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Snow Dog

Higher Lows Lower Highs

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EUR GU EJ 21 Nov

There seems to have been a big move pre European market open on news/rumour. We'll have to see follow through. Also UK MPC minutes this morning but there shouldn't be surprises there with the state of UK economy.

 

In view of the drop bias down.

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Recap 21 Nov

 

The news spike lower did not follow through and all pairs returned to trend. EJ was the easiest to pick up on with the moving averages sloping up still. The most basic of trend indications.

 

22 Nov

 

EUR - D chart shows no real progress higher for 2 days now, popping higher this morning only. We are at a general resistance level or it could be the market waiting for the outcome of EU meetings. Bias up.

 

GU - Making better progress higher than EUR. We are in general resistance area also. 4hr higher high higher low flow clear. Bias up.

 

EJ - The strongest mover of the 3. Looking to buy dips. Bias up.

 

With a very strong move yesterday, after the dip, we'll see if US holiday calms things down a little.

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22 Nov

 

EJ - The strongest mover of the 3. Looking to buy dips. Bias up.

 

With a very strong move yesterday, after the dip, we'll see if US holiday calms things down a little.

 

EJ looked the best bet to us today.

 

In uptrend (the 200 ema is way below us), 15 min HL above days open and Y's high, little/no upper wick on set up candle.

 

Exit half at W R2 and bal when 2nd move up failing to hold above R1 for +31 and +39 respectively.

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Recap 22 Nov

 

EUR and EJ had strong moves up as per bias. GU fell from the general resistance area and W R2 1.5962.

 

23 Nov

 

EUR - Pos D close above 50 RSI level. 4hr higher high higher low in tact. 1hr shows first signs of stall. Bias up.

 

GU - D neg close doji, RSI on 50 line and still above its ma, price still above D 8lwma. 4hr higher high higher low flow still in tact. 1hr has the potential to flip over first to give a lower high. We are at a resistance level. Bias up but a negative engulfing close on 1hr would signal potential scalp sell.

 

EJ - D pos close, RSI flat. 4hr RSI crossed below its ma. 1hr lower highs showing but we seem to have a base around 105.90. Bias up.

 

There is potential for scalp sells on all 3 due to 4hr and 1hr, these will be against the D which has not yet confirmed.

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EJ - D pos close, RSI flat. 4hr RSI crossed below its ma. 1hr lower highs showing but we seem to have a base around 105.90. Bias up.

 

 

Vol coming back, 4hr higher low higher high still on with pos close hammer. 15 min solid engulfing close (in terms of our definition close above prev 2 candle closes) little no upper wick on set up candle, higher low into trend.

 

Its debatable that this entry was late but with such a poor range so far today happy to take. Close week off with +27, exited as soon as move up stalled and rolled over. With some neck/back health issues today keeping computer time limited just happy to have snagged this one.

 

As long as ej keeps signalling and other TF's not screaming sell happy to keep buying. Some kind of retracement must surely come???

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For me the trading psychology switch went on when (to quote a phrase) I stopped trying to jump on everything in sight (I've been in front of the computer 10 mins and haven't had a trade yet :doh:) and started acting in 'my own best interests' (Trading in the Zone). That phrase covers a multitude of trading sins.

 

I've used the analogy before but studying for certain finals (accounts being the best example) I would take the answers to questions and then worked backwards to make sure I clearly understood where the answers were coming from.

 

Relating that to forex, I started to look at a D chart with the end in sight. Certain things seemed to happen over and over again at the start of a move, certain things became clear. Nothing works 100% but they work often enough that when they fall into place your odds become much greater. That helps you to not chase everything and to wait for your fave weapon of choice (ours now 15 min above 200 ema sorry can't change 1st post) to fall into place.

 

Some of the things I noticed:

 

 

- Good candles should follow through the next day e.g. an engulfing close (don't even worry about the correct definitions and perfection did you close above or below the previous 2 candle closes)

- Did the candle just break the immediate range

- Did the D itself have a HL or LH close back into trend, i.e. did the D flow continue

- Did we have an evening/morning star pattern (yes ok I know thats also a close below/above the 2 previous closes)

- Are we above/below the RSI 50 level

- Are we above/below the tight D ma

 

Once some/most/all of these things happen the following day becomes more focused, the ability to be patient is easier as you are almost assured (well as much as you can possibly be in this game) that things have a great chance to play out in line with 15 min trend entry.

 

If you look carefully at your charts on D, even where it seems that above scenarios 'failed', on a 15 min chart they still provided a trade.

