The short off 1.3135 area was successful as our assessment was within 3 pips at top and bottom of trade distance traveled 17:00-21:00 GMT.
Thereafter, pair made a higher high of 1.3143, but registered lower on the RSI(4-Period), forming BAJA bearish divergence.
We inserted the indicator camarilladt, which has its H3 SHORT level at the same as our resistance of 1.3135. However, that is for today, April 10th, and based on the previous day's price action.
This means another short opportunity was for today. The attached chart shows R1 level 1.4150, which can be used as the S/L.
Alternatively, entry can be effected when price dropped back below 1.3135. This scenario can use the high of 1.4143 as the S/L + cushion.
Price declined into previous congestion area near the Mars 45-degree of 1.3080, which was a TP option.
R/R = 50/15
The yellow fib plot used Low = 1.3031 High = 1.3143
GBP/USD SQ9(Price) 1.67449
Attached is a 30-min on GBP/USD utilizing SQ9(Price) 5760 that was adjusted to add more levels. We kept the previously posted StartPrice = 1.67449, which was the Apr 28, 2011 significant high.
Fib plot based on last week's Apr 5the High/Low 1.59074/1.58040
Today's 10:00 revisit of Low produced bounce to the 78.6% fib area.
We can see the Apr 5th-6th consolidation resting on the 653-degree level of 1.58199. Therefore the "BUY ZONE" was between that and the Low. Let's call Entry = 1.58100.
The TP target area uses fibs (white) and the Apr 6th consolidation at the 608-degree level 1.58828 + cushion = 1.58778.
S/L options include just below 675-degree 1.57884 + cushion = 1.57834.
Net R/R = 77/27 and ratio 2.8:1
The market can move very fast and therefore the courtesy touch of the Low may not have filled. Identifying the BUY ZONE allows for an idea of where entry can safely be triggered, while staying at adequate R/R.
Last Friday Apr 6th, we posted a USD/CAD chart with SQ9(Price) and fibs. We identified 3 levels of S&R for possible trade opportunities.
After watching a lower volume Good Friday stay in range-bound, despite NFP, a revisit to the 127.2 (.9995) occurred Monday Apr 9th. The max decline was to the MML level .9949.
Our resistance was just above this and the furthest of the cluster of resistance. Unfortunately, Tuesday's (Apr10th) risk-off conditions created a flight to saftey into USD, JPY, etc., and certainly away from commodity currencies such as CAD.
The 2565-degree resistance of 1.00087 did not hold during the 14:00 period. However, the S/L placed just above the 2543-degree did.
To get more S/L options, we can use the 178.6 fib (white) 1.00396, same as the +1/8th MML.
As we get the word about the risk-off environment, partially driven by Spanish and Italian bond auctions, we clearly have the option to move to the sidelines or exit early at a smaller loss. Here is the link to fxstreet report filed at 12:00 GMT.
European markets plunge on pressured European sovereigns
This area of trading may sound complicated, so digest what you can. Sometimes sudden surges are hard to avoid. In any event, if you watch your R/R and keep it adequately high, you can withstand a certain number of losses.
This is only one trade, in which the projected R/R was good.
CAD/JPY SQ9(Price) & Fibs
We have an intra-day SQ9(Price) plot using StartPrice of Apr 10th 01:00 high 82.160.
GAB and HAMA_T3 assist with its smoothing aspect. Fib plot Apr 9th Low/High of 81.230/81.962.
The Apr 10th top was a 127.2% extension. This is a 50% retracement of the wider plot using Apr 6th/Apr 9th High/Low.
The 90-degree level (81.256) is the key support, and same as Low of tighter fib plot. We marked a pullback during Apr 10th 12:00 period, with a white vertical line, contained by the T3 candles.
Price bounce down and stalled at the 127.2 of 81.031, before the U.S. session joined the party with shorts.
The major fib extension levels were TP options, together with the 180-degree at 80.357. Gain from the 90-degree to the 180-degree was 90 gross pips.
S/L just above the 12:00 T3 candle price of 81.501 made risk = 30 pips net.
Net R/R about 2.8:1
.GBP/USD MML & Divergence
We mentioned that several pairs were bouncing off their Apr 10th high/low levels.
