free / sat 29 jan 2011

There is a code on the TS forums somewhere (not sure where now) and if loaded with an oscillator it auto draws in the divergence that is it detects....
Great example of 'extreme deviation' re the bols on 1min gbpusd today, as that Uk data is released (Boe/Mpc rate & Qe,) the 1200pm 1min candle closes as a bullish thrust and the whole candle closes outside the 'default' 20/2 bol (white in pic below) this and the regular sequential bullish divergence on this t/f added to the ronfluence of reasons for a long trade on close of this candle, ...from the previous 1hr swing lo zone / previous 4hr swing hi x 3 zone (previous resistance=potential support) confluence with 50% fib 5750-6277 and 100sma on 4hr...4hr pic below...



4hr previous swing hi x 3 zone is here

By way of example

Posted below is the current 4hr screenshot showing the 'main' potential support/resistance factors...the orange and purple zones being the previous near-term obvious fracal swing hi/lo's, ie the previous near-term most obvious imbalances of supply/demand and demand/supply respectively. The red/blue zones are where these previous obvious near-term fractal swings on this 4hr t/f co-exist with such on the n ext higher t/f (by a factor of 4-5,) the Daily.

Interesting today that the daily lo was found in the previous 4hr/daily swing hi (potential rbs) and the pullback has encountered resistance in the previous swing lo zone (potential sbr) at the underside of the broken ascending trend line oin this 4hr t/f.

A LL has been printed on this 4hr t/f now, following the downside break today.

Unbreeched fibs of the major 1hr/4hr swings down from and including the recent 6277 Hi are on my 1hr chart and at the current pullback hi are 2 x fibs in that previous 4hr swing lo zone (potential sbr) being 23.6% of that 6277 to 5962 (current daily Lo,) with 50% 6112-same 5962 Lo- a 1hr swing down.


I really appreciate your continuing charts & clarifications.
I'm still slowly going through your presentation time & again (unf the day job will keep
me a bit too busy to throw myself in deep until at least early March).
What I am doing is taking one indicator at a time to get the feel of them. MACD first, then a 2nd Oscillator and then an understanding of the bols.

So far I am amazed at the power of using additional confluence from indicators. If I am patient enough.
I had written indicators off after being told so many times that 'it is all in the price'.
Don't get me wrong a couple of years of reading price action etc with J16 etc has been invaluable, time vey well spent. Using indicators to back PA up is the way to go.

Its funny when I look back at an early system I made to try to learn with had indicators there but to be honest I didn't really know what I was looking for or doing with them, they were part of the package so I was going to use them, lol !! wasn't long before I took the advice in the second post and moved from indicators to price action.
When I look at those two charts in the first post of that thread I see things totally differently now.

Anyway, I'm looking forward to getting a bit more time to review and test and get comfortable with the indicators and shorter TFs.

Many thanks

Hey Glyder

Good to hear you are doing okay. Confluence opens up the 'keys to the kingdom' and certainly the repeating patterns that indicators can make validated by price action can put the probability of a successful outcome resulting from a market entryt at such, strongly on our side, if we act upon them only a pre-identified potential supp/res/sbr/rbs. It is the confluence of these factors validated by price action, where the highest probability trading opportunities can be found.

As you have alluded to, having a profitable trading edge and executing it such that it it achieves that profitability over a sample is down to a large extent to one's own patience and discipline in awaiting the edge to set-up correctly, and then in acting on it consistent with the optimum money ,risk, and trade management criteria of that edge.

I am convinced that it is in developing the correct pschology to trade the particular chosen trading edge, that a quantum leap occurs in one's own trading.

Contiunued G/L
Good eg of where triple regular immediate seperate valley bullish divergence (to give it it's full name, lol!) informed us that price momentum may be failing in the downmove, sufficient for buyers to overwhelm sellers, - where are buyers likely to come into the market? at potential support...and you can see below price nudged the top of the previous 1hr swing lo zone ...the PA on 5min + leading up to the 5min set-up below showing there was an imbalance of buyers/sellers there buyers and this may occur did.



The 5min set-up is here

re post # 206 above

Shoulda mentioned the confluence of the 4hr ascending trend line...pic below


master bullish thrust engulfing eg

Great example of a master bullish thrust engulfing candle on 5min (and 15min) off this morning's current Lo in gbpusd...0800 5min thrust candle closed and engulfed the previous 13 candle bodies...the market trying to tell us that buying pressure coming into the market...bullish divergence there too. 15min closed similarly engulfing the 6 x bodies on it's t/f.


Funny how the charts always know Lol

Uk Cpi/Rpi data comes in exactly on forecast, market clearly expecting an upside surprise positioned long ahead of it, except that at 0922 a whole reversal candle closed outside 20 bol (extreme deviation) in a 1min regular sequential divergence based repeating reversal set-up supported by a 5min repeating reversal set-up ...just wish I had held - Lol...closed out ahead of data which dissapointed the market who were probably expecting a higher print and more upside ?

Funny how the charts know before we do.