 

This EUR chart shows many of the above examples, engulfing closes, D higher lows/lower highs back into trend, evening/morning star patterns, most in line with RSI cross and when really in trend above/below RSI 50 level.

 

To bring that into line with a practical example. Mrs V phoned me yesterday to sell EJ around LO, I said no its not system (didn't matter it might have been a good CT scalp Mrs V is not there yet) and the risk is IF it failed and she's busy getting stopped out it might make her miss the correct entry back into trend. Price chopped a while as we know, she took her chance to rest her neck/back. Came back for US session and got a nice +27 in line with system. Finishing off a great week for her and at the moment we are running at 1 losing trade for the month.

 

Forex takes some work. but work in relation to what? A degree, stuck in traffic jams for hours every day, a pain of a boss? it potentially has the chance of being the most difficult thing you'll do in your life. Fortunately with some of the right help, focus on a few basics you can put the odds in your favour and reduce the learning curve. You can put some rules in place that will enable you to be successful, to 'act in your own best interest'.

 

Mrs V has a fave phrase at the moment as she is on the verge of significantly exceeding her best month - humble trader. I am (and I think I succeeded in changing this yesterday), getting her to say to herself TREND TRADER.

 

Point of it all look at some of D set ups, look at 15 min the next day, were there successful 15 min trades trend or CT? Would this help focus on trend.

 

This methodology worked wonders for me, cheers.

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Got this question.

 

can you please explain your methodology in detail with examples and how you take trades, as the issue im getting is that 1 or 2 loss/bad trades wipes all my profits everytime ..... i want to know how you identify the trend on daily and then take trades on 15m TF..

 

and when you dont see any trend on Daily TF then how do you take trades next day? im getting frustrated with few losses tht wipe my profit..... its happening time n again!!

 

in addition what SL and TP do you set?

 

looking forward to your assistance

 

I trade MTF analysis with entries from 5 min. Approx 2 months ago switched to 15 min entry with focus buying above 15 min 200 ema, selling below. Good results became borderline unbelievable. An old dog can learn some new tricks.

 

I start with an analysis of D chart for trend. Looking for:

 

Good candles should follow through the next day e.g. an engulfing close (don't even worry about the correct definitions and perfection did you close above or below the previous 2 candle closes)

Did the candle break the immediate range

Did the D itself have a HL or LH close back into trend, i.e. did the D flow continue

Did we have an evening/morning star pattern (yes ok I know thats also a close below/above the 2 previous closes)

Are we above/below the RSI 50 level

Are we above/below the tight D ma

 

Once some/most/all of these things happen the following day becomes more focused, the ability to be patient is easier as you are almost assured (well as much as you can possibly be in this game) that things have a great chance to play out in line with 15 min trend entry.

 

I literally run through my list as above every morning to look at prev days close for 3 pairs eur, gu, ej and try and get some clarity as to what may happen for the coming days trade. Yes sometimes pairs go into a sideways funk on D but generally 70% of time 1 day follows the next. Its not rocket science or anything weird, just common sense.

 

From D chart analysis I'll do similar on 4hr and 1hr looking to identify the flow of the market i.e. higher high higher lows, or lower highs lower lows.

 

OK see ej D chart attached for some analysis:

 

Left arrow up. We are above 50 RSI, RSI above its ma, we have a hammer (wick rejects move lower), D ma sloping up nicely. Everything suggesting D trend up. Focus should be buying the next day as the only possible worry could be the failure of the hammer to really trade higher than the previous day.

Left arrow down. D rsi crossed below its ma. 2 upper wicks, taken 3 days to turn (turns often take 3-7 days to play out), an engulfing neg close (close below the 2 prior candle closes). I trust an engulfing close (when price on any time frame can break its immediate range thats normally a good sign), I trust D rsi cross of its ma. OK this sell signal could be the start of a move down or it could be a pause in uptrend, that I don't know. Whats happening on 1hr and then entry from 15 min should keep me out of too much trouble. What follows is 5 days of sell focus from 15 min.

Arrow up 2nd from left. Taken 4 days to bottom out and for RSI to cross up, we are also trading above our ma. The candle has an upper wick so its not a clear signal. Again could go up or be small rally in downtrend. Analysis of 1hr flow and 15 min entry again should give final guide. Even if you missed a day and waited for 2 Oct positive close you'd then have 4 days of buy focus. Or look at other pairs to see the have given a clearer signal.

Arrow down 2nd from left. Engulfing close, RSI cross focus on sells the next day.

Arrow up 2nd from right. An engulfing close, morning star pattern from an identified support level. Bias on buys for next 5 days.

Arrow down right. A D lower high, engulfing negative close, RSI touch trade below 50 level. Focus sell the next few days.

