A-B-C-D Trade - page 10
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Here's the chart with the ABC and FE levels.
I stand corrected. The market is telling me that my tighter pull was wrong.
See the correct low for Point A.
No breakout from Asian session. EUR/USD dropped back below previous day's U.S. high (lime green horizontal line).
It did break a trend line going back down. An intermediate/advance trader can make that trade.
The U.S. stock markets and banks will be closed Monday May 31st. for holiday. Forex volume will be much lower during that session.
The attached 15-min chart will show the 2 ABC patterns running consecutively. This is something you'll see often and is recognized by the Elliot Wave experts and enthusiasts.
When I pulled the tighter ABC, it wasn't necessarily wrong. However, the market has been strong and respected the lower Point A.
The psychology of a trader might enter here if new to trading. We shouldn't be discouraged when this kind of thing happens.
I've posted about 3 weeks of ABC patterns with breakouts from previous sessions. It's a good marriage as witnessed by the precision and ability to read where the market will halt or pause in order to take profit.
I assessed the last post's potential trade and stuck with the risk/reward being below 1:1 for me on the breakout. We can' regret this decision if we want to be conservative and follow our conservative decisions.
I will soon post spreadsheet calculators that will:
- size/scale the number of lots to conform with the stop-loss and max risk per trade,
- a simple growth calculation of account.
This should be reserved for the experienced trader since it trades counter-trend and they will know how to exit as well as take precautions with the recent strong move up by EUR/USD.
Draw a simple trend line of the last significant move (15-min chart attached).
Plot the ABC on top, going down.
ABC and extensions are black lines.
B = 1.2607 (entry should be just below round number of 1.2600)
FE 100 = 1.2571
FE 161.8 = 1.2529
Draw retracement fibs (blue lines) from low to high. Recognize that 38.2% retrace (1.2544) is highly possible.
Observations:
Notice during the retrace that the previous FE levels acted as resistance (ceiling) as it methodically ratcheted down.
It also respected each major level of the retrace fibs, 38.2, 50, 61.8.
It stopped at the 61.8% retrace fib, which also happens to be the low pivot from May 20th.
The previous retrace fibs can be used to move the stop-loss.
Here is the same chart (15-min) with the Heiken Ashi candles, which can help a trader stay in the trade during trends.
This indicator should be available already loaded on most MT4 platforms. If not just add it. There is also a Heiken Ashi Smoothed, but the turning point (when candles change color), has a bigger lag time.
You can choose which time frame to use the Heiken Ashi, with the 5-min also good. The longer the time interval that you use, the bigger the lag time (losing pips on the reversal) with change in color.
O.K., had to strip this from a larger spreadsheet that combines other calculators that I use.
Just enter your numbers in the yellow boxes, and the number of lots to trade will be in red.
Remember to factor in the spread.
Attached is 15-min EUR/USD with 2 channels plotted.
The horizontal channel (black) takes the low and high and shows fib extensions going up.
The diagonal channel (red) is pulled from Points 1 to Point 2 (see dots). The extensions thereafter are 61.8, 100, 161.8, 261.8.
The pair ended the week at the horizontal 100 FE.
These pulls were curve-fitted to past action. The result is that we are able to see the support and resistance (S&R) levels for future trading.
Asia opened with an ABCD to the downside on EUR/USD. per attached 15-min chart.
Note that the indicator "Time_Modified2" did not color the start of the week correctly. It used the tan color of the US session as continuance of Friday. I'm not sure if I can fix this.
Large breakout from Asian low. Attached is 15-min chart, which shows both breakouts.
As previously mentioned, verbal or actual intervention rarlely works/lasts for a few hours or days. The traders revert to pounding the Euro based on the same pessimistic outlook/fundamentals.
EUR/USD 15-min
Here's another way the look at the same breakout. I had drew the channels after the second low (1) was established. Watched EUR/USD respect the expansion fibs.
If you drew the ABC, you would get the same levels as the previous chart of course. I didn't want to clutter this one.
See how the pair paused at each diagonal fib line ( 1 & 2) en route down? Those were your exit levels.