A-B-C-D Trade - page 145
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The Gold CFD XAU_USD:
The 14:00 1-hour candle was BAJA bearish divergence.
The 15-min entry at 16:15 price 1502.15
Fib plot: Low = Apr 18th 12:00 1477.05 and Apr 20th 15:00 1505.85.
SELL position hit the 38.2% retrace price 1494.85, during the 1-Hour 17:00 GMT candle.
High pivot was 1506.85 therefore S/L 1507 for Risk = 5.00
Reward = 6.00
***
With the triangle indicator Ind-TD-Demark applied to 1-hour chart, we saw break of upper trend line (UTD) at Asian open 00:00 GMT. The red profit line 1507.30 is listed in upper left hand corner of chart.
This level was hit during 01:00 candle, for +7.00 gross.
Now when we switch the chart to 4-hour interval, we can see the current 00:00 candle body below previous significant high of 1505.85 and Gann_SQ9 1440-degree 1505.44.
The lower trend line (LTD) can be used for breakout. Profit levels below are 1488.06, which is also the 61.8 horizontal fib, and 1485.16.
thanks guru for the brief , im much clear now thanks again
Attached is update on 30-min EUR/USD. We last highlighted BAJA bullish divergence on bottom Apr 18th, and its bounce to the 38.2% retrace fib.
That bottom was the PSQ9 90-degree level, hit 15:00 GMT.
The 50% fib is the PSQ9 180-degree, hit Apr 19th 09:30.
The 100% fib is the 270-degree, hit Apr 20th 01:00.
The 161.8% extension is the 0-degree, both intersect Apr 21st 00:30.
The first hit to the 0-degree was Apr 20th 10:30.
Good view of it on attached chart. We also have the HAMA (blue candles), and trend stayed above it nicely. If entry effected at 1.4200, gain to 161.8 fib of 1.4571 = +371 pips. Risk/stop-loss was about 55 pips.
This chart week thus far is different from the other examples. The up move broke through 3 levels of PSQ9, compared to bouncing around between 1 or 2 levels.
The other examples had several confirming divergence signals at or very near the PSQ9 lines.
*****
We do have a BAJA bearish divergence (yellow X) when price hit the 161.8, however, this occurred above the PSQ9 line. The 15-min entry would have been 1.4572, about 15 pips above the PSQ9 0-degree line.
As it turned out, price could not break that PSQ9 support. We also saw the HAMA provide support at the same time.
Here's scenario when going long (Buy) instead:
Tight fib plot; *Low = Apr 20th 17:00 1.4484 and High = Apr 21st 01:00 1.4581. We are now at the 138.2 extension of 1.4618.
When price pivots, we need to figure out where it will extend. There was only one other option for the Low plot, Apr 20th 23:00 1.4504**.
Experienced traders recognizing support and entering on pullback of about 1.4565, and trading to the 138.2, would gain:
*Using 1st Low = +53 net pips
**Using 2nd Low = +43 net pips
Just attached 2nd chart with zoom-in on tight fib. We can see the red PSQ9 support and blue HAMA candles. This is entry point for BUY. Pair just hit the 161.8. Alternatively, entry can be made at break of "High", but the reward/risk would have been worse.
Here is an updated chart from recently posted, with PSQ9 and ABCD.
We last saw this chart point to the FE 100 of 1.45159. The expansion hit resistance there, as covered in this thread a million times. The RSI(4) made lower highs, before the retrace of about 50%.
Since then, it had hit the FE 127 during the Apr 21st 04:00 candle and bounced down to the FE 100 level, which is predictable behavior.
We also plot retrace fibs from that low Apr 18th 1.41558 to FE 127 high 1.46509. Today's 12:00 candle hit the 23.6% retrace fib, about same as FE 100.
The indicator CPD caught the divergence off the FE 127, but does not show until the 16:00 candle.
Look at last posted tight fib plot for this pair (not shown here). We mentioned hit at the 161.8 extension 1.46388. The bounce down touched the 50% fib 1.45321 at 14:00 candle (30-min). There was also beraish divergence signal on the CPD indicator.
Here's a Head & Shoulder pattern on 1-hour EUR/USD, with trend line from "neck line" of each shoulder, for break entry. The fibs were plotted on wider basis, and can be used together with tighter set of fibs for targeting profit.
The base, which is the starting point, and often finishing point is a bit harder to recognize on this one. The Apr 20th 17:00 low pivot of 1.44844 is one option. Trade is usually to a low pivot at base, but also watch the fibs.
