A-B-C-D Trade - page 340
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The London Open (08:00) is GMT + 1 hour, and therefore 07:00 GMT. This is used for the "European" open as well, when referencing the 3 session of Forex.
Reference link: Worldwide stock markets map shows the current open closed holiday status and current time for stock exchange- 24 hour format
or cut & paste: worldtimezone.com/markets24.php
The attached chart is a 15-minute EUR/USD with session colors, which is painted by the indicator Time_Modified.
We aligned the fib channel tool to yesterday's (May 28th) Asian session (yellow), which is 00:00-06:59 GMT, LOW and the early European session (blue) pivot LOW established at 07:15. This plot produced an upslope.
The lower channel was revisited at 09:00 for a BUY opportunity, and proceeded to bounce up. It met resistance at the upper channel 11:00 for a SELL opportunity.
Price declined and broke the lower channel for a breakout (SELL opportunity) to the downside.
We stacked 2 more fib channels of equal proportions below the initial plot.
This gave us a play (BUY) at the 100% expansion (arrow) at 15:00 of the same day. That could have also been the exit for the short coming off the upper channel.
The indicator HAMA_T3 displays the smoothed trend for guidance.
Fast forward to today's Asian session which was in a tight range and prime for a breakout.
We can see that the first attempt at the breakout met resistance at 07:15 this morning at the 2nd channel line from the bottom, shortly after the European open.
When trading the Asian Breakout method, some traders might have gotten spooked into exiting the trade after this bounce off resistance.
We will now point to the HAMA_T3, which provided "support" for that moment. Since the Asian price range was small, the trader can afford to wait a little longer to pull the trade due to a negative move against his/her position.
Surviving this pullback, with visual from the HAMA_T3, enabled trader to stay in the trade and ride the trend upward. Another instance of support by the HAMA_T3 occurred at 10:15, which was also on the other side of the same fib channel.
The next 2 channel lines (the 2 at the top) became take-profit levels. Price did reach the vicinity of the upper most channel at 11:00, and bounced back down to the HAMA_T3, and the 2nd channel level.
hi
i came across this thread by searching about Gann's square of nine theory, & i found here the indicator called "SQ9 (price) 22.5 factor 56".
pls can someone explain why 56 & what it's based on, is 56 connected somehow to gann no. ?
tia
hii came across this thread by searching about Gann's square of nine theory, & i found here the indicator called "SQ9 (price) 22.5 factor 56".pls can someone explain why 56 & what it's based on, is 56 connected somehow to gann no. ?tia
56 was added to the formula, as pictured below.
AnglePrice = MathPow(MathSqrt(Price) + Factor,2);
Original--------------- FactorIndex = FactorIndex + 0.125;
Index = Index + 1;
Modified-------------FactorIndex = FactorIndex + 0.56;// 0.125 <<<<<<<<<<< Renier gebruik 0.14
Index = Index + 1;
This 22.5 Factor 56 version calculates larger intervals between angle levels of course. As far as any link to Gann, the only thing found is that 56 is on of the list of trading day counts.
11, 22, 33, 45, 56, 67, 78, 90, 101, 112, 123, 135, 146, 157, 168 and 180.
Rather than using the modified version because it might have some mystical link to Gann theory, I suggest comparing the 2 versions side-by-side.
Here's a EUR/USD (Daily time-frame chart) example of using the fib channel triangle to identify a bounce opportunity after Point C has traveled down to Plot Line B.
A =Mar 8th high 1.31334
B = Apr 4th low 1.27438
C = May 1st high 1.32418 (127.2% extension of A-B)
On May 17th, price met the Plot Line B lower channel, for a BUY opportunity. This can be identified as Point D. That pivot low was an 88.6% retrace of the C-D leg.
We don't even have to re-plot the triangle for this BUY, since the interior levels are almost the same. If we did re-plot, Plot Line A-C would be at the location of B and D from the original plot. The new Point B would be at the original Point C.
We can also move Point A up a little, until the lower channel is position at the Point D pivot low.
