A-B-C-D Trade - page 98
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As AUD/USD attempts to inch higher towards a 100% retrace, we will make a non-magical forecast of a turning point, based on our take on the reading and our applied parameters.
03:30 - 04:00 GMT, with a higher probability toward 03:30.
Forecast for AUD/USD: indicator did not adjust until after our post and thus was pointing out the wrong pivot time. We took a pic of the screen and discovered the mistake. The manual use of the tool also confirmed.
Here's the indicator, which is nothing new or magical. Some viewers have already guessed that it is the Fib Time Projection, also known as the Fib Time Zones tool on the MT4 platform.
The default setting from the MT4 platform needs to be changed, which is covered at the end of this post
The indicator that automates Fib Time Projection is the QT4, which is part of the ZUP program (pattern recognition). It plots off of 2 sets of 2 lows and 2 highs, projecting potential turning points based on fib ratios. It is not a stand-alone tool/indicator, and should be used together with fibs, etc. We detached the QT4 and use it separately.
The attached chart is the AUD/USD 30-min chart from Jan 11th to 12th, which was the forecast scenario. We had originally read 2 pivot points at 03:30 and 04:00 GMT, with is a "cluster" and usually brings more probability. One set of turning points was from the 2 high plot, and the other from the 2 low plot by the QT4.
Upon further examination, we saw that although the QT4 had the zig-zag at the correct 2nd low, it did not calculate the new fib extensions yet.
The attached chart shows a manual use of this tool (red) on the main portion of the chart, while the QT4 is on the bottom. Both are the correct plots.
The low points (red) were during the 05:30 and 22:30 candles (30-min). The correct first turning point is labeled .382. The chart shows the correct time at 05:00 GMT. This projection did indeed catch the change in direction for AUD/USD after a retrace to the 38.2 horizontal fib.
On the QT4, we can also see its plot of the 2 highs ( blue) of Jan 10th 18:30 and Jan 11th 12:00. This plot produce turning points: .382 at Jan 11th 18:30 and .618 at Jan 11th 22:30. The .618 was the big one as it turned up significantly.
The QT4 plots several fib ratios which can be seen. With both intra-day trading and swing trading, we are likely to dismiss fibs that get too far out.
The attached chart had 2 “clusters” of time fibs. 22:30-23:00 and 05:00-05:30. Both hit nicely
Fib Time Projection uses time instead of price for extensions. It takes the total time between (for example) the 2 low points. In our chart example that number is 17 hours:
22:30 - 05:30 = 17 hours
17 hours X .382 = 6.5 hours
22:30 + 6.5 = 05:00 GMT (this is the turning point)
The input for Fib Time Zones need to be changed from its default on MT4.
The first input for first turning point should be 1.382. The label for this is .382.
Next input is 1.618, label is .618
If you want more, just use fib ratios. You can use the ones in the QT4 indicator. Enabling your Fib Time Zones tool allows you to manually check plots for research and confirmation. Try it out on different interval charts.
To change the colors of the QT4 fibs, go to input and you’ll see HHC, which stands for High High Candle. Then LLC for Low Low Candle. We use blue for HHC and red for LLC
You can use 2 sets of Fib Time Tools manually, one for the 2 highs and one for the 2 lows. This way you can research clusters. We need to do it this way as the QT4 cannot not go back to previous plots.
Try different interval charts, and try with fibs, RSI, Fractal, or other indicators to come up with a system that you like and one that fits your style. We were going to do this for you but decided it’s best to encourage you to do it yourselves. The exercise in research is part of the growth in being a good trader
We’ve attached a template with the QT4 (color changed) and Fib Time Zones tool (2).
Nice recovery by the AUD.
Now, draw a trend line on that AUD/USD ascent and wait for a possibly break down. AUD has employment & unemployment data out at 00:30 GMT.
On the 30-min, we saw mild divergence at 17:00 and 18:30 peak candles and RSI, with the 18:30 being a gravestone doji. The downturn lasted one candle for about 20 pips. Trigger with short interval trigger.