Before we forget, Friday Apr 22nd in U.S. is a holiday and banks, trading houses, etc. are closed.
Another example of trading off of S&R. Attached 1-Hour EUR/JPY chart, with same indicators PSQ9, divergence, and HAS candles.
BAJA bearish divergence Apr 20th 10:00 GMT candle, is also at PSQ9 180-degree resistance line. 15-min EFT trigger SELL entry at 11:15 price 120.21.
S/L above high pivot 120.39 + 8 pips = 120.47. Risk = 26 pips
Fib plot: Low = Apr 18th 116.46 and High = Apr 20th 120.39.
Trading to 23.6% retrace fib = +70 net pips, 2.7:1 reward/risk ratio
Trading to 38.2% retrace fib = +130 net pips, 5:1 reward/risk ratio
If you only make 10 of these trades per month at 2.7:1 reward/risk ratio, and win 70%:
$25,000 account and 2% risk on stop-loss = $95,000/year
You can use the quick calculator we posted previously on googledocs template, to determine the various scenarios.
It's not how often we trade, but the type of trades we select.
Attached is USD/JPY with regular candles and indicators PSQ9, and SQ9(Price). This is another very long post, so take it one step at a time.
The 1st chart is a daily, and shows down trend from Japan's earthquake. The rebound, partially due to physical intervention topped out at 85.513 on Apr 4th.
The daily chart shows Mar 17th low as start of the climb that went up 720-degrees to establish that top, based on the indicator Gann_SQ9. The numbering of the SQ9 horizontal lines is upside down and 720-degrees is on bottom and 0-degrees on top. We did this to focus on downtrend from the top.
From that top, the pair moved down and made a close of candle at the 360-degree level on Apr 21st. This is the same as a 50% retrace. The candlewick was a probe below to the next Gann interval 383-degree. This chart has intervals of 22.5% but rounds up. Thus 382.5 = 383.
A bounce from the low has advanced to the 315-degree level of 82.307 right now.
***
The 2nd chart is a 30-min where we can better see the diagonal PSQ9 S&R lines. We continue our comments from the top at 85.513, which was caught by a BAJA bearish divergence.
That top was also a 138.2 extension based on plot: Low = Mar 31st 92.556 and High = Apr 1st 84.722. We don't show that fib plot as it will clutter the chart.
From the alignment of the PSQ9 lines, we can see price activity for each week. The very 1st week from the TOP, we caught the support with the PSQ9 and SQ9(Price) 68-degree horizontal level. Once again, we can see a probe bellow support with a candlewick to the next SQ9(Price) support at 90-degree.
This leads up to our point. We can use the SQ9(Price) indicator, found in the Gann Is The Man thread, to create support and resistance. We typed into the indicator's start price, the price of the TOP of 85.513. For input of "Direction_Up" we typed in "false".
The examplesalso tells us that we can use the next level for the stop-loss, in case there is a probe.
Therefore, the bounce trade off of PSQ9 support took place during the Apr 7th, when a BAJA bullish divergence registered. The 15-min EFT trigger entry at 16:00 price 84.974.
Placement of the S/L just below probe and the next SQ9(price) level down of 84.591 + cushion = risk about 41 pips.
The EFT entry kept us out of trouble, avoiding that probe. In case we chose to use a smaller stop-loss, such as the 68-degree level of 84.821 + cushion, risk = 20 pips. This is also close to the 23.6 fib.
Looking at both a retrace fib plot (from high of 23:30 85.491) and the SQ9 levels, we see that at about 85.290, both the 78.6% horizontal fib and the 22.5-degree level occupied a similar space. Looking left, we also see previous resistance at that price level. This would be a profit target, with a potential reward of +28 net pips.
The above exercise needs to be accomplished prior to entry of course, in order to evaluate reward/risk scenarios. Therefore, if we choose to take this trade, we should use the smaller stop-loss.
That was an intra-day trade. We had a BAJA at top and bottom, as well as PSQ9 resistance an support. For swing trading, we can apply the HAS candles and the HAMA to the 4-hour chart.
Here is the 30-min, with PSQ9 and divergence indicators. We also removed the HAMA from the chart and in its place, used the histogram version (attached). However, if you compare it to the EFT's action above/below its zero-line, it's almost identical.
Some traders prefer not to clutter their chart, and like it on the bottom. Blue = price above HAMA, and Red = price below HAMA.
