Day Trading & Forex Forum

fibonelli

I use a S/R pivot plus Fibonacci.

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"The trend is your friend and divergences are your best friend until the bend at the end"

Party on like it's 1930, until Mr C (Wave) gatecrashes the party.

bond_trader1

Interesting...

Ok, best of luck Fibonelli and thank you for continuing to read me!

bond_trader1

So, we got the test of 110.00 as I suggested we would a few posts back.

Is this a double bottom?

I certainly see this challenging that descending TL next.

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bond_trader1

I've been active in the Bund over the last few days so I've some updates to make on my progress.

Is anyone even still reading? Hoggums, splitlink, options? Where are you guys?

bond_trader1

This was not the cleverest trade to have made and the market told me quickly enough.

More and more S/R lines are appearing on my charts as I put in any areas that price has reacted at significantly on the 30m and 1hr timeframes. I am starting to think there are too many.

At any rate, in this trade, I took the break long of a pin bar which bounced on a support area I had indentified.

In hindsight this was probably not the best idea. It's clear from this chart that the market was making a series of lower highs and the sell offs were looking quite sharp.

Still, I took the signal at £3 per tick with a stop one tick beneath the low of the pin - 19 ticks away. This again was not a good idea when you consider that by waiting and being patient you can get setups like my last trade which only risked 9 ticks. Add to that the fact that I closed the last trade for +15 and was willing to risk over and above that on this, I'm really not sure it can be defended.

To be fair, I was 7 ticks in profit at one point and I could have taken it but the size of that stop was making me think I should have hung on for more to get a better return on risk.

As you can see the market then turned abruptly and I lost £57.

This left me with £638 as of yesterday.

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bond_trader1

I have been studying a system carefully over the past few days. It looks like it could be very profitable.

The system was originally designed to work on the 5m timeframe on the EUR/USD and GBP/USD but I have looked at it on many markets across different timeframes and it seems to work on them all.

The premise is fairly simple: Add a 50sma, a 21ema and a 10ema to the chart. The original system said to open a position when the angle of the 50 Simple moving average is greater than 20 degrees (this is determined by sight and indicates the intermediate term trend is up) and the price retraces back into the zone of the 21 exponential moving average and the 10 exponential moving average.

If you look at the 30m chart attached (which is the one in which I lost yesterday) you can see two examples where this worked - presuming you waited for the price to turn back upwards and take out the high of the previous candle. The third time it came into the zone was the price at which I was buying and it then moved higher but it failed.

However, looking at it in terms of this system, I can see that I was buying on the third touch where the 10 and 21 emas look to be losing their momentum and moving sideways.

Now I think this system could probably be enhanced by looking specifically for price action in or soon after a move back away from the retracement zone.

The best trade would have been a combination of certain elements.

Firstly there is a pin bar (circled). Secondly, the low of that pin has hit the 10ema during this consolidation phase. Thirdly the price heads through previous resistance and then finds support there.

An ideal place to go long looks to be on a break of the previous 30m candle with a stop just below that support.

The only problem I see with this setup is that the entry would be taken as the market comes into the close, leaving you vulnerable in the face of an opening gap against you.

Still, it is something to think over.

The original system said to set the stop loss at 6 points plus spread and take profit in the region of 8-10 points. The other directive was to move the stop loss to breakeven as soon as 6 pips gain is obtained.

I may look at the Bund on the 5m chart again with this system in mind although the targets would probably have to be altered due to the difference in the number of points moved on average in the day.

This trade management may be something I can take over to the 30m charts as an alternative to trailing the stop at a previous bar low which I keep coming back to as a potentially good exit strategy.

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bond_trader1

I am starting to feel like I have this market figured out.

Which is probably dangerous.

But then again, reading through my earlier posts I do seem to have called it correctly - on the larger timeframes that is.

On the charts I use in E*Trade, the previous session close made a pin bar* and since the nose perfectly touched the descending TL, I decided to take this short today.

On this chart below which shows todays action, there is no pin yesterday but the fundamental reason for entering the trade was the same. Price has rejected the upper end of this channel and a test of the double bottom now looks imminent.

Infact, to me this looks like we could be on the verge of a key turning point in this market. If it bounces on that support, the market could finally be showing signs of basing. If it breaks the support, then it could be in for another sharp fall.

Time well tell...

I am short at 110.59 at £3 a tick. My stop is 72 ticks away which represents a risk of £216. At this point almost 34% of my total equity. This is not sensible - I know that! Yet I feel very strongly about this trade and I have decided to take that risk.


* The reason for this is that E*Trade shows gaps up/down in this market by a solid up/down candle. Which means if the market gapped up as it did in this case the market would show a solid green bar upwards at the open which would then retrace as the market fell, leaving a pin at the close.

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options

Keep going, you'll get there.

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