Just about Gold (XAUUSD). Chinkou Span line came to be very close to historical price on D1 timeframe price to be ready for good breakout. But the price is still below Senkou Span A line (which is the...
How to Trade the Forex Bullish AB=CD Pattern (source - dailyfx.com)
- AB=CD Pattern is easy to identify on the charts - AB=CD Pattern has a structure made up of equal price legs - The AB=CD Pattern must happen at specific Fibonacci points
Would you pay $1500.00 to learn this pattern? If you answered “No!” then would not have purchased the book with the first appearance of this pattern in 1935 written by none other than H.M Gartley, the father of harmonic patterns.
The Forex AB=CD Pattern or equal wave pattern is an impulsive move in the market. It is part of Elliott Wave theory, but you don’t have to know Elliott Wave in order to make use of this easy pattern.
The BC leg usually retraces to the 0.618 Level of AB but it should not retrace beyond the 0.786 retracement. If leg BC moves lower than the 0.786 Fibonacci retracement level then the pattern is invalid.
In addition, a shallow retracement to the 0.236 or 0.382 level shows traders are eager to end the correction and resume the uptrend as they are unwilling to wait for the 0.618 level
Notice in the above example of EUR/JPY on the 2-hour chart how the “A” leg was formed with the impulsive move from 131.14 and ending at 133.78 for point “B”. After a stellar run of 264 pips, traders will wait for a profit taking decline to end at a Fibonacci level. While the average retracement is to the 0.618 level or 163 pips for this move; the decline was only 100 pips from point B (133.78) to point C near 132.77. In the above trade the risk to reward was 1 to 5!
A sharp rebound from point C could have been entered on October 16th at 133.08 with five range bound candles before EUR/JPY really started moving. After entering long at 133.08, a protective stop could have been placed at 132.57 just below point C at 132.60.From there, a 264 pip limit could have been set at 135.25 which was handily hit on October 22nd.
In the above example the distance from point A and B was fairly equal to the distance from points C and D. However, an expansion of volume can lead to the D target point to move higher to other Fibonacci expansion ratios of 1.272, 1.382, 1.618 and even 2.618. Taking part of a trade off at the 1.00 expansion target and using a trailing stop for the rest of the position will allow a trader to participate in more of the move.
As you can see, the AB=CD is a useful pattern to add to your tool kit as it can provide trades with small amounts of risk in relation to the possible reward. Now you know your ABCD’s to finding good trades!
Minna L. Immonen was born 01/23/1964 in Posio, a municipality of Finland which is located in the province of Lapland. She lives currently in Oulunsalo a municipality in northern Finland. She has designed several of Finland's stamps, held many exhibitions, and illustrated several books.
GBPUSD Technical Analysis (based on dailyfx.com article)
The month of January has a seasonal tendency to be one of the worst performing months for European currencies. A few key cycle turn windows this week in the Euro and the Pound suggest this January could see more of the same especially when taking into account the recent jump in positive sentiment vis-a-vis the Daily Sentiment Index . In the case of Cable we have been looking for a top this week based on certain medium-term Fibonacci time relationships that seem to be playing out. Our idealized point of failure for this peak is the 15th square root relationship of the 2012 low at 1.6610 which is very close to today’s high. An initial downside pivot is seen at 1.6495, but a move under 1.6410 is really required to confirm that a more important peak is already in place in the Pound. Any strength through 1.6610 over the next couple of days would severely undermine the potential for a cyclical top.
Denis Nolet (1964-) Born in Lauzon, Quebec, Canada, Nolet became interested in art at a young age. After attempting various artistic techniques, he developed his own style that combines urban scenes with imaginative romance. His paintings have a romantic flair, tremendous visual appeal, and are appreciated by a wide audience. Nolet's paintings can be found in a variety of corporate and private collections in Canada and other countries.
Harmonic Trading, Volume Two: Advanced Strategies for Profiting from the Natural Order of the Financial Markets: Scott M. Carney
Now, in Harmonic Trading: Volume 2, Carney takes a quantum leap forward, introducing new strategies, patterns, and methods that make Harmonic Trading an even more powerful tool for trading the financial markets. For the first time, he reveals how to utilize harmonic impulse waves and introduces measurement techniques that identify market turning points even more accurately. Finally, he demonstrates how to integrate the Relative Strength Indicator (RSI) with advanced Harmonic Trading techniques to separate minor “reactive” moves from major opportunities.