EUR/USD - Oct 26th
General plot using the fib retracement tool on 15-min chart:
High = 07:00 1.4080
Low = 23:15 1.3907
Regular 138.2 = 1.3841 (hit 15:00)
Due to data at 08:30 and 14:00, needed to squeeze any trades in-between
A = 05:30 high 1.3981
B = 09:30 low 1.3921
C = 10:00 high 1.3962
FE 100 = 1.3901
FE 127 = 1.3884
FE 161.8 = 1.3864 (hit 13:30)
Unless one specialized in trading the news, wise to wait for a pivot after data released. The ABC plotted fit in very nicely between data.
Using retracement fib plot A-B, the 138.2 = 1.3898 and 161.8 = 1.3884
We had previously mentioned our 4-Hour plot. EUR/USD is now sitting on the low of 1.3857.
Low = Oct 22nd 1.3857
High = Oct 24th 1.3994
Pair had bounced off its regular 161.8 extension price of 1.4079 on Oct 25th 04:00.
Next major pivot was at the 61.8 fib, where it retraced about 38.2%. From there it made a regular extension of 138.2 to 1.3841. Attached is chart.
Last edited by fxbaja; 10-26-2010 at 05:09 PM. Reason: Add 4-Hour Chart
We did not review the Yen pairs, so good time to throw out a test.
USD/JPY - Oct 26th GMT Chart Time
1) Using a 15-minute chart, apply the fib retracement tool to significant high/low during European session incorporation 08:30 GBP data.
A) What are the 138.2 and 161.8 regular extension prices?
B) Using the closing price of candles, what was the pullback (retrace) fib ratio during the European session, prior to extension into the U.S. session?
C) Was there a bounce trade during extension, and when, what price, and targets?
2) Zooming in at the peak price during the U.S. session, plot an ABC downward. If the FE 61.8 price is 81.37, what are the ABC prices? What was the pullback ratio?
3) Switch time interval on the chart to 1-Hour. Using the low of Oct 25th 08:00, and today's high, what fib did pair bounce off of during the 21:00 candle?
Hey there - are you all alone in here? I do not see anyone responding to your posts or is that my own stupidity - I just joined this Blog.
If I am seeing what you are doing correctly - you have a trendline that is divided into Fibinocci proportions? Just looking things over - have not spent enough time.
In any event you seem quite devoted to trading - You are the kind that makes it!
There has been very few responses. I'm guessing most viewers are not registered. Don't know why, perhaps afraid to download due to general fear of viruses.
That is one reason I list exact parameters of each trade, etc. I run an anti-virus program and have never had a problem with this site.
This thread does not highlight a trend line technique. If you read the first few pages, it will describe that this focuses on trading the ABCD patterns. It is based on Fibonacci price action, not indicators.
This is also referred to as "Harmonic Trading". I don't necessarily compartmentalize it as such. Patterns have strict parameters. An example is that some harmonic traders require an ABCD pattern to have a 61.8% pullback for Swing C, otherwise it is invalidated. They also have patterns such as the Gartley and Butterfly. Although I did provide an updated indicator, I don't trade patterns per se, because its still a bit cumbersome as it relates to intra-day trading in the Forex market.
A couple of indicators can be useful to detect multi-time frame trend and/or momentum, as we have mentioned. We also have an indicator that divides the 3 sessions for easier viewing. Note that we use a different start time for the European session (08:00 GMT) than the London Open (coinciding with the stock market) of 07:00 GMT.
The 2 main tools are:
Fib Expansion (ABC)
Both of these, plus a host of others, are standard in the MT4 program, which is free. The "community" also develops indicators for MT4 and make them available free, as you probably know.
In summation, if a trader understands how the Forex market moves in relations to Fibonacci ratios, he/she will have a distinct advantage.
The ABCD patterns and price action allows us to anticipate extensions. If we understand how the market operates, and where it is is going, we then apply money management techniques to take advantage.
Your query comes when I am going to expand a little more on the money management segment.
Welcome and I hope you will gather something useful for your trading.
Oct 27th EUR/USD
EUR/USD – Oct 27th – 5-Min Chart
Mid-Asian session, made ABC starting at 02:20 high of 1.3843, and extended to its regular 161.8 of 1.3775 during the 07:00 candle period. It also touched the FE 127 of 1.3773.
We had also identified this area as significant support on the 4-Hour chart fib plots.
Pullback for Point C swing was 61.8%.
Trading break of Point B produced about 25 gross pips. Form the pullback, gross was about 50 pips.
The indicator Forex Freedom Bars had all 4 time-frames in a down trend. Exit was ahead of 08:00 data.
Attached is 5-min chart which highlights the 2 downward ABCs.
During the European session, pair retraced off aforementioned support nearly to Point A level. Based on Asian session high, retrace hit the 78.6% area, partially fueled by the 08:00 data. Let’s call this the general retracement plot.
This high of 1.3853, achieved at 10:35, was also the FE 235.2 extension of the ABC formed starting at 07:25 (see 5-min chart for better view of small swings).
Fibo fan plot from 0:50 to 07:10 provided diagonal S&R.
