A-B-C-D Trade - page 143
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We like 30-min since we can often marry it up with BAJA divergence, which just happened per attached chart.
Attached is 15-min chart, with fib plot 83.75 (Asian High) and 03:30 pivot 83.26. This produced regular 161.8 extension of 82.96.
This target for bounce trade up is also near previous significant low on Apr 14th 12:30 83.94. This is also the regular 138.2 from wide plot: Apr 11th high 84.77 and Apr 12th low 83.45.
From 82.96 + spread & cushion, trade to 38.2% retrace from high = 05:15 83.15, results in +15 net pips. Stop-loss was tight, no more than 10 pips.
The Euro session opens with pressure on Euro due to Greece and Ireland news on negative side.
Moody's downgraded Ireland with continued negative outlook. Greece restructuring debt as anticipated, and installing austerity measures.
Ahead is Euro CPI at 09:00 GMT and US CPI at 12:30 GMT with US UOM 13:55.
Attached is continuance of 30-min EUR/USD as we near end of week. We labeled the 2 U.S. data releases with blue arrows. Although this example was not a trade scenario due to data release, it is interesting to note the S&R.
Aside from the PSQ9 (red dotted horizontal),
we added a fibo fan plot (white) : Low = Apr 7th 13:00 GMT 1.42569 and
High = Apr 13th 11:00 1.45193.
We adjusted horizontal fib plot (blue) from previous post to same as fibo fan high/low.
After EUR/USD fell below the PSQ9 support, we saw it meet 3 other support calculations:
38.2% retrace fib (blue) 1.44125.
100% fib (yellow), left over from our 138.2 extension discussed in recent post.
Fibo fan's 61.8% fib, which also supported last dip at 10:30. There were several candidates for the high plot of the fibo fib, but this one met the other support best.
The bounce of of these support lines hit the lower PSQ9, which also had 2 fibs there, as well as a fan line.
***
If the 2 dips were seen as bounce trade opportunities (BUY), we like to see the RSI(4) curl back above the 15 level. Both dips had a wick that would stop-out a tight stop-loss.
The 1st dip at 11:00 was readable since the 138.2% extension was the obvious target.
The 2nd dip at 13:30 closed above the regular 161.8 (not shown) of 1.44046 but probed below it. This fib plot was High = 07:00 1.44991 and Low = 08:30 1.44407. Another option is to place stop-loss below the 200% extension of 1.43823.
We repeat that this is not a trade scenario but a study exercise in plotting for S&R, and recognizing price action respecting such.
We have a small Friday gift for you. Attached is a coder's combination of 2 indicators that locates divergence.
We have monitored the Complex_pair_Divergence_V1.0 for about 3-4 months now. While we like our BAJA setting, using the RSI(4), this one at least is an indicator with alert. It will help you recognize importance of divergence, even if you don't end up trading with it.
You'll notice that it triggers 4 different types of divergence instead of 2. The extra 2 are reverse divergence. There are a lot of false signals, so use with higher time-frames. Also when the slope of the 2 peaks or dips is too close to being flat, it can also be a false signal.
The indicator places priority on the CCI humps, and overrides a situation where the price peaks or dips are not the 2 highest or lowest in the cluster.
The CCI settings cannot be changed in the input section. You'll have to change it in the formula. The coder also had used different setting for each time-frame.
The indicator takes 1 or 2 candles to materialize. We also need to remind that an entry method is a good idea, such as using the EFT or another cross-over. Awareness of where market is at, relative to fibs, always should be recognized. And last, money management is a vital part of the equation.
Attached are 30-min EUR/USD charts covering the week of March 27th through April 1st. We’re going to cover all of the various signals and turning point, so it’s rather extensive. We have the PSQ9 X 4 (lime green color horizontal) , the BAJA, the Complex_pairs_Divergence (CPD) indicators, and HAS candles
The 2nd chart includes indicator Time_modified2, which gives us a view of sessions by color. This allows us to look at situations like the breakout of the Asian High or Low (yellow box is Asian session).
For the horizontal fib plot (aqua color), we took the most recent high, which was Mar 24th 16:30 GMT 1.42189, and the low established at the beginning of week on Mar 27th 1.40197.
We marked signals/entries with different color arrows. The yellow are BAJA divergence and the pink are CPD. We also marked the RSI(4) with yellow X to identify BAJA divergence.