The attached is 30-min GBP/USD with GAB and HAMA_T3 for smoothing.
We also have the MurreyMath1.0 (MML) and the previously posted 2 automatic divergence indicators. The one using RSI has input changed to 4-period to match our BAJA Divergence parameter.
The check mark labels the pair's Apr 10th hit to the 6/8th MML 1.5930. Today's revisit was during the 07:00 period.
Shorting into the top of the T3 candle produced net R/R of about 35/18 and ratio of 2:1. S/L was halfway between 7/8th annd 8/8th MML + cushion.
Price respected the T3 for support and made another test of the 6/8th resistance10:00-11:00. Price printed a slightly higher high this time. It triggered the CCI divergence indicator.
The RSI divergence indicator should have caught this as well. These are not perfect, but you can also recognize it with the naked eye.
This time around, the TP distance to the T3 candles was significantly less, as the moving average aspect was trending up.
The second hits always carry a lesser probability. If one were to take this trade, moving the S/L to break-even would have been prudent.
The result of the second short opportunity was a decline to the 5/8th and bottom of the T3 candles, a gain of about 25-40 pips.
A tighter S/L just above the 10:00 high of 1.5937 was the shred selection. This made the trade to the 5/8th MML a net R/R of 25/10 and ratio of 2.5:1
This example is simple, and visually easy to see. The automated MML and divergence indicators did the work for you.
As usual, money management is projected in advance. Using our risk/reward calculator and being real conservative in win %, here is result of what you can achieve:
R/R = 2:1
Risk = 2% per trade
7 wins 5 losses
18% return per month
Compounded one year $10K = $73K
This calculator can be found on googledocs. Or you can do an internet search and just use key words fxbaja.
Last edited by fxbaja; 04-11-2012 at 06:08 PM. Reason: risk = 2%, compounded ...
EUR/USD MML & Divergence
We have the same set-up on the 30-min EUR/USD. The only difference is the distance between MML is 15 pips, as opposed to 30 pips on GBP/USD.
We have 3 arrows pointing down identifying short opportunities, and a yellow vertical line pointing to the BUY off T3 support and divergence.
SELLs: Apr 11th 07:00, 10:00, 14:00
The 07:00 was the 1st revisit of the Apr 10th 12:30 high of 1.3137 and at the 5/8th MML.
The 10:00 high was the 2nd peak of BAJA divergence. The RSI divergence indicator did NOT catch it, but it was recognized easily by the naked eye. Using the next MML up, the 6/8th, for resistance was an important element.
The 14:00 was a 2nd revisit to that 6/8th MML.
All 3 short opportunities target 30 pips gross, a move of 2 MML levels down. The S/L therefore must make sense and keep trade at a good R/R.
S/L halfway between MML levels mad it 7.5 pips + cushion = 11 pips risk.
The net R/R should be about 25/11, and ratio about 2.2:1
The BUY also had the same approximate R/R, moving up from the 4/8th to the 6/8th.
This is a bigger view of this pair, with S&R provided by indicator Planetary SQ9 (PSQ9). The Moon and Mars are at 45-degree intervals.
We plot fibs based on April's High/Low of 1.6062/1.5804
We bracketed the diagonal Moon 270-degree and 225-degree (yellow).
Trend indicators are GAB & HAMA_T3, and Ichimoku
The market can stay in a range diagonally, just as it can using horizontal S&R. After a revisit and bounce off the Low on Apr 10th, price reentered the Moon range.
We can also see GAB rise above the T3 and Ichimoku clouds, during today's early Asian session. This was a BUY opportunity, trading with the trend.
The revisit of the 50% fib level 1.5933 during 10:00 today was one of the aforementioned peaks on last post. The Moon 270-degree was right there for additional resistance.
BAJA bearish divergence adds another confirmation for this Short.
|Thread Tools||Search this Thread|
|Thread||Thread Starter||Forum||Replies||Last Post|
|Tools of The Trade - Preparing to Trade||Microscope||Tools / Utilities||0||08-16-2009 03:15 PM|
Registered members gain free access to online FOREX currency trading tools, foreign exchange software, Metatrader MT4/MT5 expert advisors, MT4 indicators and EAs. Register now