6105 the current daily Hi (61.8% 6185-5962) and prior to that at that Hi 30min printed a HH but 30min 100sma remains below it's 200 so not a general uptrend let alone a classic uptrend, 5min sets-ups with a hidden divergence based re-entry set-up follwoing the pullback from the 6105 (this coinciding with a regular bullish divergence based reversal set-up on 1min) but aqdding to the reasons to be cautious about a re-entry to the 30min uptrend (that doesn't exist either classically or generally) was that the 5min L(at the 61.8% of the 5962-6105 move) came below the last 3 x HL's on the same t/f, even though that coexisted with a potential HL on 30min... All in all not the highest probability set-up for reasons mentioned.


above 5min hidden div based set-up co-existed with a 1min regular divergence based reversal set-up:

and this was the 30min trend t/f:

Price did actually rise from the set-ups but has since fallen back only to find fresh demand at that pullback Lo. now 15min printed a bullish engulfing before the drop to the pullback lo again, and then 5min prints a hammer candle (after another 1min regular bullish divergence reversal set-up at it's bottom)..this effective double bottom added to the 15min bullish engulf candle made an entry on close of 5min hammer higher in probability of a successful outcome and therefore a better proposition...

(have just booked gains from it.)


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Listen to price

My point re the above price action set-up is that you gotta be open to what price may be telling us...this was also the case re the regular bullish divergence based set-up discussed in post # 208, a 5min master bullish thrust engulfing candle trigger that engulfed the last 13 candles on it's t/f, then a similar candle on15min then 30min followed...I only had a 61.8% fib in the vicinity of what is currently the daily Lo so not a favoured/preferred potential support factors/combo- but price on successive t/f's told me that buying pressure may be coming into the market which also made sense ahead of the Cpi/Rpi data which was being talked up all morning.

The 15min bullish engulf candle discussed in post before last is here, (just to complete the picture.)



(Actually it doesn't engulf on this screenshot (alpari) but it did on ODL feed - lol
re post above re 15min candle

Here is odl feed and it engulfed,..Lol

just to complete the story

market clearly taking heart on the exchange of letters between King and Osbourne published at 1030am taking about 'will do what is necessary' and 'targetting low inflation' reading that as hawkish as price rises to restore the intraday gains lost on the cpi data knee-jerk react.

By way of example

My current 1hr chart in respect of main potential support/resistance factors is below. Price has arrived @ the previous 1hr/4hr swing hi zone, confluence with 76.4% 6185-5962 and the minor factors Weekly R1 and daily R2 pivots, - this is the current daily Hi as I post this as price continues to gain strength from the King/Osbourne communications published earlier.


Repeating patterns

The central point about my style of trading is of course confluence. Confluence is derived from;

a. Repeating hi-probability combinations of potential support/resistance factors on t/f's above that being used as the trigger for a market entry
b. The combination of simple repeating indicator patterns with simple repeating price action patterns (validated by price itself as the trigger for a market entry) on the t/f being used for a market entry and above, to give a 'Full Set-up.'
c. Such 'set-ups' as described by b. above supported by the the same or other such set-ups on the t/f's above that used for market entry. (These set-ups will not have been validated by price as entry is on a lower t/f, and a price action trigger will not have closed.)

Repeating patterns are part of science, nature and mathematics and are very prevalent in technical trading. Patterns are fairly easy to spot, be they price or indicator based or both, but in order to ensure a high strike rate of successful outcomes it is neccessary to try and define the difference between when they fail and when they succeed. In so doing you can define the highest probability conditions under which they develop and build these 'rules/criteria' into your trading edge. Assessing the overall price action conditions on your intermediate (middle) and trend (longest) t/f's and on how many t/f's a trend exists (if indeed one does) can aid in this pursuit.

Patience and Discipline

Patience is bitter, but its fruit is sweet ...Aristotle

Wise words indeed. Patience is reequired both in waiting for the market to come to you, by acting only when one of your high probability set-ups develop (howsoever you define them) and having the discipline not to get involved with the market until then. The same 2 disciplines are again required in adhering to the optimised money, risk and trade managemnet criteria of your trading edge, when a market entry has been made.

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Good eg of a hi-prob b/o

Uk Boe Qtrly inflation report -Merv hadn't even sat down and the sell-off began Lol...and then he spoke....just before at 1029am a great 1min hidden divergence re-entry to 5min downtrend after the pullback from 6122 - 6142, (Stayed flat as Merv was due - Doh!) Never mind a bear thust b/o on 1min provided a shortside trigger for a nice haul of pips before price arrived at 2 x fibs and a previous 1hr swing hi zone. which seemed a good place to book some profit.


Great bearish divergence set-ups occured 1min thru to 1hr at today's current 6185 hi which occurred in the late asian session and at a previous 1hr/4hr swing hi zone shown below.



Price duly arrived
Markets are made up of sentiment

Isn't PA in gbpusd today and yesterday a great eg of the premis in this post's title... Uk Cpi data comes out, market sells off ...Exchange of letters between Merv and Osbourne and the market reads it as hawkish...then this morning's Boe Qtrly inlation report & Q&A and market reads it as dovish on the knee-jerk.

You gotta love it, and with volatility comes potential opportunity.

and then came the pullback

Drop from 6185 (current daily hi) exacerbated by reaction to Inflation report found some demand at the 100sma on the 4hr...triple regular immediate seperate valley bullish divergence on the 1min tells us that downside momentum may be waning at this point and that buyers could overwhelm sellers to push price up from here (howsoever temporailly)

How often do we see this ? it is another repeating pattern, - a strong move and a pullback...just another pattern, and this repeat of the repeating patterns is in itself a pattern...or is that too esoteric a view ? Lol...whatever, - it happens.G/L