A-B-C-D Trade - page 38
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EUR/USD observations on larger interval charts: We split the various plots/indicators into two DAILY charts for easier viewing. We’ll repeat the parameters that were posted previously
Chart 1
1) Fibo Fan Pointing Down:
Apr 14th high 1.3677
June 7th low 1.1876
2) Fibo Fan Pointing Up:
June 7th low 1.1876
Aug 6h high 1.3333
3) Retracement Fibs (black)
June 7th low 1.1876
Aug 6th high 1.3333
4) Retracement Fibs (red)
Aug 6th high 1.3333
Aug 24th low 1.2587
5) Retracement Fibs (blue)
Aug 18th high 1.2922
Aug 24th low 1.2587
Comments:
First pull-back from major “move” per #
- Although it did pause at the 38.2% fib, it descended to the 50% fib based on a low of June 29th 1.2151 and same high of Aug 6th 1.3333. It failed to confirm above the 23.6% retrace fib from high/low of Aug 6th 1.3333 and Aug 16th 1.2733.
Second pull-back:
- The S&R provided by the fibo fans are obvious. Our belief that the 1.2600 was major support turned out to be the case.
- We cited the 50% retracement fib from #3 above, as well as the 61.8% from low/high of June 29th/Aug 6th.
- That pivot was also support by the 61.8% fibo fan pointing up.
- This area also was the FE 61.8 from an ABCC expansion pull on 1-Hour (as we mentioned).
Per # 5, it had retraced to the 50% fib (closing price). It probed (candle wick) to the 38.2% fib from #3.
Chart 2
200-EMA and 50-EMA
- Pair now just in front of the 50-EMA.
1st ABC:
A = Jun 7th low 1.187
B = Jun 20th high 1.2467
C = Jun 29th low 1.2151
FE 100 = 1.2751
FE 127 = 1.2914
FE 161.8 = 1.3123
2nd ABC:
A = Jun 29th low 1.2151
B = Jul 20th high 1.3027
C = Jul 21st low 1.2731
FE 61.8 = 1.3273
FE 100 = 1.3607
Fib Channel (Reported Aug 16th):
First Line = June 16th low 1.2254 to Aug 8th high 1.3333
Second line = July 13th low 1.2522
- We fitted this plot to conform with the spike down on Aug 11th, and to the 100% extension fib. On that date, we also saw that it acknowledged the 161.8.
- The last few days have seen EUR/USD march up the 261.8% channel fib.
Retracement Fibs:
High = Apr 14th 1.3677
Low = Jun 7th 1.1876
- EUR/USD high on Aug 6th was the area of the 78.6% fib.
- End of this week, it is at the 50% fib from this plot.
Retracement Fibs:
Low = June 7th 1.1876
High = Aug 6th 1.3333
- As of the end of the week, EUR/USD had touched the 38.2% retrace fib.
We see 3 fibs and the 50-EMA as resistance for the start of the week.
Fundamental analysis:
Japan's Central Bank, the Bank of Japan has an emergency meeting today in order to address the strength of the Yen. Easing policies are expected, and thus at least a temporary bullish result for USD/JPY.
The cross-currency correlation, as it pertains to our focus, would impact EUR/JPY, and thus EUR/USD.
Yen weakness = Euro and USD strength in those cross-currency pairs.
We are seeing upward pressure on USD/JPY as we speak now.
This meeting and any subsequent action was anticipated last week and we assume some have priced advance in USD/JPY into the market. The delay was due to a meeting amongst industrialized nations and waiting for that to conclude prior to any action by BOJ.
Here's what the 5-min USD/JPY look like. The Point A was the low just as the market opened. The pair hit the FE 161.8 precisely and currently attempting to revisit.
Meanwhile, we do detect some downward pressure on EUR/USD.
Both of these actions are USD strength.
This is 5-min chart on EUR/USD. We can see the FE 161.8 met although very briefly.
We had also noticed that pair is still respecting last Friday's ABC levels. We can use the cross hair tool or draw horizontal lines to get a better look.
Since we may have the thrust, due to the anxiety with possible BOJ action, we can keep an eye on shorts. Draw ABCs to determine extension levels.
All Yen cross pairs and EUR/USD calmed down and trading in a tight range ahead of the scheduled 05:30 report time of the BOJ meeting.
