A-B-C-D Trade - page 90
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EUR/USD broke out above 1.3314. Measured extension reached thus far are FE 100 = 1.3347. Next resistance is tighter 261.8 price 1.3358.
FE 127 = 1.3371 (same as regular 161.8)
FE 161.8 = 1.3403
As per our Dec 27th post, the EUR/USD weekly chart contains important support/resistance levels that we need to keep in mind and handy.
Low = June 6th 1.1876
High = Oct 31st 1.4281
Retrace bounced off the 50% fib (white) to the 38.2% fib today.
The 2 fibo fans (pink) also act as resistance.
Happy New Year to all that celebrate at this time.
For better precision, as market sessions advance, plot new ABC on 15-min chart.
A = 03:30 low 1.3288
B = 06:45 high 1.3387
C = 08:30 low 1.3326
(D) FE 100 = 1.3425
Since pullback for Swing C was exactly to the 61.8% price of 1.3326, the regular 138.2% extension produced by the fib retracement tool was the same price as the FE 100.
We mentioned that pullbacks to 61.8, the highest probability is extension to its 138.2.
Pullback to 38.2 has highest probability to extend to its 161.8.
This is due to the A-B = C-D rule, which means the 2 legs are equal in distance (number of pips).
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After leg A-B was established, we can plot the fib retracement tool to ascertain the 138.2 and 161.8 extension levels.
Obeying the A-B = C-D rule, we can anticipate the location of the pullback down to 2 possibilities.
After the pullback bounced off of the 38.2 and continue to retrace, we then knew that the 61.8 was a very likely turning point, to produce Swing C.
For additional confirmation, we can use an OB/OS indicator. These would show that it was well below the 50% level and approaching oversold when price reached the 61.8 fib.
This analysis and anticipation allows the trader to place a very tight stop-loss on the trade. It also allows for full or partial exit prior to Swing B.
Alternatively, we can wait for the pivot at the 61.8, by using the fractal indicator. Almost all indicators won't catch the turn early, since they are lagging.
As we can see, there was a bounce off of the Swing B en route up. A re-plot of an ABC would produce FE 100 = 1.3422.
If a trader took this set-up from Swing C all the way up to the 138.2 extension, gross profit = 99 pips.
Some traders prefer lurking at the 61.8 since it is the last significant fib.
Happy New Year and may the upcoming year be fruitful.
EUR/USD opened week at 1.3344, which is the 23.6% retrace fib from low of Dec 29th to high of Dec 31st.
The Sunday Reversal Candle (SRC) is from 19:00 through 23:59 GMT. If the body of this time-abbreviated candle is small, it can be a reversal signal.
At the moment, during the last 30 minutes of the SRC, EUR/USD is being dragged up by Yen strength, and stands at 1.3355.
Using an 15-min chart ABC plot from: Dec 31st 16:00/Jan 2nd 20:30/Jan 2nd 22:15.
Can trade toward or to Swing B, with partial reserved for possible push below that to FE levels.
EUR/USD now 1.3340, thus + 18 pips
EUR/USD just bounced off previous 15-min doji low price of 1.3334 (23:15) acting as at least temporary support. Some traders will opt to take partial profit here to be conservative.
Entry was at 00:00 1.3358, so this is now + 24 pips
1.3314 is the regular 138.2 extension from C-D leg plot. 1.3317 is the FE 61.8 based on lower Swing A of 17:10 GMT price 1.3399.
Absorbing what price movement is telling us, we stay with the aforementioned Swing A. We currently see EUR/USD respecting support at FE 78.6 price if 1.3304. Next FE 100 = 1.3289.
Regular 161.8 extension off the C-D leg = 1.3306.
EUR/USD bounced off FE 100 price of 1.3289, probing to 1.3276.
This is move from 4-Hour GannBox horizontal 72 line (50%) to 1/3rd horizontal line (yellow). It is also near Dec 28th high of 1.3274.
From daily plot Dec 14th high to Dec 23rd low, 1.3276 is 50% fib.
1-Hour chart saw 02:00 doji candle. 01:00 and 02:00 candles formed a tweezer bottom, a reversal formation.