Comprehensive Trading System/Methodology

[bbmac]

Example today of the perfect Reversal Extreme set-up

See screenshot below:

Note the well diverged 4bol flip, and how the 161.8 2nd extreme Support channel was breeched and the cci was hooked back into it's bol from an extreme at the open of the first reversal candle, both other oscillators being at extreme readings. These are the characteristics of the 'perfect' Reversal Extreme set-up.

Edit 1745pm gmt This set-up saw a quick +100+ pips available from entry.

 

[bbmac]

Example of 'perfect' Reversal type A ii set-up

Supporting the 1min Reversal Extreme set-up above was this perfect example of a Reversal Aii on the 15min t/f. Note the 3bol flip inside the 60bol and the regula immediate [seperate valley] bullish divergence. More commonly the 3bol flip straddles the 60bol.

These repeating simple indicator set-ups (comprised of certain patterns of oscillator divergence/extremes combined with band/channel deviation) indicate hi-probability trading opportunitiess in the right overall price action circumstances.

 

[bbmac]

Gbpusd early London/European morning set-ups so far

2 set-ups so far this London/Morning session in gbpusd, the 0720am gmt 1min trigger Reversal type A, followed by the 0801am gmt 1min Reversal Extreme with supporting 5min Re-entry type 4, into 30min downtrend @ the LH circled, shown below;

The 5min Re-ent 4 set-up is here;

This Set-up has seen +50+ pips but no with trend follow thru as yet. 0720am set-up saw just shy of 100pip gain available.

 

[bbmac]

Nice bounce off minor 1hr descending t/line...the 1min trigger Reversal A seq set-up indicating a high probability trading opportunity, that has seen =30+ pips available at time of writing..

The 1min Reversal A seq set-up @ the T/Line is here:

Little in the way of a definate 5min main chart supporting set-up for this one but 1 and 5min small charts supporting conditions.

Edit: 1013am gmt Rev Extr set-up at the ascending 1hr support t/line now-shown in screenshot above (green)...no 5min main chart supporting set-up but 1/5min small charts supporting conditions...caution though as the desc res t/line (red in screenshot above) was rejected and saw a bounce down and a LH in 5min intermediate chart, so , small target scalp only...out with +5 from 3855ask entry.

 

[bbmac]

So 7 set-ups so far today in this London/European morning session per this trading system/methodology, at the swing points shown on the 5min chart below.

No. 1...discussed in post #403 above...saw +30+
No. 2...discussed in post #403above...saw +30+
No. 3...discussed in post # 404 above....saw +30+
No. 4...discueed in the Edit note of post #404 above...saw +7 at best

Then in quick succession as 5min downtrend developed...
No. 5 ...1024am gmt Re-entry type 4 into 5min downtrend (no pre-identified sbr so rejected) set-up saw +30+ pips
No. 6...1031am gmt Rev C seq, no 5min main chart set-up. 1/5min small charts supporting cons @ pot supp = prev 5min/1hr sw lo zones, bids...saw +20+
No. 7...1043am gmt Re-entry type 4 (into 5min downtrend, 5/30/1hr macd hists below axis) @ pot sbr = prev 5min swing lo zone...saw +30+
**1100am gmt Uk data (Cbi survey) **

Just as I was in the middle of writing this post, got another 1min Re-entry to 5min downtrend set-up @ the 5min prev swing lo=potential sbr shown below...(1115am 1min Re-ent 4)...that has again seena with trend follow thru to a new LL, +30+ pips available from the entry. This makes it 8 set-ups since 0700am gmt in a 169pip Hi-lo session pip range so far.

The 1115am gmt 1min Re-entry set-up is shown below:

 

[bbmac]

30min trend t/f

This is how the 30min trend t/f developed into a potential downtrend, 5min (intermediate t/f) developing into a downtrend first with the 30min macd hist staying below the axis and 1hr pointing down now crossed below.

 

[bbmac]

The 'perfect' Reversal type B set-up.

The screenshot shows the 'perfect' Reversal type B per this Trading System/Methodology...notice how in this Bearish example the divergence in the osma oscillator is measured whilst it stays below the axis (above axis-bullish @ pot supp/rbs.) This and the 10bol coming inside the 40 (possibly 60) as the divergence sets-up in all 3 oscillators @ pre-identified potential supp/res/sbr/rbs are the characteristics of a Reversal type B

 

[bbmac]

Potential SBR in a downtrend example

see screenshot...

30min trend t/f was in a downtrend and at the time of the set-ups the macd histograms on next 2 t/f's up from the 5min intermediate t/f Re-entry set-up (timed as a 1min trigger reversal Extreme set-up) were crossed down thru axis....a hi-probability trading opportunity that saw +60pips gain available.