We'll be on sidelines.
EUR/JPY failed to confirm above the FE 161.8.
USD/JPY had a 2nd ABC and made it to that FE 100.
EUR/USD has been tugged oin both directions, but managed to extend to its FE 100 on the downside before scampering back up.
All Yen cross pairs and EUR/USD had calmed down and traded in a tight range ahead of the scheduled 05:30 report time of the BOJ meeting.
A sudden spike down on USD/JPY is now at hand.
It is dragging EUR/JPY and EUR/USD down at the moment.
Well, the spike down on USD/JPY is apparently due to the early release of BOJ minutes, which fell short of convincing measures to weaken the Yen.
This is something to remember, the unpredictability of the situation, with wild spikes. Good reason to stay on the sidelines.
We decided to make a bonce trade. Focused was on Aug 27th low 1.2725. There were other fibs close to that as well.
Filled BUY order at 1.2729, including spread.
Measured:
High = 01:00 GMT 1.2755
Low = 1.2709 GMT 1.2709
38.2% (target) price = 1.2738
Took profit at 1.2737 for + 8 net pips.
Leveraged ot more lots due to tight stop-loss
Attached is chart just before it hit our profit.
Another bounce trade, this time off support that we saw as 1.2714/15. We filled at 1.2718.
Plotted fibs per attached chart (right). On left is 5-min, right is 1-hour.
As EUR/USD probed to 1.2714, we MUST redraw retrace fibs to that new low.
Targeted 38.2% fib of 1.2726 and exited at 1.2723. Net +5 pips.
5-min cart had FE price of 1.2724, therefor we played it safe and took profit at 1.2723.
Again, we used a very tight stop-loss that allowed us more leverage to trade more lots.
Attached chart pic is prior to pair reaching our target, with original low at 1.2716.
Attached is 5-min EUR/USD chart. We had 2 data releases.
1) 09:00 GMT = Euro Data
2) 12:30 GMT = U.S. Personal Income + misc.
A = 08:55 high 1.2739
B = 09:20 low 1.2712
C = 09:50 high 1.2725
Asian Low = 1.2714
FE 100 = 1.2697
FE 127 = 1.2689
FE 161.8 = 1.2680 (target - hit)
Entry SELL = Open price of 10:50 GMT 5-min candle 1.2708
- Reward (projected) = 28 gross pips. Minus 2 or 3 pips for spread = 25 net pips.
Stop -Loss Options:
- Just above Point B 1.2712 + spread and cushion = 1.2716. Risk = 8 pips
- Just above Asian Low 1.2714 + spread and cushion = 1.2718. Risk = 10 pips.
- Just above 5-min pivot 1.2721 + spread and cushion = 1.2725. Risk = 17 pips
- Just above Point C 1.2725 = spread and cushion = 1.2729. Risk = 21 pips
*****
We were familiar with the Asian Low as we had made a bounce trade off that price, just before the European open. Pair probed below to 1.2712 but did not confirm with a close of a 5-min candle, until 10:25. That candle closed at 1.2713.
We did not use this example as the entry price, opting for the more conservative evidence of break.
Our rule dictates that we move our stop-loss once a 5-min candle closes past the FE 100 (when targeting beyond that). 1.2701 was stop-out for + 7 net pips.
THe 2nd data release at 12:30 took hold of pair after it reached the FE 127 and drove it back up to the Asian Low. After about one hour, the market resume its downward pressure and EUR/USD did eventually hit the FE 161.8 at the 14:15 candle.
After a minor U.S. data release at 14:30, which provided more choppiness, pair hit its FE 236.2.
*****
Today's attached chart included the Ichimoku indicator, which had been left out as it can clutter the visual aspect for tutorial. You can keep it on your demo account chart(s) with your other indicators/tools and fib plots.
Price action above or below the "clouds" indicate trend.
The Ichimoku can provide support and resistance with its "cloud" edges. It also has 2 lines that cross, indicating trigger/trend, with red crossing blue (default colors). However, as with most crossovers, there can be lag time.
We find the Ichimoku cloud edges to be particularly effective during the Asian session, and when it is applied to a 15-min chart (for our technique's time interval).
If you trade Yen pairs, the adherence to the cloud edges for S&R is also evident. Just conduct an internet search for more info on this indicator.