Arrow up right. Morning star pattern, from support area, engulfing positive close, RSI cross on 50 level. Buy focus from then on.

 

Like I said once I have my D view then its a question of waiting for the trades to fall into place. I'll still look at 1hr flow but its 15 min entries as per this thread.

 

 

Stops typically below the last 15 min swing high/low if its to large (above 25 pips or so) then we'll probably leave. The last swing high/low + some pivots/RN's/SR level should also be between your entry and stop to provide some buffers (2 or 3 would be good).

 

 

Take profits at the moment we are exiting half at first typical area around 30/40 pips that could cause a problem (RN, SR level, W pivot) and leaving balance to try to get to 2nd key level closer to 5 day ADR (again RN, SR level, W pivot).

 

 

If we don't see anything on any of the 3 pairs we have no problem with not trading for the day. At 2% risk a 60 pip day is a 6% return thats good enough for us. Many traders I have seen say they trade less frequently as they get older, that applies to us as well as neck/back issues that hinder chart time.

 

 

If you are inconsistent take a critical look at your winning and losing trades. What do the losing trades have in common? I was having many losing trades from 5 min on 3rd/4th move in London morning session. Guess what I cut that trade out. Now I couldn't care what that trade does as I know statistically its a high risk venture. I cut out 5 min higher low/lower high trades that were counter the London morning direction that were set up from weak 1hr candles pre/early US session. Again now I don't care what those trades do, for me they are a high risk bet (a solid engulfing post US news candle a different story). If we are not in already from Lon open we are waiting out pre/early US session CT moves and looking for London's direction to resume.

 

A through analysis of your losing trades can work wonders. Could be as easy as you are trying too many CT trades (London close has a proven CT strategy but thats a different issue i.e. its proven).

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Recap 23 Nov

 

Bias up with potential to fall. Some scrappy price action in London morning session and price moving up with bias in US session. We focused on EJ but there were good buy trades on all 3 pairs.

 

26 Nov

 

EUR - Approaching the resistance area from Jan-Apr 1.30. D solid engulfing pos close. 4hr RSI crossed below its ma but price above its ma. Bias up but reaction from the resistance level must be considered.

 

GU - Solid D engulfing close. We are at a 62% fib/resistance level/W M3 confluence so there is clearly potential to fall. In view of D this viewed as chance to buy dip in rally.

 

EJ - Solid D engulfing close. 4hr RSI crossed lower, 4hr and 1hr negative divergence so there is potential to move lower. Bias up.

 

Price action on Monday mornings (like Friday mornings) can be erratic whilst the market finds its feet. Should this be the case and we hesitate to move up giving an inter day higher low to signal buys in US session that's fine.

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With the largely sideways junk today just 1 trade for us, +16 pips. The 20 Pips bank Hall of Fame emailed Mrs V asking if we want to renew her membership. She politely declined, bigger TP's will return as soon as normal service resumes.

 

Genuine 15 min HL near the bottom of range, engulfing close through 10ema, little/no upper wick on set up candle. Happy to exit when pa reached 106.70 area and showed signs of failing as it had done twice already this morning.

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Recap 26 Nov

 

London session narrow range allowed scalp trades. There was a move up last night, not sure the reason (new govenor of Bank of England perhaps or Greek bailout decision).

 

27 Nov

 

EUR - At the previously identified resistance level. 4hr and 1hr showing negative divergence. It still does not seem like there are sellers at this key area. Focus still on buy dips until D signals sell or there is a re test and indication of failure at the highs. Bias up.

 

GU and EJ in a very similar position.

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Recap 28 Nov.

 

Did not post but this is how it played out.

 

EUR - We had no D signal to sell as yet, no RSI cross lower, the red doji couldn't close below the moving average. 4hr did signal a sell, lower high following negative divergence did set up a move down which stopped at the W pivot.The 4hr signal without a D signal = a short term position.

 

29 Nov

 

EUR - Y closed a strong hammer so we should move up today. 4hr has signaled higher. Only time will tell if a move up will be the last try from the bulls and if we are getting close to a 4-7 day topping out process. Should we get to 1.30 potential for an 85/15 trade.

 

GU and EJ essentially the same picture.

 

Bias up, taking great care at recent highs.

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Recap 29 Nov Method expanded multi time frame analysis 2

These were my comments from 29 Nov.

 

EUR - Y closed a strong hammer so we should move up today. 4hr has signaled higher. Only time will tell if a move up will be the last try from the bulls and if we are getting close to a 4-7 day topping out process. Should we get to 1.30 potential for an 85/15 trade.

