A-B-C-D Trade - page 96
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Here's a 1-Hour chart on EUR/USD which utilizes the indicator RSI-TC to visualize the divergence. As previously mentioned, a trader can use a number of difference indicators to achieve this purpose.
We've marked the 3 set-ups where divergence can be detected, allowing us to predict a change of direction. Added was a trigger for entry, the Ehler's Fisher Transform. Like recent post, we used both the histogram and cross-over version of this non-repaint indicator. The 2nd opposite colored histogram bar is the same entry time as the cross-over.
What we need to look for is 2 high candles (peaks) or 2 low candles (valleys). With 2 high candles, the 2nd peak is losing strength, as witnessed by the lower hump of the RSI-TC. The opposite is true for 2 low candles.
Note per previous post, we changed the color of the thin histogram bars on the Ehler's Fisher Transform since this is when the cross-over version is the trigger. We've attached a template of chart that includes the indicators for your convenience.
The RSI overbought/oversold (OB/OS) levels are 85/15. We can see the 1st hump in all 3 trade set-ups at or near these levels, prior to pulling back with the 2nd hump.
The 3 trade set-ups on the 1-hour chart are:
1) Dec 21st 06:00 & 15:00 high candles - SELL signal candle 18:00 - max gain +111 pips
2) Jan 3rd 01:00 & 07:00 low candles - BUY signal candle 10:00 - max +147 pips
3) Jan 4th 10:00 & 13:00 high candles - SELL signal candle 15:00 - max gain +249 pips
Stop-loss placed above or below highest or lowest candle (peak/valley). Scale number of lots based on number of pips between entry and S/L.
We can also add the fractal indicator for another confirmation of the pivot.
You need to have an exit strategy. This would depend on whether you are an intra-day or swing trader. Trading off the 1-hour can result in a trade lasting a few days, if you allow it. We'll address trailing stops and exit EAs at another time.
EUR/USD,as well as other pairs, opened with a gap, strong USD.
Attached is a 1-Hour chart with last week's fib extension plot, and LSMA channel. It had the week's close right at the 138.2 fib. Now pair is at the 161.8.
We also have the divergence tools on this chart. The RSI-TC is at 15 right now just after 20:00 GMT. Therefore, we need to wait for a 2nd hump that is higher. This term is called higher lows.
If we have the 2 humps which is opposite the candle direction, that is divergence. We would then use a trigger for a BUY entry, set S/L and exit target/strategy.
We also have the Chin Breakout Alert on the upper and lower trend lines of channel.
***
Edit: Want to add that if we make a new fib plot, it is Jan 7th 15:00 high 1.3011 to Jan 7th 17:45 low 1.2906. FE 138.2 = 1.2866 (hit upon open), FE 161.8 = 1.2841
Written over the weekend, prior to week's open. Comments/outlook not affected by gap down at open.
AUD/USD
This pair had been on a down turn since establishing an all-time high of 1.0256 on Dec 31st. This top is the FE 127 from a daily ABC plot:
A = May 25th low .8065
B = Aug 6th .high 9221
C = Aug 25th low 8770
FE 127 = 1.0238
FE 100 = .9926
FE 78.6 = .9679
Friday clearly saw pair bounce off of the FE 100. Switching to the 1-hour, we can see the bounce hit the 23.6 retrace fib of .9991. It failed to break that price 3 times before retreating to about a 78.6 retrace. Closed out the week with 3 candles to the upside again, probably in part associated with profit taking for week and/or exiting short positions based on a more positive NFP.
This is the current 1-hour ABC swing times: 08:00/13:00/17:00.
Now, let’s apply the indicator mv-i-Chuvashov_1_3 to the 1-hour chart. It will produce a BUY level of .9988, which is the area of the aforementioned resistance of .9991. Again, treat this like the breakout examples and trade to an FE level (and beyond if you desire, with proper money management).
Note that on the daily chart, plot from Low = Dec 1st to High = Dec 31st, produced a 50% retrace fib of .9997. This is close to the pair’s significant round number of 1.000 (parity).