The 18:30 high of .9963 was near the high of Jan 10th.
Fib plots from
Low = Jan 11th 22:30 .9803
High = Jan 12th 09:30 .9921
Regular 138.2 = .9966.
This is the same result as plot
Low = Jan 12th 04:30 .9840
High = Jan 12th 13:30 .9931
Regular 138.2 = .9966
If we switch from the 30-min to a 1-hour chart, we can see a Fib Time Projection 1.272 fib at 19:00. That was from the low plots of Jan 11th 05:00 and Jan 11th 22:00. You can verify that by using the tool manually.
Attached is a 30-min chart of the EUR/USD for Jan 12th.
The QT4 showed a cluster of time fibs scheduled for 1:30 & 2:00 GMT. This projection was available after Jan 11th 15:00, as that was the 2nd low for one of the measurements. You can see the zig-zag on the chart.
We also have an ABC at swing time of Jan 11th 15:00/16:30/18:30. The FE 78.6 was 1.3015 and held for bounce down. This high was also recent significant high during Euro session on Jan 7th.
The 01:30 candle had closed with a RSI reading of 94.
We switch to the 15-min and try to look for a trigger. The 2:00 candle closed with a drop in RSI reading from 91 to 76. Entry was 1.3013 after first fractal (5-candle analysis). We later saw a double (2nd) fractal at that top.
Plotting our retrace fib from Swing C low to top produced exit levels 38.2% = 1.2987, 50% = 1.2978 (hit 05:45).
AUD/USD, EUR/USD, and EUR/JPY showing signs of retracing in unison. USD/JPY was there too, but may be decoupling now, as at least one pair needs to do so.
AUD/USD broke trend line, chopped with data, and now looks to want to revisit 61.8 that was touched upon release of 00:30 data.
EUR/JPY may get to the 61.8% fib and yesterday's Asian High of 108.32/34.
EUR/USD sees support at 1.3083.
Jan 13th Recap
Attached 1-Hour chart:
EUR/USD ABC swing times of 12:00/19:00/06:00.
EUR/USD retraced to 1.3087, prior to making a spectacular rise to its FE 161.8 of 1.3381, partially due to positive comments from ECB chief Trichet and negative U.S. jobless claims.
Red arrow pointing to our most recent focus, the fib time projection/time zones, 1.618 fib at 11:00. This was the start of 6 consecutive bull candles. The QT4 indicator caught this, with its 2-highs plot of 09:00 and 19:00. The 30-min chart had its 1.618 time fib at 11:30.
While not every time fib hits, there is suppose to be particular emphasis on the 1.618 since this is the “Golden Ratio”, and foundation ratio of Fibonacci. There is one guru that strictly uses multiples of 1.618 from the 2-highs plots or 2-low plots. That would make his interval fibs at 1.618, 2.617, 4.236, et
As mentioned, this tool should be an accessory indicator.
EUR/USD Daily (attached)
Jan 10th HL 2.0 and LH .5
Jan 12th HH .386 and LL .886
Jan 14th LH .886 and HH .5
*****
AUD/USD held firm in its gains at the 38.2% retrace fib, probing to .9932, through Asian after 00:30 data that produced a whipsaw. Pair made an extension to its 138.2 just above parity of 1.0000.
The ABC swings had various plots, all of which were respected. This was due to the whipsaw 00:00 candle. Use 30-min chart to separate 00:00 candle. Swings were 11:30/00:00/00:30, producing FE 100 = 1.0005. If we eliminate the use of that 00:00 hour price period, and use the next best prices, the FE 100 = 1.0016 which is closer to candle wick high.
To avoid the uncertainty, one can simply apply the fib retracement tool and plot Low = Jan 12th 12:30 .9882 and Jan 13th 00:00 .9972, to get regular 138.2 of 1.0006.
The pair made a bounce off the day’s high upon first approach at the 17:30 candle period and proceeded to finish a “M” pattern back do
For this pair, we turned on the rest of the time fib parameters, which are the Low-To-High (LHC) and the High-to-Low (HLC), and have all 4. Applied different colors for better viewing.