The set-up came @ an immediate LH on the trend t/f into whose trend an entry is sought, but arguably at a H on the 5min intermediate t/f where the re-entry t/f set-up....so not an optimum LH/LH into a downtrend...that said still a 60pip gain available from a quick sell off.

Edit: 1515pm gmt Set-up has seen +100+pips gain available

 

[bbmac]

Re-entry set-up in non-optimal price action conditions.

Gbpusd is in a downtrend on 5min intermediate and 30min trend t/f's...that downtrend extending beyond the trend t/f to the longer t/f's too.

A 1min trigger re-entry set-up develops @ a 5min previous swing lo zone (shown with red lines in screenshot below) this pot sbr zone also being at the very extreme of the 1hr pot sbr zone...so a good potential sbr.

Caution though, although the Re-entry set-up comes @ an immediate LH on both the t/f it sets-up on (1min ) and the next higher t/f into whose trend a re-entry is sought (5min...shown in green and circled on screenshot below) it follows an obvious HL on that t/f..(actually as it turned out price did sell off to achieve a with trend follow thru to a new L ...and in these eventualities it is always advisavble to excercise caution. I took the entry (+30+ pips available) but watched it closely and minimised stop to b/e as soon as practically possible in case the HL was a first sign of price bottoming out/consolidating.

The 5min chart is here:

Edit: Highest pip score of the day so far for me as it turns out, lol, but the above caution still stands...came out ahead of the obvious 3620support,...raft of Uk data due at 0930am gmt.)

Edit: A further 80pip drop available with trend post data release, correct as I type this...was tempted to stay in the above trade but feared any short squeeze if data had been any better than expected with traders looking for some gbp relief

 

[bbmac]

A Re-entry and a Reversal set-up

Price finds some interim support in gbpusd @ the minor pot supp/res factor of Dly S2 pivot (in vicinity of Wkly S2 also) see-ing a 1min Reversal Extreme ii set-up (saw +20pips gain available, rejected it as no identifiable pot support) before the following Re-entry type 4 set-up developed indicating a re-entry after a pullback into 5/30min+ downtrend...No real potential sbr identified though.

Price sells down to a new with trend follow thru to a new LL at the 3500level before a 1min Reversal type C sets-up (see screenshot below)...no real 5min main chart supporting set-up but a 15min Reversal Extreme supporting set-up and small charts to 15min have supporting conditions too...as for potential support, bit blind now under that 3616-20 area, even mni saying nothing clear till Aug'85 lows @3266!!, but took it to be the often psychological round number support @ the 3500level, and with price extended beyond it's 10, 20 and 100day average pip ranges now it seemed a hi-probability area for a trade-able pullback at least, (has seen +30+ pips available at time of writing.)

 

[bbmac]

Reimnder of a good point, emphasised by Phil Newton (Newtron Bomb)

I attended an fxstreet.com webinar y/day by Phil Newton. he was talking about the potential for trades and re-inforced a point I have made in this thread a few times about price's relationship with it's current average pip ranges. Today being an example, where price has exceeded its 10 and 20day average pip ranges but not yet it's 5day average so far. Phil uses the 100day atr [currently 336 ] for gbpusd and looks at what potential there is for a move (with trend) in respect of the difference between the current daily pip range at entry and it's 100day atr. [I liked the way Phil used the 100day atr as his measure] Of course reversal set-ups too become statistically higher probability when set-up/entry is outside the average daily pip ranges. ....as demonstrated by the Reversal set-ups at the 3500/05 area this london/European morning session, discussed in post above.

 

[bbmac]

Set-ups pre this system/methodology so far today..

These were the areas at which set-ups developed (per this trading system/methodology)during my trading session beginning 0745am gmt(after some prep) till now, the set-ups numbered 1 and 2 were an 0818am gmt Rev Extr @ pot supp = prev 1hr swing lo zone, and the 0832am gmt was a Re-entry (to trend after a pullback) type 4 @ pot sbr = prev 5min swing lo, respectively.

G/L

 

[bbmac]

multiple set-ups/one instrument -vs- one set-up/multiple instruments

I was reading a post and reply on another thread this morning basically involving one poster's bemoaning of ranging conditions on his preferred instrument (s) and another's reply that there are plenty of opportunities on other instruments if on some there presently are not.

With this trading system/methodology my preference is to trade 1 instrument (Gbpusd) and I can do this because with 5 repeating Reversal set-ups (3 of which have sequential divergence derivatives) and 4 repeating Re-entry set-ups, there should for the most part always be a good sample of hi-probability trading opportunities (when they set-up with the other confluences required by the system/methodology) even on one instrument.

Whereas, if trading only one or two set-ups, - say a re-entry to trend after a pullback, or a breakout, I too would look to do so across multiple instruments so that there should always for the most part be something setting up.

