart plots/analysis. We also owe you our comments on QE2 and the China “situation”. Cleaning up the latter two items as well as incorporating newer news such as the surprise Chinese rate hike.
Update: Around 01:00 GMT Oct 21st: U.S. Treasury Secretary Timothy Geithner's comment on strategic planning for global economics during this weekend's G-20 meeting was met with USD strength in the Forex market.
Attached chart is a 15-min for the EUR/USD on Oct 21st Asian end session, up to the London open.
Data included CHF data at 06:15.
We highlight the ABC plot:
A = 01:40 low 1.3871
B = 02:05 high 1.3946
C = 05:10 low 1.3900 (adjusted*) this is 61.8% retrace of A-B
FE 100 = 1.3975
Retracement fibs:
Low = 01:40 1.3871
High = 02:10 1.3946
138.2 = 1.3975 (hit 06:30)
* The Swing C candle on our plotting chart was slightly below the 1.3900 fib.
We also had the Multi-Time Frame HAS and the FX Sniper Ergodic CCI crossover indicator.
Once again, we are illustrating entry at the pull-back. Pair has been trending nicely for months, with nice movements intra-day.
Obviously the 138.2 and the FE 100 are the same price and the profit target. This was a 75-pip gross move from the pull-back to extension.
EUR/USD just hit the regular 161.8 extension of Asian low to high plot.
Low = 1.3871
high = 1.3977
Data at 08:30, 09:00, 12:30, 14:00.
One approach to a set-up for trade is:
Wait for data cluster to end. In this day’s case, last major data was at 14:00
Pair did not quite make it up to the session high of 1.4047, only reaching 1.4037 at 14:15.
A Doji candle formed on the 15-min chart, and a retrace ensued.
1) We plot a retracement set of fibs by using fib retracement tool and pulling from:
Low = 01:30 1.3871
High = 08:30 1.4050
2) We plot retracement pulling from;
High = 14:15 1.4037
Low = 15:45 1.3948
Notice the pullback at:
16:15 high 1.3982 = 38.2%
The above 3 is an ABC of course, just using a different tool. Remember the rule: if pullback is 38.2%, highest probability is a 161.8 extension. The 161.8 = FE 100, and the 138.2 = FE 78.6.
138.2 = 1.3914
161.8 = 1.3893
However, it doesn’t mean one can’t take profit at the 138.
We had a change in session (see chart which is color coded) as European ended. We didn’t detect/expect enough volume/volatility by 20:00 GMT to provide enough steam to make it to the 161.8. A revisit to the 138.2 at 20:15 should be latest exit for this trade.
Be aware of the time you are in and its various aspects that may impact your position. Simply adding a volume indicator will make it obvious, but experience will tell you this in advance. When the stock market closes at 18:00GMT in New York, volume is reduced significantly and it usually channels until the Asian picks up. A clock indicator is Clock_v1_3, which should be found in the indicator section of this site.
Notice extension also probed just below the 138.2, where the 78.6% retracement fib is per pull #1.
With an ABC plot, a trade from the break of Point B reached the minor FE 78.6 (same as the regular extension of 138.2). If you haven’t done so, add this minor fib to your ABC extension levels
This is another example of how the ABC and Retracement Tool can have the same fibs. We know that the 138.2 and 161.8 are recognized in the trading community. Seeing those 2 fibs, together with our ABC FE fibs will make things more clear.
Note: If we move Swing A, on the ABC plot, to the session high, it produces a FE 78.6 of 1.3902, precisely where extension halted. The pullback, if that plot was used, was a non-conforming ratio of A-B and not a fib of 23.6 or 38.2.
Ahead of this weekend's G-20 meeting which will focus on the so-called "currency wars", plenty of movement in market.
During Asian, EUR/USD had nice extension to the upside. Pull-back was 38.2% and regular extension hit its 161.8 (same as FE 100).
After a bounce off the session top, formed an ABC to downside which hit its FE 161.8 price of 1.3882 just before 08:00 data.
Handfull of data sent pair spiking up to 1.3932 before an abrupt turnaround back to the downside.
Using the fib retracement tool, and plotting from Asian Low to High, we saw pair hit 138.2 fib of 1.3857 precisely.
Next data 11:00 CAD data including CPI.
Cheers