The daily with the mv-i-Chuvashov also called for a sell at .9998, due to breakout of a triangle. This can still become reality, but after more retracement.
From the fundamental angle, and dinner conversation for us, this pair was affected (since New Year) by a negative outlook due to the recent flooding affecting crops, as well as USD strength from speculation on NFP.
Trader psychology may dictate a larger pullback (NFP missed projections), especially since the open of the week will be the first time the Asian session traders get back to their desks since the NFP data was released. This view is intra-day bullish AUD/USD.
Adding to the bears and bulls tug-of-war was a pullback on commodity prices Friday. The AUD is very sensitive to commodity prices, as Australia is rich in commodities such as coal and metals. This view is intra-day bearish AUD/USD.
Working on a system that can foresee turning points a few bars/candles ahead of time. Analyzing settings, filters, etc. Will release if it is consistent.
Meanwhile here are a handful of charts, long and short interval, with arrows pointing to entry candle. These turning points were seen a few candles prior to the first arrow of each chart. The exception is AUD/USD where we blended 1-HR and 30-Min. The last 4 arrows are 30 min signals predicted prior to the first candle of that group.
Tokyo being closed for holiday contributed to range bound trading during Asian. 2 attempts to break the Asian High during European failed until 3rd, which is extending now.
The 15-min ABC swing times are 12:45/14:15/14:30. FE 100 = 1.2958. This is the same level as the 50% fib from plot of Jan 7th 15:00 high 1.3011 and Jan 7th 17:45 low 1.2906.
This is a lackluster extension move as Europe closed about an hour ago.
*****
As mentioned, price opened week with a gap down. These type of occurrences are actually a trade opportunity for those familiar with it, as there is a very high probability that the market closes the gap. It did so rather quickly during the 2nd hour of trading, and bounce a little back down.
EUR/USD had support, not only at the aforementioned 161.8, but also the daily SQ9 (Price)180-degree level. We posted that chart, which utilized an input of recent significant low of 1.1876 as the start price. *** Edit add: if you switch the chart from daily to 15-min, you'll see how exact the 180-degree was as support.
Prices also bounced up after the Sunday candle, which had a body too large to be considered a doji or for our description as a high probability reversal candle (SRC).
The current extension attempt to the FE 100 = 1.2958 is near significant resistance of 1.2968 which was the Nov 30th pivot low price.
The LSMA Channel that we posted, with Chin Breakout alert trend lines, did trigger with a breakout to the upside diagonally.
Regarding the divergence system posted recently under "More Divergence", which uses the RSI-TC indicator.
To filter bad signals, you can have a rule:
The candle preceding the entry candle should not be:
Lower RSI reading than 60 for a SELL
Higher RSI reading than 40 for a BUY
EUR/USD was trading in a tight range between the 50% and 61.8% fibs, from plot of Jan 7th high 13:30 1.3018 and Jan 9th 19:30 low 1.2863.
Then, Japan announces it would purchase European bonds. This created a whipsaw in the pair, with one 15-min candle representing 63 pips in movement.
It has since returned to the aforementioned range with price at 1.2954.
*******
AUD under pressure today due to more flooding and negative data. AUD/USD pair has retraced to the 138.2 from plot of Jan 10th 15:00 low .9887 to 18:30 high .9966.
As with our post on EUR/USD, let's take a look at AUD/USD daily with the indicator SQ9(Price) 22.5 Factor 56.
Start Price = significant low of May 25th .8065, and direction setting up on YES.
We can see current support at the 383-degree level. The next level is 360-degree price .9755, a significant mark in the Gann world.
If we use the most recent low of Dec 1st .9537, the 45-degree level (which is one of the significant) is .9757. Can also plot retrace fibs from this low/high.
ZUP triggerred a Bearish Gartley on EUR/USD 1-Hour. Check the distances, etc.
This indicator does repaint, use caution.
You can turn on alert.