When the new plot is made, it is a little more exact, and we can see the resistance at the -50% level, where price bounced on Thursday May 30th.
If that BUY was exited at the -50% level, the R/R was a gross: 50 divided by 12.5 (stop-loss) = 4:1
However, after spread and cushion, it would probably end up 2.5:1 or 3:1, depending on the traders.
One aspect we need to emphasis is the direction of the slope. This trade was in the same direction of the channel's slope. This means that as time elapses, we can gain in profit, since the interior ratios increase in amount of pips gained from the entry point.
The stop-loss level also slopes upwards, which allows the trader to trail the S/L if desired.
The opposite is true if the trade is going against the slope, counter-slope. The profit decreases as time elapses, and the stop-loss level increases.
If the trade hits the take-profit level fairly quickly, for example within 5 candle periods, the difference with the counter-slope is negligible.
Trading extensions (counter-trade) is always counter-slope. The original plot with the 127.2% extension of the A-B leg is an example of counter-trading an extension, and thus trading counter-slope, since the entry would be for a SELL at that Point C.
This is a continuation of the last example, with a more advanced twist.
Use the Andrew's Pitchfork tool, also found standard on the MT4 platform, and align it to the original A-B-C plot.
The tool requires user to click onto 3 locations. The first one is for the "handle" of the pitchfork, which is Point A. The other 2 is for the outer boundaries or corners, Point B and C.
Now, we plot a 2nd fib channel, in red color. It shall be aligned to the upper fork and lower fork lines. The interior levels of -31.4, -50, and -68.6 remain the same.
This gave us the picture with clues:
- The BUY entry on May 17th is exactly at the -31.4% level.
- Convergence of 2 resistance levels for a take-profit option. The red -68.6 meets the blue (original) -31.4, which resulted in a significant bounce against the BUY position. We can see previous support and resistance at this red -68.6 level during April.
If a new triangle was plotted for the BUY, the convergence would have been May 29th/30th.
Once again, we have EUR/USD Daily.
It is attempting to break out of a Symmetrical Triangle pattern, to the upside.
A = Nov 13 low
B = Feb 1 high
C = Apr 4th low
Draw a simple trendline from Point B to the high of May 1st.
The lower trendline is from Point A to Point C.
There has been 2 bounce trades generated by this plot, each were the 3rd touch to its respective trendline. These 2 opportunities are marked with arrows, May 8th SELL and May 17th BUY.
We also used the ABC coordinates for a Fib Channel Triangle (FCT) plot, which provided the interior ratios.
Currently, after breach of the upper trendline, price met resistance at the -68.6 level.
This surge was propelled by reaction to negative U.S. economic data (ISM Manufacturing), released at 14:00, about one hour ago.
Breakouts often give false signals, especially right after data. Some breakout traders use horizontal trendline to accompany diagonal trendline breach. In this case, it would be the May 8th high of 1.3193.
However, since the next high is so close, May 1st 1.3242, there would be natural indecision as to which pivot high to use. Most would probably pick the higher option of May 1st.
Another way to pair a 2nd hurdle to the Symmetrical Triangle's upper trendline, is to use to FCT's -68.6 level as the hurdle.
This set-up is more of the swing trade variety, versus a quick shave of a few pips
As per last post, trader may elect to use the FCT -68.6 level as additional hurdle for the breakout to the upside.
This occurred on June 6th (Thurs), after price respected the resistance at the -68.6 level, as illustrate on the attached chart. We zoomed in and overlaid a 2nd FCT (white color).
We aligned the 2nd FCT to the anticipated TP level at the original plot's -.68.6 level, and the -50 level. (original plot is blue)
1) To do this, first align the 2nd FCT's Plot line A-C (3 dots) to the original plot's -68.6 level.
2) Move Plot Line B (1 dot) upward, until this plot's -68.6 level is aligned to the original plot's -50 level.