After 14:00 data release, which showed positive U.S. housing numbers, pair ratcheted down.
1st ABC had FE 100 = 1.3764 and FE 127 at 1.3746. Since the break of Point B occurred during data release, we wait for the dust to settle and for a possible pivot.
2nd ABC with swing times of 14:00/14:20/14:35 nailed it with an FE 161.8 of 1.3734.
- Pullback was 61.8%.
- FE 100 = 1.3758 (same as regular 138.2 extension of 1.3757). Large bounce off this FE which meant stop-out if profit not taken or stop placed below Point C.
- The area of the FE 100 was also near the 1st ABC’s FE 100 of 1.3765. The 5-minute candles’ closing price used this as support, upon first approach.
- Our rule pertaining to smaller A-B distances of 45 pips or less, allows us to target the FE 161.8. Reward = 40 pips gross from Point B. Placing Stop-Loss above Point C was 27 pips plus cushion. Therefore risk/reward was easily adequate at about 32/35 net pips.
- If partial or entire profit not taken at FE 100, necessitated some patience. The Forex Freedom Bars had all 4 time-frames in downtrend. Bounce off the FE 100 stop precisely at the 61.8% retrace fib, which was Point C.
Calculations for partial profit at the FE 100:
Point B = 14:20 low 1.3773 = entry 1.3771 (estimate)
FE 100 = 1.3758 (hit 15:00) = + 10 net pips on 70% of lots (exit price 1.3761 after spread & cushion)
10 lots X 70% X 10 pips = + 70 pips
- move stop-loss 5 pips above Point B = 1.3778
Stopped-out on balance of lots due to bounce off FE 100.
10 lots X 30% X 7 pips = minus 21 pips
Net = + 49 pips
Average = 5 pips per lot.
Obviously, if Stop-Loss was not moved, profit would have been 35 net pips per lot X 10 lots.
Alternatively, another option was to leave the stop-loss above Point C on remaining lots. Let’s look at the risk/reward of this scenario.
First 70% exited at +10 pips each lot = +70 pips.
Remaining 30%, in this example it’s 3 lots, X 35 pips net profit = 105 pips
Risk on remaining 3 lots X 32 pips = 96 pips
RISK/REWARD 96/105 on remaining lots.
Total +175 net pips
Average = 17.5 pips per lot
1) Some traders move their stop-loss to break-even on remaining lots.
2) Nice fibo fan, which was easy to plot on this day. Provided support 3 times en route down. Its 50% fib coincided with the 2nd ABC’s FE 100 and FE 161.8.
3) The Asian Low of 1.3770 was breached with the 2nd ABCD pattern. Since we understand what the price action is doing, it helps us deal with the pair bouncing back into the Asian range temporarily.
The reason in this case as described above, was a bounce off of the 2nd ABC’s FE 100 and 1st ABC’s FE 100.
Last edited by fxbaja; 10-27-2010 at 10:28 PM.
Oct 28th EUR/USD Asian Bounce
EUR/USD bounced of previous day's European High of 1.3853, reaching 1.3852 during the 07:05 5-min candle period
ABC downward from that high had the FE 100 = 1.3809 (Hit 07:30 candle)
Session 61.8 retrace fib = 1.3807
From previous day's European High to U.S. Low, the 61.8 fib = 1.3807
Applying the Ichimoku had bottom of the cloud (Senkou Span B) at 1.3809
Fibo fan from Asian Low to that high = 61.8 at 1.3809. The 78.6 also caught
Although it did have a subsequent pivot and further extension, these bounce trades are normally quick and conservative. This scenario went for gross of 43 pips.
Net around 30 pips due to quick touch of top may not have triggered an auto fill, thus requiring manual entry a little further down from top. Depends on broker's price/feed.
Alternate exits were at other fib levels based on retracement using either Asian Low or U.S. Low.
Exit ahead of 08:00 data prudent.
Last edited by fxbaja; 10-28-2010 at 08:55 AM. Reason: Fibo fan comment.
We trade using a few different techniques but all with Fibonacci. This is more of a classic trading style versus today's desire to have indicators, back testing, and robots.
Trading this way cannot be duplicated from trader to trader where an equity curve and/or full report is of any assistance - even if I am at liberty to share. Some months we do more of one kind than the others. Sometimes we trade during more than one session.
In this thread, we share 3 styles/techniques:
1) Breakout, using the fib expansion tool (ABCD). Plotting A-B-C will allow us to project a high probability for D. Entry at break of B or at C.
2) Bounce trade opportunities. Utilizing tight stop-loss can produce good risk/reward ratios.
3) Trading between fibs. Identifying support & resistance levels, and trading between these levels.
And finally money management will differ from trader to trader and thus affect reports.
Here is an example. Just with techniques #2 and #3, we had an average win ratio of 70% and 14 pips per win. Remember, these are basically scalping techniques (I call it shaving). This segment trades very conservatively. Average 10% growth per month.
It is not unusual to run off 10-15 consecutive wins.
We have different segments using various techniques based on risk factors and objectives.
|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