I think the best advice is either to limit yourself to one or two particular types of hi-probability repeating set-ups across multi-instruments or as I prefer, trade multiple set-ups across limited or even one instrument.

Whatever works for the individual is the right way to trade.

 

[bbmac]

5min Re-entry set-up in non optimum place

Gbpusd rallys off the 3500/05 lows to see a 5min Re-entry type 2 (into 30min + downtrend) set-up develop @ potential res of the 23.6% fib of the 3913-3503 swing, just short of the first real 1hr previous swing lo zone=potential sbr.

This Re-entry set-up after the pullback saw all conditions being met, (timed as a 1min trigger Reversal A seq set-up) came at a H (following a HL) not an immediate LH on the time frame it set-up on. This H only existed on the t/f it set-up on, not the next higher t/f into whose trend a re-entry was sought, ie the 30min trend t/f's downtrend, where it came at a immediate LH...see screenshot below;

Had the set-up come @ a H on the time frame whose trend was being re-entered, ie in this case the 30min trend t/f, this would have been even less optimal.

These optimal/non-optimal places for a re-entry to trend set-ups are acute and even nuanced observations and take a while to commit to memory. If however you are trading with the fullest information available to you, and following the overall price action conditions via classic peak/valley analysis on your intermediate and trend t/f's this will become obvious.

The set-up has seen a gain of +30+ pips from the 1141am gmt 1min Rev A seq set-up entry, but has yet to see any with trend follow thru to new intraday lows below the current 3503.

Re the point in post #411 above, re ' trade potential' ...remember too that the current average daily range of the instrument has already been exceeded.

 

[bbmac]

Supporting Re-entry to trend example

Price in gbpusd rallys further off 3003area lows to challenge the 1hr prev swing lo zone shown in screenshot below;

A 1min Reversal Extreme sets-up but without any 5min main chart supporting set-up, whish by this stage was in an uptrend. 1 and 5min small charts offered supporting conditions.

Further confluence came in the form of a 15min Re-entry type 4 set-up, (see screenshot below)

...and looking at the time frame above the 15min -the 1hr this was indeed trending down and the 15min Re-entry set-up came at an immediate LH on this time frame...into which a 15min Re-entry set-up was indicating.

1hr and 4hr macd hists were good for a 15min re-entry too..

On the 15min t/f the supporting Re-entry set-up developed @ a HH, (after 2 x HL) so again not optimum conditions for a with 1hr trend follow thru to new lows.

------------------------------------------------------

Effectively though this further information about the 1hr trend etc is superfluous other than gauging a target for what was essentially a Reversal set-up against the then 1and 5min uptrend. The set-up still saw +50pips+ gain before revesing up again to continue the newly extablished uptrend to 15min making new recovery highs, deeper in the 1hr pot sbr zones.

 

[bbmac]

another eg of supporting re-entry to trend set-up @ non-optimum place

per the discussion in post above....price rallies further to test the more recent/immediate pot sbr zone on 1hr..see screenshot below...at which a 1min Reversal type C supported by a 5min Reversal extreme sets-up,

...the 1433pm gmt 1min Rev Extr is shown below...by this time 15min was at another HH after 3 x HL and obviously the 1 and 5min t/f's were trending up also.

So the supporting 15min Re-entry type 1 set-up came at a non-optimum place in repect of it's highest probability of achieving a with 1hr dwontrend follow thru top new lows in that 1hr trend (although it was at a LH on that 1hr t/f)

...the set-up has just seen +90 pips at time of writing.

The point is this, these non-optimum price action conditions for re-entry set-ups (well covered now in this thread) can be critical when they are important/part of the actual trend you are re-entering from your own trigger or intermediate t/f's. (In my case 1 and 5min respectively.)

They are worthy of note when they support a set-up (s) on your own t/f's and are useful in terms of potential target setting but are not that material otherwise.

 

[Newtron Bomb]

HI BBMAC,

thanks for the mention... Firstly i think this is an excellent thread and that while I prefer not to use math indicators they do have their place if you can, like with any tool, spend time to learn and understand what you are doing with them.

The point about potential is for me a critical one. a lot of the so called patterns by their names actually have a low R/R according to the text books but what is important to me is to use these patterns as a trigger in to a larger movemement derived from my over all trading objective.

This method shows a clear potential for a trade and is quite visual as well with the use of the tools described here.