Plot tighter fib retrace (not shown) with High = Mar 25th 06:30 1.41927, and use the same Low. The most conservative profit target would be the 38.2% fib of 1.40857. We can see that it was already hit from the initial retrace on Mar 28th 08:00. The next is the 50% 1.41061, which was hit at 14:30.
We didn’t count the CPD signal that caught the low pivot on Sunday. We take Sundays with some caution for intra-day trading, if it relies on calculations from the previous week
CPD # 2 was a bounce off the Asian High at 08:00 candle. It was also the 38.2% retrace fib of the tight plot. This bounce went down to the PSQ9 support line for about 50 pips. You’ll have to click on the regular candles to see the exact hit. CPD #3 triggered en route down but was a false signal, and at best, an optional conservative exit point
Aqua blue entry, was revisit of low and bounced up to the 50% retrace fib of tight plot, for about 75 pips.
Then we saw our 1st BAJA, a bearish move for about 40 pips to the tight plot’s 23.6% fib. Here we saw both CPD #4 and BAJA #2 bullish divergence
CPD #4 and BAJA #2 went up during Asian to top out early Euro session for about 80 pips, just below the upper PSQ9 and wide plot’s 61,8% fib. Here we saw BAJA #3
Baja #3 was a large move of about 100 pips, back down to the PSQ9 and 23.6% tight retrace fib. BAJA # 4 bullish divergence formed at the bottom.
BAJA #4 went up 75 pips to the tight 61.8% fib, where CPD #5 triggered. The CPD #5 sold off 65 pips to the lower PSQ9 and near both the wide and tight plots’ 23.6% fibs. The CPD #6 formed at bottom
CPD # 6 and #7 were bounces off the lower PSQ9, for gains to the upside of 55 pips each. BAJA #5 came down off of the wide plot’s 61.8% fib, but was a break-even or small gain, channeling for the entire session.
CPD #8 and BAJA #6 were small losers.
The BAJA #7 signal looked like a loser but was a winner. We wait for the 15-min trigger and that saved the trade since the cross-over on the EFT histogram occurred after the top was formed. Baja #8 joined the #7 on the same path down.
This new top was also above the previous highs used for fib plot. Thus, we need to plot new fibs going downward. Low = Mar 30th 14:00 1.40509. High = Mar 31st 09:00 1.42319.
BAJA #7 & #8 retraced down to the 38.2% fib 1.41628. for +70 pips. The CPD #9 formed here.
CPD #9 and #10 were small gains as the resistance proved too strong. CPD #11 was a sell trade off of the upper PSQ9.
There was another CPD signal just prior to CPD #11. SInce the entry was close to #11, and virtually the same price, we counted these as one.
CPD #11 move dropped below the lower PSQ9 for +140 pips. En route, we saw CPD #12 bullish divergence that was small or no gain. If we monitored and used the EFT, it had crossed-over bearish, as witnessed by the red histogram bars.
The last leg up was very close to the end of the week. Once pair resurfaced above the RSI(4) 15 level, as well as above the lower PSQ9, a BUY entry can be effected at the 14:30 open price of 1.41122. This move went up for 130 pips from entry. However, an exit at the upper PSQ9 at end of Friday’s Euro session was a safe decision that captured a modest90 pips. This move was so strong, it didn’t pivot or change regular candle colors.
So there you have it, a full week. The HAS candles can help traders to stay calm and in the trade, not getting jumpy. You can toggle the regular candlesticks back on in order to see the candlewicks.
Support & resistance is King, in our humble opinion. We can see the bigger picture better with S&R. With accessory indicators and money management, you can trade with more confidence and understanding.
Learn these things. It might look confusing to new(er) traders. Even if you have to spread the various indicators over 2 charts for easier viewing, do it. Take it one step at a time, one example signal at a time. In the end, it will be very clear, and we didn’t even include the fib extensions. That’s because we covered that at the beginning of this thread, and throughout, quite extensively. Go over those posts if necessar
This is not a black box/holy grail. You’re learning how to trade here, at least within the context of our methodology. You need to read, read, practice, and practice
Attached are templates for the Planetary SQ9 indicator, applied 4 times at different angles. We have different templates for different pairs.
1) Yen (JPY) pairs 100 and above. This means prices trading at 100 or above.
2) Yen pairs below 100.
3) USD pairs. This is set used on last tutorial for EUR/USD.
4) USD pairs with all other indicators on last tutorial.