The reason we did this is to produce a usable stop-loss level. As with our numerous posts with the FCT, the R/R is predefined. With the larger triangles, it is about 2:1.
We can see the S/L labeled as -112.5. This simply means that the distance is 12.5% of the measured interior space of the triangle. That S/L level is satisfactory below the pivot low of June 4th
Also labeled is an alternative location to move Point C, to May 17th as opposed to the original Apr 4th. It is so close that it would not have affected the trade, in hindsight. However, the S/L would NOT have been below the June 4th pivot low.
In summation, we saw resistance at the original FCT's -68.6 level. Therefore, we anticipated respect at the next level up, which is the -50. That was also near the May 1st high. This distance was our trade.
The overlay of the 2nd FCT allowed us to apply a risk/reward scenario to the TP distance.The resulting S/L level, just below the June 4th pivot, was a good "coincidence".
Gross pips to TP was about 182
Gross pips to S/L was about 70
Deduct spread and cushion.
A = June 11th 12:00 high 1.02504
B = June 12th 12:00 low 1.01544
C = June 133th 05:00 high 1.02254
Point C was a pullback/retrace between the 68.6% and 78.6% levels, from the A-B leg.
Today, medium-impact CAD economic data passed at 12:30 &13:00 GMT.
Price with upward bias since early European session, and
approaching A-C trendline (upper channel line of FCT) for a SELL opportunity.
Trendline traders call this the 3rd touch.
The last post's SELL opportunity = 3rd time not always the charm.
Now let's look at a FCT pointing up on the same pair and 1-hour time-frame.
A = June 14th 14:00 low
B = June 14th 16:00 high
C = June 17th 06:00 low (68.6% retrace of A-B)
This not only was a BUY at Point C, if one were waiting at the 68.6% level, but it also developed into a SELL off Plot Line B on June 18th 18:00 (arrow).
More subsequent bounces off the top channel took place. Note that these SELL opportunities were counter-slope.
As previously discussed, counter-slope trades may see erosion of TP and increase to S/L as time elapses.
Short trade duration usually take on minimal impact, but a long drawn-out trade will suffer.
SELL
A = Feb 1st high 1.3710
B = Apr 4th low 1.2744
C = June 19th high 1.3416 (68.6% retrace of of A-B)
If trading the pullback at the 68.6% retrace level, we can see the respect given to the Fib Channel Triangle's (FCT) interior ratios of -68.6%, -50%, -31.4%.*
Some traders may elect to add a secondary reason to enter. From a technical analysis standpoint, a momentum technique can be used as the entry trigger.
Since the momentum techniques usually lags, the take-profit (TP) target must still be enough to satisfy the reward/risk (R/R) above 1:1.
Targeting the FCT50% level would satisfy the R/R condition. For example, using a 4-hour chart with RSI set on 4-period, we can trigger entry when it crosses the 50 level.
This occurred at the close of the June 19th 16:00 candle period, at price of 1.3261.
At time of entry the diagonal FCT50% was at 1.2996. Since this triangle slopes down, it benefits the SELL position as time elapses.
In other words, the TP would not go up, and against this position. It allows the trader to set the TP on automatic, and not have to watch the market for long hours.
S/L = 1.3519 which made R/R:
Risk = 258 pips
TP1 Reward = 265 pips (gain to 50% of interior space of triangle)
TP2 Reward (1.2810) = 451 pips (gain to 68.6% of interior space of triangle)
Applying a trade management/trailing stop technique in an attempt to ride out the strong move down, one can utilize the 4-hour or Daily HAMA_T3.
Semi-automatic trendline tools (EA) are available in the marketplace, and priced about $250 up.
* If you are new to the FCT, be advised that the ratios run positive or negative from Plot Line B (trendline with one dot). Therefore, the labels can be confusing.
The first level down (in this example) simply is a gain of 31.4% of the space between the 2 plot lines. Next is a gain of 50%, and then 68.6.
You can change the labels in the "description" box for each level. However, to get the tool to calculate properly, we must input the negative numbers in the "level" box.