A-B-C-D Trade - page 39
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1) On our longer interval charts, as recently posted, we had 1.2666 as a significant fib area. EUR/USD established low of 1.2658 during U.S. session.
As pair shot back up past 1.2658, we knew a short on approach to 1.2666 was a play. Great bounce down to near Asian session low.
2) Attached is split chart of 5 and 15-min charts. On left is the 5-min with BUY just above session low of 1.2633.
We had to pull the trigger manually and was rejected as things moving fast. Reattempt filled at 1.2637.
Plotted retracement fibs to target profit. High = 1.2663 & Low = 1.2634.
23.6% = 1.2641
38.2% = 1.2645
We decided to exit at the 23.6 since the low was probed 3 times at start of the Asian session.
Net + 4 pips, with 5-pip stop-loss to leverage more lots.
Here's the same 2 charts a few minutes later. We plotted an ABC on the 5-min, resulting in a FE 61.8 of 1.2628, where it has bounced back up to 1.2634.
Herein lies the difficulty in assessing a breakout. However the new ABC plot does help. Generally, we need thrust. Asian is usually docile unless there is data, etc.
Opening of Asian saw EUR/USD get dragged down due to cross-pairs EUR/CHF and EUR/JPY.
We are also aware of next level of support, reached just a few days ago.
Breakout to upside stalling at FE 127. FE 161.8 = 1.2691
Edit: Thrust provided by better than expected European data at 07:55
Next high-impact data releases = 09:00 and 14:00
We're going to break the recap of action down into 3 parts, with small injections of fundamentals for dinner conversation.
1) ABC end Asian and into start of Euro session:
A = 07:35 low 1.2644
B = 07:55 high 1.2666
C = 08:05 low 1.2654
Asian High = 1.2666 (also major fib 23.6 on Daily chart, off high of Aug 18th and low of Aug 24th)
FE 100 = 1.2677
FE 127 = 1.2683
FE 161.8 = 1.2691
Initial breakout driven by European data at 07:55. Pair hit the FE 161.8 before resetting ahead of 09:00 data (Euro Zone confidence reports).
2) After the market made its way through the 9:00 data, which resulted in a retreat back to the Asian High, ABC plot for next data 12:30 Canadian GDP:
A = 11:30 low 1.2665
B = 12:00 high 1.2690
C = 12:20 low 1.2670
FE 100 = 1.2695
FE 127 = 1.2702
FE 161.8 = 12710
FE 236.2 = 1.2729
Market was sent to upside on negative CAD GDP. Cross-pairs, such as EUR/CAD pulled this EUR/USD up. After hitting the 236.2 fib and bouncing, pair reached its peak price of 1.2742. This price is the 50% fib from move of July 29th low 1.2151 and Aug 6th high 1.3333 (considered a major fib).
3) Keeping with our recent highlight of bounce trading, a short off of 1.2742 was prudent. We measure retracement fibs from low of 12:20 1.2670 and high 14:15 1.2742.
23.6% fib = 1.2725
38.2% = 1.2714 (target)
50% = 1.2706
61.8 % = 1.2698
78.2% = 1.2685
Retracement fibs not on attached chart.
Pair retraced all the way back to Asian High area, with last thrust after release of FOMC Minutes at 18:00. Since data release on U.S. Consumer Confidence was at 14:00, getting in right after announcement would have involved a wide spread and fast market (slippage).
The high price was established at 14:15 and volume subsided enough to get a decent fill. Trading so close to data announcement should be reserved for intermediate/advanced traders. In this case "they" should have been confident in reading the market and an anticipated bounce off a major fib/resistance. Counter-trend trading, in general, is also not for beginners, in our opinion.
Shorted EUR/JPY based on break of trend line on 5-min. Target 38.2% retrace fib + 3 pips = 107.14.
At 107.15, finger on button in case we exit manually.
Manually exited at 107.14 + spread = 107.17.
Net = 14 pips.
As you can see on attached 5-min chart, we had fib fans and retrace fib plot.
Entry after break of trend line (dotted line), filling at 107.28.
Retrace fib pull from:
Low = 23:55 106.58
High = 03:50 107.42
We targeted 38.2% 107.10 + spread = 107.13....bt we exited manually at 107.14 + spread = 107.17.
Correction: Last trade was obviously 14 gross pips and 11 net pips.
ANother short of EUR/JPY, target 107.23 (23.6 fib) + spread = 107.26.
Entered sell and filled at 107.41. We declind exit with first push to 107.30 and consequently had to wait for pair to fall back down.
Manual exit at 107.31 + spread = 107.34. Net + 7 pips
Chart shows fibo fan pointing up and pair respecting that, thus our conservative decision to exit.
Tight S/L enables trader to leverage more lots. We are very pleased with the last two trades. First was risk/projected reward of 18/18 and last trade was 10/15.
Resistance at 1.2776.
Short between now 1.2771 and 1.2776.