Despite saying we have covered the fib extensions enough, we can focus in on 1 or 2 days, to keep the charts from getting too cluttered.
Attached is EUR/USD 30-min for Mar 24th - 25th. We have the previously mentioned indicators PSQ9, HAS, BAJA (yellow arrows) and CPD (Pink arrows) divergence.
On Mar 24th 07:30 GMT, we can see the bounce off of the lower PSQ9 diagonal support (lime green color).
We have a BAJA bullish divergence at 07:00 and CPD at 07:30
Both uses a BUY entry with 15-min EFT trigger at 08:15 price of 1.40731.
S/L below pivot of 1.40522 + 10 pips = 1.40422. Risk = 31 pips
The aqua colored fibs plotted with:
Low = 07:30 1.40522
High = 12:30 1.41488
138.2 = 1.41857
161.8 = 1.42085
We can move our S/L to break-even when price surfaces above a previous significant pivot. So, let's use Mar 23rd 23:30 high of 1.41131.
This allows us to wait through a potential pivot prior to an extension. If it doesn't happen, and comes back down, we break-even. If it does happen, the risk-reward was great. The HAS will keep you calmer.
This example did pivot and extend. We can see the candles hit the regular 161.8 at 15:00 which was just beyond the upper PSQ9. Planned exit at the 138.2 or the PSQ9 was O.K. and captured about 100 net pips.
The initial Reward/Risk was therefore 100/31 and 3.2:1
***
The top had a 1-Hour CPD bearish divergence at 18:00, after a 30-min BAJA bearish (14:30). That not only confirmed exit, but presented a short opportunity. The probe at 16:30 to 1.42189 was problematic if using a tight S/L on BAJA. If the space for S/L was more than 10 pips above the highest pivot of 1.42113, position survived.
SELL entry with 15-min EFT after BAJA was at 16:15 GMT price of 1.41860.
If we moved our S/L to break-even, we don't have to watch the chart if we choose not to. Simply set take-profit just above a fib target.
We can anticipate a natural bounce off of 1.41481, which was the High on our fib plot and significant pivot. Trading to this level (hit 09:00) captured about 30 net pips. Reward/risk = 30/15 and 2:1.
By now, this was Mar 25th and Friday. Although pair eventually made a 138.2 extension on the following Sunday, it was not worth the risk of a live position over the weekend, for the intra-day trader. The stop-loss distances are too small to withstand wild swings against the position of this type of trader.
Pair hit the lower PSQ9 at 16:30 1.40954 for about +85 net pips. That's about as close as one wants to take this move as the market shuts down at 20:00 Friday.
We can see the blue HAS candles en route down. These are pivots prior to extensions, and can be used for S/L placement to lock in profit.
Retrace fib plot of course was easy to see, using Low to High on 1st move up. That gives us targets as well as S/L levels.
The intermediate trader may also opt to exit portion at a particular level and "trend the balance", as discussed previously. We refer you to the calculators posted for these circumstances, on googledocs templates. We'll repost the links soon.
Attached is last week's EUR/USD 30-min from Mar 12th - 14th, with the same indicators as last post. Yellow arrows for BAJA and pink for CPD divergence.
We saw 3 divergence signals at the upper or lower PSQ9 S&R, and one without.
1) 2 BAJA bullish formations on Apr 12th 03:30 and 06:30. We used 1st for example, and had entry at 1.4401.
The aqua fibs were plot on 1.43794 low and 1.44752 high. This resulted in the 138.2 extension right at the red upper PSQ9 resistance line, for about +100 pips.
2) This short off the top 138.2 on Apr 12th 14:30 was not accompanied by divergence. Simply taking a red HAS candle to confirm pullback for +40-50 pips.
3) Had both BAJA and CPD divergence on Apr 13th 11:00. This short made about 75 pips to red lower PSQ9 support.
4) Again, we had both BAJA and CPD on Apr 14th 01:00, where the last trade terminated. 15-min EFT trigger 01:45 BUY entry 1.44235.
Plotting retrace from recent top to bottom saw this trade make it to its 88.6 fib of 1.45064. If exit effected after the 1st red HAS candle closed at 07:00 1.44952, trade captured about +65 net pips.
TOTAL about +300 pips each lot for the week.
Week opens with non-conforming bullish butterfly on EUR/USD 30-min and 1-hour charts, at 01:30 Apr 18th.