Attached are 2 charts.
The 1-Hour chart
Displays an ABC pattern. The move to break Point B (1.2772) and extend upwards is set up now.
The fib extension tool has the FE 100 at 1.2853
Caution, as the move needs to clear a hurdle en route.
As mentioned in a previous post, the 38.2% retrace price of 1.2797 reached May 7th is significant. Allow move to confirm above 1.2800, either with a 5-min candle closing or some other method to your liking.
Once that is violated, we can anticipate the move hitting the FE 100 price of 1.2853.
The next major fib is the 50% retrace at price of 1.2886.
Then the FE 161.8 price of 1.2955
Then the 61.8% retrace fib of 1.2972
This is not advice. Just a learning example.
Last edited by fxbaja; 05-08-2010 at 05:12 AM.
Brief Article on A-B-C-D Pattern
Just want of provide a link on the subject, as I just saw this today. This published author of 9 books, has 40 years trading experience and is an expert in pattern recognition. I am not promoting this gentleman nor have I ever purchased anything from him.
Gartley's AB=CD Pattern By Larry Pesavento - Traders Log
Some of his important notes in bullet point:
There is another "guru" that preaches a method that trades from the Point C 38.2% retrace all the way to a 1.382 extension (FE 138.2). I'm not an advocate of that method myself, but have not done any sophisticated study/review. I feel that it will only be successful in a heavy biased market going in the direction of your trade.
I do, however, trade from the retracement level to another fib level, but not past B. This is due to my conservativeness. I'll just place a tight stop-loss beyond "C" and my risk/reward must be minimum 1:1. To me, the probability decreases as each fib is met going from C toward B.
This method requires traders to confirm that C is indeed going to hold as the retrace point. This must be done through other tools/indicators such as S/R, Ichimoku clouds, OB/OS oscillators, fractals, etc.
Last edited by fxbaja; 05-09-2010 at 08:08 PM.
May 10th London Brakout Set-up (1)
EUR/USD vaulted to upside spurred by EU bailout budget plan of about $750 Billion.
As pair getting ready to leave the Asian session (red box), we look for our ABC pattern. Point C must confirm and we plot fib extensions.
Chart (5-min) also shows 2 ABC patterns leading up to this one.
May 10th London Breakout Part 2
Looks like C may possibly establish itself. Let's wait to see if it breaks B.
FE 100 is 1.3180
Point B = 1.3094
Gross Pips = 86
EDIT ----------- Move faltered and dropped to 50% retrace of A-B. Need to re-set C at next pivot.
Next fib of 61.8% below is 1.3000
We'll wait for C to establish, project FE targets, then see if move breaks B.
Last edited by fxbaja; 05-10-2010 at 10:06 AM.
False breakout to downside. Broke Asian low (1.2900) but did not confirm. Look at 5-min chart. That 5-min candle that pierced through the Asian low of 1.2900 was a "hammer". I know that's outside of this lesson. Just want to say it was not a confident breach of Asian low.
Redraw fibs, using that candle's low as Point B.
C= 1.2934 Let's see if it holds. Move heading down again.
Waiting to see if it breaks B.
After breaks B........Target profit is FE 100 = 1.2822 for 53 gross pips
Check 1-min pivot for stop-loss.
Edit: If you targeted 15 pips, and entered around 1.2897.....you made money.
Edit 2 @ 13:20 GMT. Point C did not hold. Redraw if new C develops.
Edit 3 # 13:50 GMT. Point C moved to 61.8% retrace fib of 1.2943.
Headed down towards B again, now at 1.2910, so let's wait to see if it breaks B.
FE 100 Now at 1.2831 for 44 gross pips
Edit 4 @ 14:00 candle. Broke Point B waiting for confirm, now at 1.2765. In baby.
Edit 5 @14:20 GMT. Hit profit target at the FE100 price of 1.2831 + 4 pips to cover 3-pip spread and i pip cushion.
Had stop-loss above 14:04 pivot price of 1.2879 (+4 pips), after quickly moving it from previous pivot of 1.2891.
Entry price was 1.2868 at 14:02 candle.
Exit price = 1.2835
Risk = 15 pips
Profit = 33 pips
Will post chart pics later, been up all night.
Last edited by fxbaja; 05-10-2010 at 02:29 PM.
Breakout of US Session Low Set-up
Title should read ..from European session low
Set-Up on EUR/USD
A = 1.2943
B = 1.2916
C = 1.2879
FE100 = 1.2752
64 pips gross profit potential if B breaks.
It's backed off after probing to 1.2713 and now at 1.2829
Last edited by fxbaja; 05-10-2010 at 04:50 PM.
Move stopped at 1.2762 and bounced.
Took some profits (2/3rd of lots)with trialing 15-point stop-loss at 1.2777
Balance exited at 1.2803 (including spread).
I had also moved my stop to break-even when it moved passed the FE 61.8
Here is pic of 1-min FE that I drew. C-D leg bounced off FE 61.8. It started gaping up.
Money management and risk aversion...used trailing stop for majority of lots. Balance manually exited when I saw that active bounce with gaps up.
Also on 5-min, a new ABCD had emerged. It's Point D was about FE 1.27. That is the number the guru had used. See recent post with link to article.
Anyway, can't complain, had nice 2 trades.
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