A-B-C-D Trade - page 123
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EUR/USD Bearish Butterfly on 4-hour chart effective 16:00 today. Also on 1-hour.
Notice inverted Head & Shoulders, which is almost complete, at the .886 fib (Point D). The ZUP can also be used to identify H&S. Look at ZUP comments in upper left hand corner for H&S.
On 15-min, the reversal at 08:00 caught by Bullish Gartley. Switch ZUP chart to 15-min.
Here is chart pointing to BAJA signals and bounce opportunities narrated by us Feb 22nd - 24th (not including current BAJA Sell).
One small loss only, of -18 pips. The rest of opportunities should have supplied at least 100 net pips.
The first BAJA BUY should have captured an excellent amount since it was assisted by sudden ECB comments that propelled pair upwards. In fact, if trader exit portion of position and trend the balance, profit would be maximized.
The white fib plot using low of 1.3523 and high of 1.3702 provided a ceiling with FE 100 = 1.3812.
EUR/USD just arrived at its FE 161.8, ahead of 13:30 U.S. GDP data.
US GDP (revised Q4) missed projections, so we'll see EUR/USD whip back up.
GDP (revised Q4) came in at 2.8% versus the projected 3.3%.
Experienced "news traders" had a little more time to BUY as market still anticipating positive UOM Confidence at 15:00.
EUR/USD now back to FE 100 level.
The previously posted EUR/USD Bearish Butterfly had adjusted itself from the Point D 138.2 extension to 161.8.
We can see these extension levels in the red box. The aqua colored horizontal line is the 138.2 and the gold color is the 161.8.
We can see the 161.8 number on the right wing. Make sure your chart background color allows you to see properly, when applying the ZUP indicator.
The red dotted line is a trend line for support. It is one of three produced by the ZUP.
***
This example teaches us how to place the stop-loss, when using the ZUP. If we trade off the first pattern, which had Point D at the 138.2, the S/L would be placed above the 161.8. The 2 aqua lines use the same plot. The 2 gold lines use the same plot.
Attached 30-min EUR/USD:
Piercing Line pattern that starts the up trend Feb 24th start of Euro session.
That was also Point A of ABC pattern that had its FE 78.6 met during Feb 25th Asian.
Early Asian saw BAJA divergence 2nd peak candle at 01:00, with 15-min trigger sell entry 01:45 open price 1.3823.
Fib channel plot confirmed when breakout to downside bounced off 100% diagonal extension fib.
Horizontal fibs for retracement. Down move pivoted at 50%.
Not shown is ABC pointing down using Asian High as Point A and 50% fib as Point B. C = 12:00 candle high. FE 100 met at 14:30 and same location as fib channel. U.S. data here at 15:00.
Pair just bounced off bottom back to former Point C level, which is same as FE 61.8.
We posted the BAJA signal log on google docs templates at this link (or search title BAJA Divergence Log in google docs templates):
https://docs.google.com/previewtemplate?id=0ApbniYyOER5MdDlwTlc1RFpaYXBUNUlja183b0dyaVE&mode=public
The BAJA divergence log allows us to track the performance of the signals. The log separates BUY, SELL, WIN, and LOSS trades, to automate other calculations. The header includes inputs for the nearest pivot high or low for stop-loss placement, plus spread and cushion (input box Spread & Cushion).
We used a 24-hour period to gauge maximum gain. Due to each trader possessing a different level of skill, and trade management techniques, we opted to make the log adjustable to the percentage of the maximum gain a trader can capture (%Gain input box).
A skillful trader can capture 50% of the 24-hour gains, while a newer trader may be at the 35% level. We split the difference for the examples, to 42.5%.
Additional inputs track number of wins more than 20 pips and more than 30 pips, S/L less than 30 and less than 40 pips. This will assist us in determining how far the pair moves on average from the entry signals. At some point, when enough of a sample size is collected, a trader may devise an exit strategy based on a fixed number of pips.
The trader will also understand how often the signals have a stop-loss within tolerance. This will be derived when weighed against the average gain, and % of gain the trader expects to capture.
EUR/USD overall movement from January entry signals:
Wins = 27 and Loss = 6 (82%)
Wins > 20 Pips = 26 (79%)
Wins > 30 Pips = 23 (70%)
If a trader entered every signal and exited at +20 pips, the win ratio was 79%. Obviously, this is a small sample size and doesn’t consider any slippage, etc. Market conditions can change and make some systems non-competitive
Based on capturing 42.5% of 24-hour maximum gain from entry, the January sample saw results:
Wins = 27 and Loss = 6 (82%)
Wins > 20 Pips = 19 (58%)
Wins > 30 Pips = 13 (39%)
Average Win = 32 Pips
Average S/L = 31 Pips
Average Loss = 23 Pips
R/R = 1.4:1
S/L < 30 Pips = 21 (64%)
S/L < 40 Pips = 28 (85%)
***
Based on selecting trades with S/L 30 pips and less:
Win = 16 Loss = 6 (73%)
Avg Win = 27
Avg S/L = 23
Avg Loss = 24
R/R = 1.2:1
A 3-pip spread & cushion was used for both examples above.
***
January Gold came in with a 82% win percentage, and R/R of 1.7:1. Spread & cushion used was $1.00 (10 pips).Based on 42.5% capture of maximum 24-hour gain. We’ll release a little more details on Gold as time allows.
***
We placed arrows on the 30-min chart pointing to BAJA signals for January EUR/USD, AUD/USD, and GOLD. We’ll look at EUR/USD right now.
This pair opened the month with a down trend. As the slope of the trend became more steep, the BAJA suffered some losses, 3 losses out of 10 trades. Generally, this system trades counter-trend.
On Jan 9th, EUR/USD started an up trend that lasted the balance of the month. The BAJA won 20 out of 23 trades. 15 of the trades were counter-trend SELL positions. After each of the 3 losses, the BAJA came right back and won the next trade.
The inclusion of the EFT trigger entry on the 15-min cut down on the false signals, mostly due to early entry.
EUR/USD at 1.3774. We see resistance at 1.3785/94. It could even be the right shoulder of a H&S. The 30-min is developing a possible 2nd peak BAJA.
Base would thus be 1.3730.
The scheduled 10:00 EURO Zone CPI is probably behind Euro strength thus far. There was a registered BAJA sell signal on the 30-min. The 2nd peak was 07:00, with entry 07:45 price of 1.3776.
Aggressive S/L move to pivot 1.3766 + 4 pips = 1.3770. This was stop-out for +4 pips net, as pair broke back upward.