A-B-C-D Trade - page 24
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We passed on this tricky trade entry. It did spike up to hit the FE 100 of 1.2381. Moved too fast for our entry and remaining pips to FE 100 too small.
We tend to be conservative and didn't like this opportunity. But some will trade it.
A 15/15 was a winner of course.
I'll keep this short. 15-Min chart illustrates both the Asian Low and European Low breakouts. Plot them, then switch to 5-min chart to see entry candle/price.
1) Asian Low.
A-B = 48 pips
Entry 1.2343
FE 100 = 1.2333
FE 127 = 1.2319
FE 161.8 = 1.2304
2) European Low
A-B = 40 pips
Entry = 1.2308
FE 100 = 1.2302
FE 127 = 1.2293
FE 161.8 = 1.2279
If we used the higher Point A of 1.2282, we'd be waiting for FE 100 1.2272 if profit not taken at 1.2279.
We monitor both and make decision to exit or tighten stop-loss.
A major consideration is the retrace fibs:
1-Hour chart
Low = June 23d 14:00 1.2208
High = June 25th 17:00 1.2394
61.8% fib = 1.2279 which coincides with the FE 161.8 target!
Cheers
EUR/USD 1.2256 is area of big support. With low volume in Asian, we use caution and pass. Zoom out on 1-Hour chart to see better.
June 11th low and June 20th high = 50% retrace fib 1.2256.
Fibo Fans on 1-Hour.
Pointing down =
June 22nd high 1.2353
June 25th low 1.2253
Point up
June 23rd low 1.2211
June 25h high 1.2394
We'll look to move this as we ran out of fibs.
EUR/USD consolidated at support area of 1.2256/50 through early and mid Asian, finally breaking downward thereafter.
Attached 5-min chart - breakout of Asian Low during Euro session:
A = 07:20 1.2246
B = 07:55 1.2212
C = 08:05 1.2221 (just above this for stop-loss)
Asian Low = 1.2212
Entry = 08:15 1.2205
FE 100 = 1.2187
FE 127 = 1.2178
FE 161.8 = 1.2166 (target)
Stop-loss above pivot price of 1.2221 + 4 pips = 1.2225.
Risk = 20 pips
Reward = 36 pips
Extension reached FE 100, consolidated and slightly re-entered Asian Low, before reaching other FE levels.
We were safe since we don't move our stop-loss until it hurdles the FE 100.
A wider ABC pull was using the high of 1.2288 as Point A, etc. However, the Point B 1.2230 was 18 pips from the Asian low. Thus we decided to take the tighter pull.
Monitoring the wider ABC, we understand why extension stopped at 1.2152, which is the FE 161.8.
We see the market clearly when using this technique and tools. Certain rules, when implemented, can reduce risk factors.
Plotted on 5-min EUR/USD:
A = 06:30 GMT low 1.2166
B = 06:40 GMT high 1.2238
C = 08:40 GMT low 1.2205
Asian High = 1.2238
FE 100 = 1.2277 (target)
FE 127 = 1.2297 (hit)
FE 161.8 = 1.2322
Very large breakout candle at 09:15. If entered = opening of next candle at 1.2251
Clean breakout without retrace back below Asian High.
Profit target at FE 100 achieved during 09:55 candle.
European data released around 09:00, Euro CPI and Unemployment.
We're going to have to come back to address the tricky breakout of US low.
Topic du jour is the breakout of Asian High. Long but rewarding night, as Europe has just closed.
Let's draw 2 ABCs on the 5-min chart, as this was what I refer to as a step ladder.
Red Fibs:
A = 06:40 low 1.2196
B = 07:35 high 1.2235
C = 07:45 low 1.2225
Asian High = 1.2248
FE 100 = 1.2264
FE 127 = 1.2275
FE 161.8 = 1.2288
FE 236.2= 1.2317
----
Black Fibs
A = 07:45 low 1.2225
B = 08:35 high 1.2314
C = 09:30 low 1.2271
FE 100 = 1.1263
FE 127 = 1.2387
FE 161.8 = 1.2419
FE 236.2 = 1.2486 (hit)
----
Extension halted (thus far) at the June 21st high area.
Of extreme importance, on the daily chart we had advised to watch the 50-day EMA, which would act as resistance. The pair is there now.
Intermediate traders can move their stop-loss as extension ratcheted upwards, based on pivots or fibs. Some would have taken partial profits and trend the balance. Using the Heiken Ashi Smoothed on the 15-min also helps one stay in trade longer.
We understand the rise of this pair may be attributed to positive news from the Euro Zone, where is was reported that the Euro Central Bank will provide funds to cushion the banks. Coupled with negative data from U.S., EUR/USD is at a 6-week high.
Cheers
As things wind down for the week, please note the U.S. will be on 4th of July holiday through Monday and thus anticipate lower volume with USD pairs and during U.S. session Monday.
The attached 15-min chart containing the 2 ABCs is used due to the width of action and coverage of both breakouts.
1) Breakout of July 1st European High (black fibs):
A = July 1st 16:30 low 1.2434 (alternate low was 17:00 1.2437)
B = July 1st 17:30 high 1.2483
C = July 1st 18:30 low 1.2461
European High = 1.2483 (same as Point B)
Entry 19:05 (5-min candle opening after break candle closed/confirmed) at 1.2489 + spread = 1.2492.
Stop-Loss = just below 5-min pivot 18:40 candle low of 1.2461 + cushion = 1.2459.
FE 100 = 1.2510
FE 127 = 1.2523
FE 161.8 - 1.2540 *
Risk/Reward = 33/48
The quick price action that reached the FE 161.8 was too fast to fill us. Thus profit hit when it retraced and hit stop-loss just below FE 127 fib. Profit = 28 net pips.