 

Please see blog popular posts Method expanded multi time frame analysis.

 

We look to follow the daily candles as much as possible. Trying to keep things as simple as possible we:

 

1) try and identify support and resistance levels

2) look for positive/negative closes to follow through the next day (as we believe this will hold true approx 70% of the time)

3) watch for divergence

4) Look for D chart higher lows/lower highs, double tops/bottoms, engulfing candles, hammers/shooting stars, morning/evening star patterns

5) rsi crossing its moving average or crossing the 50 line

 

If we are confident that a confluence of the above exists then the next day we will look to trade in 1 direction only. This keeps us out of some head fake moves typically around London open and the US open (weak counter trend 1hr candles in and around US open just as big a fake move as LO).

 

Now if we apply the above simple concepts to 29 Nov's EUR set up.

 

1) Resistance level identified, the Feb/Apr lows in and around 1.30.

2) 28 Nov EUR closed a hammer, lower wick suggests failure to go lower. Previous analysis to that suggested D had not yet even closed with a sell signal. RSI had never crossed lower and price had not closed below our 8 lwma. This put together suggests higher on 29th.

3) Not applicable.

4) D higher low hammer.

5) RSI still above its ma and 50 level.

 

So now we have 2 major pieces of information. First we are looking to buy from 15 min, 2b or higher low/double bottom hopefully with engulfing close (close above 2 previous closes) at the extreme of price range (not the 3rd or 4th higher low in move), on 29th around 1.2950. Second bit of information, we are confident that 1.30 is a key target (so 85/15 has potential).

 

Some very basic D analysis can increase your odds.

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4 Dec

 

EUR - D positive close. The possible negative divergence was not confirmed by price action. 4hr higher high higher low flow in tact, W pivots containing price.Bias up, targets 1.3115 - 1.3170.

 

GU - Similar picture, bias up target 17 Oct/1 Nov highs 1.6175.

 

EJ - Similar picture, bias up. We are on a key resistance level, next targets 108 then 111.

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Recap 4 Dec

 

EUR - Bias up played out and 1st target reached 1.3115.

 

GU also moved higher, EJ struggled.

 

5 Dec

 

EUR - Solid D close, 4hr upper wicks probably the reaction to the resistance level 1.3115. There is no doubt as to the direction of 4hr moving average. 4hr and 1hr higher high higher low in tact. Bias up.

 

GU - D shooting star, 4hr and 1hr higher high higher low in tact. Bias up.

 

EJ - D closed an inside bar, moved up strongly in Asian session. 4hr 1hr higher high higher low in tact.

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Recap 5 Dec

 

EUR - The frequently mentioned resistance level of 1.3115/W R2 pivot held. D close negative, RSI crossed lower but we are still above 8 lwma. 4hr flow flipped to lower high. 1hr lower high lower low clear.

 

Selling EUR yesterday was counter trend. In general this requires substantially more information than 1 candle on say a 1hr chart to trigger a trade. We would be looking for a confluence of factors from proven support/resistance levels, W pivots, higher time frame divergence, price showing for some several hours that it does not want to advance.

 

GU - Asian push up did not follow through, W R2 pivot held. D close a doji, we are still above 8 lwma and RSI not yet crossed lower.

 

EJ - D positive close but again the Asian push up did not follow through. Negative sell divergence on all time frames.

 

6 Dec

 

Interest rate day for GU and EUR, could be a day for caution.

 

EUR - 1hr flow now lower high lower low. We stopped on W R1. Bias down.

 

GU - D not as convincing for sells as EUR. Price range bound between W R2 and W M4. We could get support at 1.6085, no real bias.

 

EJ - D clouding the picture as we never followed through Y's morning move up. We might be topping out. I prefer EJ to follow EUR (unless there is some other fundamental Yen story to say otherwise) so would take care buying EJ if EUR falling.

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Recap 6 Nov

 

EUR - A small push up to W M4 1.3079 at London open. It took the interest rate decision and ECB conference for the bias down to play out as expected.

 

GU and EJ charts were not as clear going into 6th. They did share the same theme, small pushes higher could not follow through for several hours, clear on 4hr charts. Key levels, divergences so enough reason to counter trend sell after the news.

 

7 Dec

 

NFP day, like the UK/EUR interest rates days yesterday (and the UK MPC minutes release) are days when I am happy to sit on the sidelines until after the news release.

 

EUR - We have now had the D engulfing close that we have been patiently waiting for to confirm the down bias from the analysis yesterday morning. Bias remains down.

 

GU and EJ - Essentially the same charts. Interesting again to see the magnets that are the W pivots. Bias down.