Aside from the Jan 12th time fib at 05:00 which was addressed, we had a clusters on at
1-Hour Chart:
Jan 12th 15:00
Jan 13th 04:00
30-Min Chart:
Jan 13th 13:30/14:00
Daily Chart (attached)
Jan 12th
HL 1.618 produced from Nov 5th High to Dec 1st Low
LH .382 produced from Dec 1st Low to Dec 31st High
Next cluster Jan 21st/22nd
HH .382 produced from 2 highs on Nov 5th and Dec 31st.
HL 2.0 produced from Nov 5th High to Dec 1st Low
Old cluster Dec 14th
HL .5 produced from Nov 5th High to Dec 1st Low
LL .382 produced from Lows of Oct 27th and Dec 1st
These Dec 14th and Jan 12th clusters are convincing because the time fibs fell on the same day. The daily chart has fewer swings and therefore are distinct with no variables. We’ll see how the Jan 20th projection turns out. Since the chart might change by the time you read this, you can check these clusters by using the MT4 fib time zones tool with changed input fib ratios to match the QT4
******
EUR/JPY 1-Hour (attached)
Jan 13th 10:00/11:00 ( 3 time fibs)
Jan 13th 13:00/14:00 (3 time fibs)
Jan 13th 15:00 (2 time fibs)
Note due to a short zig-zag there were a series of time fibs bunched up after Point A. We colored them yellow in order to keep them from cluttering chart view for this post.
******
Much work/research to do. I think its fair to say that if there was overwhelming success, we would have heard more about time projection. However, certain successful practitioners that use it as an accessory tool may keep it to themselves. Some sell software.
Note that we can also turn on the date and time for each time fib, for display. However, there seems to be a mis-code for one, the LH will read the date wrong. Thus we have to manually verify.
Attached is indicator QTA_v4 (we've been calling it QT4)
USD/JPY 1-Hour Chart Clusters
LL .382 Jan 12th 23:16
HH .5 Jan 13th 00:00
HH .886 Jan 13th 08:29
LL .618 Jan 13th 08:43
LL 1.0 Jan 14th 00:00
HH 1.618 Jan 14th 00:35
30-Min Chart
LL 1.272 Jan 13th 21:07
HH 1.0 Jan 13th 21:30 *********edit: this is plot point, not fib. signal invalidated as not cluster.
LL 2.618 Jan 14th 05:12
HH .618 Jan 14th 05:32
LL 3.0 Jan 14th 07:30
HH .786 Jan 14th 07:43
*******
The QTA's lines with optional display of dates/times can get too high on lower section of chart to read. Simply double click on line between 2 highs or 2 lows (drag points), and move height of numbers.
Lurking EUR/USD bounce traders at previous high 1.3381. Pair made a bit of an overshoot to 1.3287, taking out some entry positions with small S/L.
There is another previous high at 1.3432 but should be deemed too far away to neglect this bounce.
Last post's bounce opportunity went to 1.3369 before resuming march up. The Asian High was established late in session and became Swing B.
Swing times on 5-min was 07:35/07:45/07:55
FE 161.8 = 1.3442
FE 200 = 1.3465 (hit 08:20 candle)
Top near previous high as mentioned and retraced all the way back down below Asian High. With LSMA Channel, see chart, it is now approaching outer trend line.
Switch chart to 15-min to smooth out and find pivots. Plot down 08:15 to 09:15. 138.2 = 1.3365 and 161.8 = 1.3350. LSMA Channel changes automatically also.
*****
Over excitement with the Trichet inflation comment lead to heavy long positions. Also strange that it was voiced before EU CPI data.
EU CPI (10:00 NOW) is projected to remain same while an increase is expected in US CPI (13:30) both released today.
Trichet also said EU economy on track if energy inflation is stripped out. Don't understand the advance verbal statements that add to volatility. It's good for traders but can wreck troubled EU countries.
Thanks to Bloomberg which is reporting that China made an announcement that they will boost reserve requirements, right at time of EUR/USD top.