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I will post a pic below, this is what I see in this European morning. There is a holiday today in Germany, so the volume may be low, but we see a strong short term up trend.
I would like to ask to confirm my estimation about possible trades, please add/correct me if I would be wrong.
Thanks again for what you are doing here, good to see that your thread id running for the iPad now
From my point of view the green arrows mark possible entry points. 1508 is strongly up. What always should be noticed is that the price each time it goes up is moving at the days high. So generally one should have this in mind.
I only consideres trades with entries above the trigger line, or, in case they are red, at least between the two lines.
Entry for the 1st green arrow would be very close to the daily high, possibly to close. It would return for about 7 ticks on the next bars but would not arrive at cloud or MA. Following your rules the loss should be taken as the price arrives the cloud
Entry for the 2nd green arrow would be between the red trigger lines which is allowed. Thr price returns to the cloud with about -6 ticks which one may make quit the trade or not.
Between arrow 1 and 2 is bullish hidden divergence which i did not mark in the chart.
The stochastics panel shows another hidden divergence, this one I marked. I am aware hat you mentioned that (hidden) divergence on a 377 chart is not so remarkable.
Entry for the 3rd green arrow is after the (2nd) hidden divergence came up, the bar closes above the trigger lines, still close to the daily high. Red bars do not touch the cloud nor the MA, so no need to cancel.
The 4th green arrow bar closes between the 2 red trigger lines which is a allowed for a trade signal. This trade simply works, nothing else to mention.
Do you agree with what I think about this chart? As I said, every input is welcome
If your chart looks like this you will see an attempt to form an ABCD retrace on the ZigZag.
In order for it to be right the 1st swing A=B must be the same lenght of C=D. C-D is longer so the ABCD is not right, and my rules say that "ZigZag cannot make a higher high during a retracdement, if it does a stochastic divergence must occur" ZigZag does make a higher high, stochastic makes a higher high, no setup at that point in time
the yellow line is the 55 EMA, again read my manual the 55MA is optional
Your trade entry points are correct on the 377, remember though the 1508 must also be right at the time of the 377 setup meaning price on the 1508 has retraced to the MA or cloud. On my chart presently it has only done that once around 2:10 cst, and came real close at 3:39.
Knowing of the bank holidays in Euro land I did not get up early to trade I am surprised to see this move this morning. In either event I plan to start trading today during the U S session
thank you. Actually what you pointed out makes sense, means that some of my trading ideas are nonsense when one looks at the 1508. I will start cleaning my glasses right after submitting this post. Attached is a chart that shows the 4 entry points on the 1508.
First green arrow to enter: no reason to do so
2nd: looks better
3rd: in the move, no retrace
4th: take it or leave it.
Charles, what about reentering or taking the first trade on a strong up move like this one but the 1508 does not retrace?
The green triangle would give me an entry on the 377 chart which is obviously bullish hidden divergence (green triangle on 1508 shows the same bar).
The idea behind that would be to wait for a good opportunity to (re-)enter a trade. I am aware that the setup for a trade to re-enter may not be worse than for entering a trade for the first time.
I suppose that your rules do not allow such a 2nd trade on a stong move up or down!? In general one could say that this would not be a bad thing, we simply wait for the retrace and thats it. IN particular i think that this is what you say. Are these your rules?
Jumping into a trade at this point will not work over the long term. You would be entering a valid setup on the 377 with price on the higher time frame in the middle of no where. Trades look great in hindsight, but follow the rules and the winning trades will take care of themselves and you.
Being discipline to wait for the right setup is the key, even when you may wait 4 or 5 hours for it. To get 3 trades a day using this method is a good day
With the bank holiday in Euro Land you want to be caredful not to get anxious to trade and get caught in this low volume chop. Wait and let the market break out if it is going to and show a trend with a little conviction.
When choppy you have a tendency to get bored which leads to forcing a trade that is not there
Don't be afraid of missing a move make the market show its hand first
Please advise how to stay out of chop when we dont know what is going to be to the right of the chart. According to this system what should I look for such as cloud being thick or prolonged or ema 13 being flat etc. Thanks
#1 1st higher low after extended vertical move up, the market usually goes into a pro longed period of congestion after a vertical move
#2 congestion period is confirmed by a lower an almost immediate lower high
#3 barely a lower low , price is lower than point #1 but barely inside a thick blue cloud telling you that the cloud should be strong support
#4 Lower high, retrace went back above cloud slightly. the point of Point #4 is at 7:55 cst if you look at at your 377 chart you did get a hidden divergence short signal there. I did not take this trade based off of basically sideways price action in front of it
#5 A stronger lower low deeper in to the cloud seeing this you will want a retrace back to the top of the cloud or the MA
#6 The retrace did not hold and price went up and made a higher high
#7 Again after price makes a higher high at point 6 now price blows through and makes another lower low. pay close attention and notice that this lower low stopped on the bottom edge of the cloud to the tick
#8 A lower high at the top of the cloud but also above the MA, this occurs at 9:00 cst looking at the 377 chart you see that any potential short trade has failed as ZIgZag makes a higher high as does Stochastics
#9 a higher low without a higher high in front of it, so this basically breaks the downtrend cycle and nothing else
#10 price makes a higher high by a tick
#11 price makes a double bottom with point #9 which is also below the cloud. I also want you to notice how thin the cloud is here at point #11, This is an indication of very low volatility in the market which is generally needed for good setups
#12 this is a double top as no candle closes above the high of Point #10. Also notice that when price is going up the cloud is turning red and expanding. Again a sign of no volatility or at least not enough of it
#13 the low of another vertical move down with no retraces in it to trade. This move was a news driven move (refer back to my post yesterday about trading news) based off of oil inventories
Also notice on the 1508 chart the horizontal line I have at 1.4400. I put these lines on the 1508 chart at the whole #'s as the market reacts at these points. You will notice that the vertical down move stopped there to the tick. You want to be aware of where the whole #'s are and consider avoiding trades that must go through the number for you to make profit
As evident by my last post patience and discipline to wait - wait - wait will take care of you
look at 1508 chart
#1 price went above the red cloud giving the signal for a potential trend reversal trade - refer back to trading manual
#2 Cloud held the retracement - this is where you immediately go to the 377 chart for a proper trade entry
377 chart
#1 market making higher highs
#2 hidden divergence compare with point #3
#4 up candle closing above Doji, I entered a market order as candle went into the trigger lines, I do this only on strong signals
this is a very powerful trade that is fueled by traders who are short covering their position which adds fuel to your long trade as their stops are taken out