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Recap 7 Dec

 

Bias was down, currencies fell until a news bounce pushed all pairs up.

 

10 Dec

 

The Fri push up did not follow through in Asian session.

 

EUR - D chart closed with a lower wick, we are below RSI 50 level and below 8 lwma. 4hr on lower high lower low. Bias down.

 

GU and EJ - Essentially the same charts as EUR, bias down.

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Recap 10 Dec

 

Bias was down which did not play out.

 

GU did signal a counter trend buy opportunity with a 4hr engulfing close, higher low at W M2. This halted the 4hr lower high lower low flow. A higher low on 4hr, by definition a multiple candle pattern, showing over many hours price does not want to go lower.

 

EUR support level 1.2880/W M2 held, 1hr had a higher low following divergence, showing over a 12 hour period that it did not want to go lower.

 

If you want to go counter trend you need multiple reasons to do so. For us its a confluence of support/resistance levels, W pivots, higher TF divergence, price showing over many hours that it does not want to carry on previous direction.

 

11 Dec

 

EUR - Positive close on D but we are still below the 8 lwma and RSI has not crossed its signal line (but on 50 level). 4hr and 1hr flow now higher low. Bias up.

 

GU - D higher low engulfing close, 4hr flow now up. Bias up.

 

EJ - Another D hammer, not moving up with same enthusiasm as EUR. D below 8 lwma and RSI nowhere near to crossing up.

 

Only time will tell if EUR and GU are going up or if these D moves are a test and we get lower highs going forward. For now the short term flow is up.

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Recap 11 Dec

 

The up bias did play out on all pairs.

 

12 Dec

 

EUR - Positive D close that stopped on the Feb/Apr resistance level 1.3015. We also have W M3 just above at 1.3025. Bias is up but obviously we can go lower from this proven turn area.

 

GU - D positive close close to previous high 1.6130. There is hidden divergence in play, price action must confirm (thanks Sunny fx). US session could not take us any higher which raises a little question mark. Asian session support at W R1 1.6108. Bias up but potential to turn 1.6130. There are resistance areas a little higher but reaching them would be good target in line with up bias.

 

EJ - D positive close approaching previous high 107.90, potential divergence. Bias up obviously we can go lower from the turn area.

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Recap 12 Dec

 

The up bias played out.

 

13 Dec

 

EUR - D pos close and we are approaching the next resistance area 1.3120/40. Had a decent pull back on 4hr which bounced from D pivot (just happens to be 4hr 8 lwma). Higher high higher low flow in tact. Bias up.

 

GU - D positive close, hit the resistance level. 4hr has signaled sell. Higher high higher low flow in tact but if 1hr fails here would give a lower high on that chart and scalp sell. Overall bias up.

 

EJ - Looks clear bias up, biggest problem might be getting entry.

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Recap 13 Dec

 

Counter trend falls early in London session did provide buying opportunities in line with bias.

 

14 Dec

 

EUR - D closed a doji previous highs respected, 1.3100 proving to be a key level. The failure to go higher is clearly shown on 4hr chart which is showing divergence (price has not yet confirmed), 1hr looking choppy with divergence and its get tight between possible entry and the highs. We seem to have an inverse head and shoulders with 1.3100 the neckline. Bias up, getting an entry might be tricky. There obviously can be fall from 1.3100.

 

GU - D closed negative, RSI crossed lower but we are still above 8 lwma. The negative close seems to have confirmed the divergence. 4hr has sell signal and a lower high, ranges contained by the W pivots. No bias.

 

EJ - D closed positive on a narrow range, making new highs and RSi is not confirming. 4hr higher high higher low in tact and also showing divergence (price to yet confirm). Bias up.

 

Friday mornings can be volatile so with the mixed signals will be careful on any trades, or just sit out a likely option.

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Recap 14 Dec

 

As often happens Fri morning was choppy and we were happy to sit on the sidelines. It was not until after the US news that the up bias played out. We were not in front of the computer at the time but patient trend traders were well rewarded.

 

17 Dec

 

EUR - We are right on the Sep highs after a solid W engulfing close. 5 days move up with barely a retracement does suggest a pullback is likely. Bias up perhaps from the D pivot 1.3132 or M2 1.3112.

 

GU - Similar story to EUR, strong W close right on a proven resistance level. Bias up but like EUR we can always react lower to the R level.

 

EJ - Gapped up on reaction to their election. There may be pressure to move lower to close the gap but then bias up.

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We finished trading Fri, so all the best over the holidays and normal service will resume 2 Jan (most likely).

 

Many thanks for the journal and the charts.

Have a good holiday @snow dog.

 

TAMS

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