On the left of the chart, we had previously posted the 161.8 extension. A BAJA bearish divergence registered twice at the top on Thursday Apr 21st early European session.
We had originally plotted horizontal fibs from Low to High (to calculate 161.8 extension). After High established, can move plot to new High. We added plot of a fibo fan from Low to Top (yellow).
The retrace from Top stopped at the fibo fan's 78.6%. This is also the 50% fib from the original horizontal plot.
The pair consolidated through Friday, which was a holiday in the U.S. The pivot low from Thursday and fibo fan's 88.6 acted as support. A hit and bounce off the PSQ9 0-degree line also occurred at 05:30.
Open of new week saw BAJA bullish divergence at the 02:00 candle which had support at the original horizontal 61.8% fib. The PSQ9 270-degree was also just below this pivot.
This up move made it to the 78.6% fibo fan, and candle closed at the original 138.2 fib. The PSQ9 0-degree is just above this. A BAJA bearish is at this top, along with CPD.
We placed yellow X to mark divergence on the RSI(4) indicator.
The Complex Pairs Divergence indicator (CPD) used on lower time-frames often trigger many false signals, or signals that generate very small moves. However, as an accessory indicator, it can be an important additional confirmation to the BAJA, PSQ9, and fibs.
Reverse divergence is marked with dotted lines on the CPD. We've used yellow lines to denote up move and red as down move.
We can see how much lag there is with indicators. The HAMA didn't turn red on the decline from the 161.8 TOP, until price reached 1.46100. Using the BAJA, we had entry at 1.46412, a difference of 30 pips. Therefore we view this type of indicator useful to detect trend, S&R, and to stay in a trade longer. We do not see it as a good trigger.
***
This week contains the U.S. FED meeting and its subsequent verbiage, especially as it pertains to QE2.
Kudos to Bloomberg's Tom Keene, who displays charts. In this way, he's one of us, and we like he show overall. Today, he had an emphasis on technical analysis. We were one of many that e-mailed Bloomberg requesting more of it.
Picking up where we left off on EUR/USD, we plotted an Andrew's Pitchfork. The handle was Apr 25th 00:00, and the 2 aforementioned BAJA's as outer points.
This created the 3 trend lines. The yellow arrows show hits at 15:00 (mid-line), 21:00 upper, and 00:30 lower.
Pair went into consolidation and hugged PSQ9 270-degree. We also left the horizontal fibs on from previous post.
Attached chart is still focused on the EUR/USD 30-min. We take the last chart posted and add fib channels (lime color).
Take your fib channel tool and match up the 1st diagonal line with the Andrew's Pitchfork's middle trend line. Drag the 2nd fib channel line to the Pitchfork's upper line. Make sure these are aligned with the Pitchfork perfectly.
The fib channel has default extensions, after we pinpoint the start and drag the 2nd line. Thus, the 3rd line is the 61.8%, followed by 100%, 161.8%, and 2.618%. You can add the fib labels in the "Fibo Levels" tab in the indicator edit function. The fib ratio calculations are on the left under "Level". You must type in the labels, such as 61.8, in the "Description".
We can see price hit the upper PSQ9 0-degree line (red dotted line) during the Apr 26th 09:00 candle period. This met with the fib channel's 161.8% (lime). This level is also a revisit of the horizontal 161.8% (white).
And....that top was a BAJA bearish divergence, that retraced 38.2% where it met the fib channel's 100%. This retrace down went for +25 pips with a 17-pip risk.
The pair consolidated thereafter, with the PSQ9 still acting as resistance.
Any time you notice a channel, its worth checking the fib channel tool to plot extensions.
***
Switch the same chart to the 15-min interval (not shown here). We can see the breakout of the channel for the up move occurred at 06:30. That was after consolidation that followed a down move bouncing off the middle Pitchfork trend line.
Looking at the RSI(4), we can even see BAJA bullish divergence on the 06:00 candle period.
Using our fib retracement tool, plotting from the bottom 1.45062 to either pivots above, it would arrive at a fib extension level for the top.
Low = 06:00 1.45062 & High = 06:45 1.45757 results in 200% = 1.46452
Low = 06:00 1.45062 & High = 07:45 1.46091 result in 138.2% = 1.46484
Note where each option for High hit resistance. The 06:45 High hit horizontal 0% from wider plot. We can also see consolidation on left at that price level.
The 07:45 option for High was at the fib channel's 100% (lime), and horizontal 138.2 (white).
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