* Using the alternate low would make take profit target FE 161.8. If we didn't, it was not worth trading to FE 100 based on risk/reward.
----------------------
2) Breakout of July 2nd Asian High (blue fibs):
A = 18:30 low 1.2461
B = 19:45 high 1.2539
C = 05:15 low 1.2485 (alternate low 1.2481)
Asian High = 1.2531
Entry = 11:55 (5-min candle opening) 1.2534 + spread = 1.2537
Stop-Loss = 1.2516 + cushion = 1.2514 (11:35 pivot low on 5-min chart).
FE 100 = 1.2562 (target)
FE 127 = 1.2583
FE 161.8 = 1.2610 (hit, albeit quick)
Risk/reward = 23/25
If we waited for breakout to hurdle nearby U.S. high of 1.2540, entry 1.2543 ( open of 12:05 candle on 5-min chart).
Multiple options fro stop-loss as witnessed by 5-min pivots prior to breakout. Breakout was clean, thus any initial S/L chosen was not triggered.
If trading beyond FE 100, extension hit FE 161.8 quickly but stayed in area long enough to extract profit pretty close, either with manual exit or take profit 2-3 pips below.
We always move stop based on fib or pivots as extension gains. If we look at the 5-min, we can see it bounce off FE 161.8 area on FIRST approach, reaching 1.2608.
It we did not exit, it would have stopped us out just below the FE 127. It is always an option to input take profit with 2-3 pips cushion.
The round numbers, such as 1.2600 in this case, always have waiting orders, trading off the anticipated bounce. Many traders will come in early, which explains the force fighting a clean hit to FE price levels above these round numbers.
------
Both ABCs had alternate Points, but they were very close and didn't make much difference with the FE levels. We monitor both.
Edit: Final note. U.S data released around 13:30 affected pair and eventually sent it on retrace. We just exit prior but don't get caught up with predictions, etc.
Have a great weekend....Cheers!
EUR/USD had to hurdle waiting sell orders at 1.2600 level prior to advancing to the FE 100 price of 1.2661.
Tricky plot of ABC swings, as well as tricky entry based on aforementioned 1.2600.
Lots of pivots, so let's use the 15-min chart for better clarity.
A = July 6th GMT 04:30 low 1.2517
B = 08:30 high 1.2606
C = 10:00 low 1.2572
Pair probed below this, thus 13:30 low of 1.2564 was alternate.
To anlayze this we need to look at the retrace of A-B.
Our fib retrace tool confirms that 1.2572 is the 38.2% retrace fib of A-B.
FE 100 = 1.2661 (target)
FE 127 = 1.2685
FE 161.8 = 1.2716
Addressing ENTRY:
A false breakout occurred at 08:35 5-min candle, with entry price of 1.2604 on next candle opening.
The 13:45 candle would have registered a stop-out at 1.2564.
Additional concerns were previous resistance with July 2nd European high 1.2610, however that was not a deal breaker for entry.
The only clue for confirmation came on the 15-min chart, when candles refused to close above 1.2600 until the actual breakout.
Please note that different data feeds may not have registered the low of 1.2564. In any event, hindsight shows that the market respected a.2572 as Point C - with the exact hit to the FE 100 price of 1.2661.
A tricky set-up and entry. Likely a losing trade unless one waited for the 15-min to confirm. We use the 5-min to confirm.
A 2nd entry would have been a successful trade. Break candle was large (fast). Entry at 14:05 (next 5-min candle open) price of 1.2617 + spread = 1.2620. Reward potential = 41 pips
Stop-loss options:
- just below 5-min pivot 1.2564 + cushion = 1.2562. Risk = 55 pips
- just below 38.2% retrace fib 1.2572 + cushion = 1.2570. Risk = 47 pips
- just below 23.6% retrace fib 1.2585 + cushion = 1.2583 Risk = 34 pips
The last option is the only one that provides a 1:1 risk/reward ratio or better.
It should be noted that since entry price is not known until the last minute, you should have the various scenarios written down (or on a spreadsheet).
You would then be able to understand the worst price you can accept for entry. Failing to receive that is a pass on this trade.
Don't forget to factor in the spread, in this example, on the BUY entry.
Cheers
July 7th breakout of U.S. low.
A = 17:30 high 1.2646
B = 19:25 low 1.2612
C = 21:40 high 1.2634
U.S. Low = 1.2612
FE 100 = 1.2599
FE 127 = 1.2590
FE 161.8 = 1.2578 (Target) Hit 04:15
Hit at/near target at 04:15, after many hours of consolidation.
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July 7th breakout of Asian Low
This actually turned out to be the finish of the previous extension, hitting the 236.2 fib.
A = 06:20 high 1.2601
B = 07:35 low 1.2567
C = 07:50 high 1.2590
Asian Low = 1.2567
FE 100 = 1.2556 (hit)
FE 127 = 1.2536
FE 161.8 = 1.2511 (target) not reached
This trade opportunity either has take profit at/near the FE 100 or break-even (moved stop-loss).
------------------------------------------------
July 7th breakout of Asian high.
A = 12:15 low 1.2562
B = 13:40 high 1.2610
C = 13:50 low 1.2595
Asian High = 1.2624
FE 100 = 1.2643 (Target)
FE 127 = 1.2655
FE 161.8 = 1.2673
Entry Offered = 14:35 opening candle price of 1.2629 + spread = 1.2632
Stop-loss just below 14:20 pivot 1.2613 – cushion =1.2611
Risk = 21 pips
Reward = 11 pips
This is a pass due to poor of risk/reward ratio.
Extension did hit the FE 100 during 14:50 candle.