A-B-C-D Trade - page 160
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Here's a 3-way split screen.
Upper left: 4-hour with the same SQ(Price) plot. Price just hit its 450-degree level.
Lower left: 1-hour, the APF, price just hit its AL!Lower_ML1.
Right: 1-hour hitting 88.6% horizontal retrace fib and pulling back as session ending. Move is over.
Here is the CFD for Gold, which tends to closely mimic Gold Futures. We used the 4 hour to emphasize the peaks and swings.
The Andrew's Pitchfork plot:
Handle = June 1st 12:00 high 1550.10
Upper corner = June 6th 16:00 high 1553.42
Lower corner = June 2nd 12:00 low 1519.35
Once again, rename APF to AL1 in objects list. Then apply indicator AML.
The yellow horizontal retrace fibs plot which had previously been posted:
Low = May 26th 12:00 and High May 31st. 00:00 1540.55
138.2 = 1550.41 (hit June 1st 12:00 candle)
The RSI(4) and EFT also on chart.
We can see that after making its 138.2 extension, the swing down to the 78.6 pivot low bottom was a BAJA bullish divergence. This low became the lower corner of the APF.
A 200% extension upward occurred on June 6th 12:00, based on plot using pivot high of June 2nd 16:00. We can keep this plot on chart (NOT SHOWN). This top slightly exceed the previous high and 138.2 level. It established the upper corner of the APF.
This top qualified as a BAJA bearish divergence. The other peak was the hit to the 138.2 on June 1st.
After creating the interior fibs of the APF, we must see confirmation. This happened with the June 6th and 7th candles hitting the AL1Upper_ML2. The June 7th candle's low also was price level of pivot high June 2nd 16:00.
As price continued to drop, activity stayed inside the channel between the upper fork and the Upper ML2.
Horizontal retrace fib levels (yellow) at 23.6 and 38.2 also met/respected.
We've been speaking about the BAJA divergence and providing regular examples since December. If BAJA divergence is on a 4-hour, we trigger on the 30-min (recommended).
The attached 30-min chart shows an arrow pointing to entry June 6th 17:00 open price of 1551.45. The top was 1553.42 on the 16:00 candle. With spread and cushion, the stop-loss risk for this SELL trade was about 3.00.
The chart shows the horizontal and diagonal S&R which is used for determining exit and managing trade.
The quick shave trade would be back down to the 0% fib which is the High of horizontal plot (yellow). That level was met by the Upper ML2 (gray dotted line). That result was +10.00 for reward/risk ratio of 3:1.
Other exit targets include the 23.6 and 38.2 retrace fibs.
The 38.2 retrace fib is the same level as the previous pullback on June 1st (best seen on 4-hour). This is significant. A conservative trader would exit just above that level.
Intermediate/advance traders would trade the bounce up from that pivot low. Exit options include the 0% fib and/or upper fork line.
This is another example of how S&R can enhance your trading. The channel was well respected.
And what would life be without our new found friend, the PSQ9. The red Moon 180-degree diagonal line slice through the chart to provide current support at the bottom of this move. We can see the candles hit it 3 or 4 times.
Volatile period after BOE and ECB held rates and ECB Chairman Trichet refused to telegraph timing of possible tightening (rate hike). Coupled with statements of economic uncertainty, this made markets nervous.
The attached EUR/USD resumes where we left off on the 1-hour PSQ9 chart. We add fib retrace plot Low = June 3rd 12:00 and High = June 7th 18:00.
We had recognized that the push down on June 8th to levels established on June 6th was significant for support. It was also the 50% retrace fib level.
BAJA divergence formed and pair bounced back up to the 23.6 horizontal fib (yellow), and Mars 270-degree (red), at 07:00. There was BAJA bearish divergence at this top.
The ECB rate decision was scheduled for 11:45, and England rate decision at 11:00. Intra-day traders exit ahead of these data releases. Any short was limited by this and captured a maximum of about 50 pips.
The 12:00 candle had early whipsaw to upside that hit hte Mars 270, before plunging down. That candle low hit the Mars 180, and the move continued to the horizontal 88.6 retracement fib (yellow).
Our 2nd chart with the APF shows bottom at the lower fork. It also shows the 161.8% extension. June 7th high to June 8th low. Pullback of 61.8 was to the upper fork. The 161.8 extension (same as an ABC's FE 127) was to 88.6 and lower fork.
Gold up and we'll try to post chart.
We zoom in on previous plot with APF, and add the fib channel based on technique of aligning with APF's middle and upper fork.
We plot horizontal fibs with Low = Jun 9th 12:30 1533.55 and High = June 9th 13:00 1540.55 (previous wide plot's High).
We circle where the 2 plots of resistance intersect. The fib channel 61.8 and the horizontal 200% extension fib.
Now let's talk about adjustments to a plot. The APF had more than one option for the handle (high). Using the 30-min chart, we moved it to June 09:00 candle high 1.46517.
This made the low pivot of June 8th fit better to the Lower ML 1 line. The other interior ML lines also were compliant with price movement/pivots. And finally, the just arrived extension bottom was a precise hit to the lower fork.
Although our original plot was decent, don't be afraid to move it around. This example is in hindsight but the lesson itself is very useful.
As previously mentioned, we don't recommend intra-day trading during high-impact data. However, once a trader is adapt at plotting S&R, the experienced trader can trade the bounce off the bottom.
And the last S&R chart we displayed is the 4-hour SQ9(Price).
The bottom hit the 383-degree line. We can also see the Head and Shoulder pattern.
Market is in Asian session ahead of 06:00 German CPI. Also U.K. GDP today.
Attached 30-min EUR/USD picks up where we left off. We marked the high of the massive 12:30 candle.
The whipsaw to that upside high 1.46516 is used for fib retracement plot. The bottom is 1.44764, which was the regular 161.8 and FE 127. The wider yellow 88.6 fib also there.
The bounce up from bottom hit the 38.2% retrace fib of this plot during 01:00. It is the same location of the yellow 61.8 and also met by center fork of APF.
The initial bounce hit the AL1Lower_ML1 and retreated prior to reaching the 38.2.
Bottom = 1.4480 more or less
23.6 = 1.4518 for +38 pips
38.2 = 1.4544 for +64 pips
It is not unusual for the market to behave like this, using the high of the spike for plot. In the minds of traders/market, this is the significant point due to the Trichet speech.
Today is an estimate of the next U.K. GDP figure, one month ahead, not the actual.