Top stuff as always

I attended an fxstreet.com webinar y/day by Phil Newton. he was talking about the potential for trades and re-inforced a point I have made in this thread a few times about price's relationship with it's current average pip ranges. Today being an example, where price has exceeded its 10 and 20day average pip ranges but not yet it's 5day average so far. Phil uses the 100day atr [currently 336 ] for gbpusd and looks at what potential there is for a move (with trend) in respect of the difference between the current daily pip range at entry and it's 100day atr. [I liked the way Phil used the 100day atr as his measure] Of course reversal set-ups too become statistically higher probability when set-up/entry is outside the average daily pip ranges. ....as demonstrated by the Reversal set-ups at the 3500/05 area this london/European morning session, discussed in post above.

 

[bbmac]

HI BBMAC,

thanks for the mention... Firstly I think this is an excellent thread and that while I prefer not to use math indicators they do have their place if you can, like with any tool, spend time to learn and understand what you are doing with them.

The point about potential is for me a critical one. a lot of the so called patterns by their names actually have a low R/R according to the text books but what is important to me is to use these patterns as a trigger in to a larger movemement derived from my over all trading objective.

This method shows a clear potential for a trade and is quite visual as well with the use of the tools described here.

Top stuff as always

Thanks for the comments NB, and for the Webinar Y/day...good stuff, good points you make about patterns and use of any 'tool' to aid trading decsions. Continued G/L.

 

[bbmac]

Rev Aii seq example today - gbpusd.

5min uptrend establishes itself, price rallying off late asian session lows @ 3545 to find resistance at the extreme of the previous 1hr swing lo zone, mni also adding weight to the potential resistance there by toutings offers 3745-55. A perfect example of a 1min Reversal A ii seq set-up develops, no clear 5min main chart supporting set-up but small charts supporting conditions to 15min. Price pullsback to the already twice tested 5min support potential rbs/supp in it's uptrend before rallying again to new highs. This Reversal set-up saw a good +30+ pips available.

Price doing it's best to see the initial new week opening gap down filled in this pairing.

The 1min Rev A ii seq set-up is here;

 

[bbmac]

Thread summary.

The trouble with these threads is that they can become un-weildy/difficult to follow.

So far in this thread I have outlined the trading system/methodology, provided countless examples of it's set-ups as well as discussing the various important nuances in price action that can be used in conjunction with the trading system/methodology.

This is probably a good point in the thread to summarise;

Think Price action (overall and individual) Support & Resistance, and Confluence.

Identifying the overall price action conditions on the intermediate and trend time frames are the starting point.

Then Identifying the potential supp/res/sbr/rbs zones centered around the previous price pivots (previous swing hi and lo's) again on the intermediate and trend time frames provides the framework in which to seek a hi-probability with or against trend trading opportunity.

Then acting on indivdual price action as the trigger to market entry at one of the repeating (oscillator divergence/extremes and band/channel deviation )tech indicator based set-ups patterns.

These set-ups are as follows:

Reversal type A
Reversal type A ii
Reversal type B
Reversal type C
Reversal Extreme
Reversal Extreme ii

Re-entry (to next t/f trend after a pullback) type 1
Re-entry type 2
Re-entry type 3
Re-entry type 4

NB:
* Reversal types A, Aii, and C can exhibit regular sequential as well as regular immediate divergence.
* Reversal Extreme ii and Re-entry type 2 set-ups are similar in that Osma exhibits same peak/valley regular divergence at the same time as macd exhibiting an extreme reading. (the difference is in the band deviation....with a Re-entry type ii, the 20bol comes inside the 10bol (2bol flip) whereas a Rev Extr ii exhibits the 10bol coming inside the 20bol after an intial 4bol flip)
* All Re-entry set-ups exhibit Hidden/Reverse divergence.
* Reversal set-ups should be sought at pre-identified potential sbr/rbs on the next higher time frame from the set-up, aware of any prevailing trend, how many t/f's any trend extends to and price's relationship to it's average daily pip range (s.)
* Re-entry (to next t/f trend after a pullback) should be sought at pre-identified potential sbr/rbs on the next higher t/f from the set-up.
* Re-entry set-ups are highest probability of achieving a 'with trend' follow thru to new lows/highs when the set-up develops @ a HL/HL-uptrend or LH/LH-downtrend on the t/f it appears on and the next higher t/f into whose trend a re-entry (after a pullback) is being attempted as an area of potential rbs/sbr pre-identified on the same t/f.
* Price tends to test deep into a potential supp/res/sbr/rbs zone lest there be any obvious confluence of other potential supp/res factors elsewhere in the zone.
*The most recent price pivots (previous swing hi/lo's) tend to exercise the most influence over current price insofar as their potential for supp/res/sbr/rbs zones, lest there be a more oft tested visible previous previous swing hi/lo that resulted in a strong reaction.


The documents attached to page 10, post 74 entitled Part I, II and III are essentially re-writes of the docs attached to page 1, post 1 of the thread. The re-write is I think a simpler way to explain the essential features of the trading system/methodology.

G/L