A-B-C-D Trade - page 65
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I believe the author was a person by the name of Parsons. He wrote an article that I picked up that had a different strategy for the Doji Candlestick.
Instead of considering a Doji as always a reversal signal, this approach uses the Doji's high or low as the trigger for entry and direction.
1) If price ventures above the high of the Doji, enter a BUY.
2) If price ventures below the low of the Doji, enter a SELL.
3) Stop-loss set just above or below Doji's high or low.
To get a good look at examples of Dojis, use the indicator Doji_Reader_2 which we've attached recently. The default setting is O.K. For regular Dojis, it allows for a 1-pip body maximum. You can set that to zero to get only colorless Dojis.
We are looking at the 1-Hour chart Dojis.
Another option to filter out some trade set-ups that may not be appealing is to not trade any Dojis with long wicks that would make the stop-loss large.
There are different exit strategies of course. We favor using fibs. Monitoring the shorter interval charts is also a good idea. Move S/L as we accumulate profit, and other money management techniques should apply.
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After the 38.2% pullback, EUR/USD extended to its regular 138.2 of 1.3593.Hopefully the predictability of these retracements and extensions are getting clearer
EUR/USD hit the regular 161.8 extension during 06:00 15-min candle, price of 1.3607.
Early reaction to news that an Irish government official has speculated that they will receive a bailout, by narrowing all PIGS nation spreads against German Bonds.
This should create BUY strength in EURO, thus caution.
OK, we have a breakout to upside on EUR/USD. Using Asian low/high, we have:
138.2 = 1.3637
161.8 = 1.3654
That was a quick trade, 7 minutes, as pair hit its 161.8 extension during 09:00 candle.
After hitting 1.3656 as high, pair retraced 23.6 (same as first 138.2) thus far. If breaks high:
138.2 = 1.3686
161.8 = 1.3704
Edit: data at 09:30 & 10:00
Neglected to remind that 1.3667, as mentioned in a previous post, is a resistance level. This was area of reversal for EUR/USD after probing above previous high of 1.3656. It is also the 200% fib from previous day's low/high. The aforementioned SpudFibo indicator had this nicely plotted.
1) Bounced off 1.3567 to the 23.6% retracement fib derived out of last plot using 1.3656 as high and 08:30 1.3578 as low.
This temporary support was also the regular 138.2 extension fib from Asian low/high plot. Bounce up caped at 1.3556 area.
1A) We can plot an ABC downward from the top. The pullback for Point C was 78.6%. This produced:
FE 100 = 1.3622 (hit 14:15)
FE 161.8 = 1.3600 (hit 15:05)
1B) Using the retracement tool from top of 1.3567 to swing of 1.3630 (same as A-B) resulted in:
138.2 = 1.3616 (hit 14:35)
161.8 = 1.3607 (hit 15:00)
2) The 2nd move down was a reaction to U.S. data, the Philadelphia FED Manufacturing Survey released at `15:00. This came in about 4 times better than expected. USD gathered strong gains across the board.
The swings were:
A = 13:45 high 1.3659
B = 14:35 low 1.3617
C = 14:55 high 1.3633
FE 78.6 = 1.3601 (same as regular 138.2)
FE 100 = 1.3591 (same as regular 161.8) hit 15:20
The regular extensions were the same as the FE level since the pullback (Point C) was exactly 38.2%.
Extension halted and reversed at 1.3584 at 16:05, which is 38.2 fib from Asian session plot. This bottom is also the 127.2 fib plotted by SpudFibo indicator.
Experienced traders may elect to wait until the bounces off of the 138.2 and 161.8 extension levels. Bounces were 11 and 20 pips respectively.
3) Reversal from bottom had 2 very small pullbacks and pausing now at 1.3638. If you measure A-B swings, you can trade to extension(s).
4) Market moves, identify swings, arrive at intelligent take-profit levels based on extensions and retracements.
Commodities took major hits in the last 24-hours. It was fueled in part by China's (and other countries) tightening action in raising interest rates. Speculation is that demand will lessen for oil and metals, including gold.A good read is a book by Harry S. Dent Jr. entitled " The Great Depression Ahead" (and how to prosper in the crash). Mr. Dent is a respected economic forecaster that is not main stream. He utilizes demographic cycles.Mr. Dent had correctly predicted the "largest boom in U.S. history" in his previous book. Amongst many other interesting forecasts, he projects that commodities run in 29 or 30-year cycles. Guess what? Based on that, we are due for a commodities collapse.This is not the normal "the sky is falling book". We'll post excepts from this book from time to time. For now, we'll leave you with one: Most economists are flat line, not using cycles. This means they miss the extremes (booms and crashes).
Mr. Dent, in the referenced update video, considers the oil price collapse from $148/barrel to be part of the 29-30 year commodities cycle. Here is the link to his site with his November 2010 update video.
His main message in this video is that QE2 will create a 3rd and final bubble.
HS Dent | November 2010 Update
In the attempt to ascertain the extension during end of Asian, we review options and though process. Using 15-min chart.
1) First let's list plot that pair conformed to for arriving at its bottom during the Asian session.
High = 00:15 1.3660
Low = 01:45 1.3621
Regular 138.2 = 1.3606 (hit 1.3608 at 04:00)
2) European session
Low = 08:15 1.3575
High = 12:15 1.3667
138.2 = 1.3702
3) Low = 16:00 1.3584
High = 00:15 1.3660
138.2 = 1.3689
4) High = 00:15 1.3660
Low = 04:00 1.3608
138.2 = 1.3680
161.8 = 1.3692 (hit 07:15)
5) U.S. session
Low = 16:00 1.3584
High = 17:00 1.3647
138.2 = 1.3673
161.8 = 1.3688 (hit 07:15)
6) High = 12:15 1/3667
Low = 16:00 1.3584
138.2 = 1.3698 (hit 07:45)
As we can see, the various plots produced tops that are all in the same general area of the actual top. We favored plot #4.
EUR/USD attempting to break out to upside after setting off some stop losses at top near 1.3700.
Regular extension:
138.2 = 1.3732
161.8 = 1.3754
10:15 starts slew of Central Bankers speaking.
*****
I plucked this off of the indicator section of this site. Go to the proprietor's web site for details.
Name of indicator: TRADERSTOOLS-FX.COM AUTO FIBO RETRACEMENT V-2
We can zoom in/out of chart and indicator will adjust its fibo plot.
It does not plot extensions.
Can input color for area that has not been visited by retrace.