The SETUP and the Chuvashova Fork

EURJPY M5 Live trade.

I watched the EURJPY move Counter Trend into the M15 Alligator and went hunting for a bearish LTF SETUP.

The H4 and H1 HTF trend is down (Check reas' chart above.) So I only want to take bearish trades on the LTF.

Don't paddle your canoe upstream against the current.

Entered at E and U with pending orders.



Stop is being trailed along the green Alligator moving average by my trade manager - which is a commercial product available on line.

Nothing to do now. All the work is done.

Trade over.

This is how I set up my work area.

HTF, so that I know the dominant trend, on the right.

LTF Active chart I actually trade with on the left.



Shortly after this a Bullish E line was broken.

Q. Why would I not trade it?

A. The HTF chart on the right has a dominant down trend.

Wait for the next bearish SETUP.

I try to understand how to find a good SETUP.

Is it a good setup for a BUY on the picture below?

Hi,

It looks alright altough I would have preferred a more distinguished move from each of the points.
For me, I would have waited for the next HH on your chart and, of course, miss out on all of that nice move we had on that pair.
But that's just me, maybe others view it differently.

What is your winning ratio with this method of trading?

Last time I was watching the EURJPY for a bearish reversal. I had a bullish SETUP but it was against the H1 trend. So I was waiting for it to end and a bearish SETUP to arrive. I marked the H1 green Alligator level on my M1 chart and waited.

H1 was moving back towards the Alligator and we do not trade towards the Alligator. We try to not paddle our canoe against the current.

Eventually, an M1 bearish SETUP arrived just above that H1 Green Alligator level and I took an M1 E line and an M1 U with pending order entry. The market dropped and I was filled.

I put my stop above T of the M1 bearish SETUP, changed my chart to M15 for my trade manger. I wanted to avoid getting stopped out on an M1 Fractal and I figured that M15 would have a bigger structure for my trade manager to handle. (If I was at P of the H1 SETUP, I would have traded this on the H1 chart for a really long run.)

Then I went to bed.

Here is how it turned out.



You can see the T of the M1 SETUP and the M1 E Line hidden away inside the M15 chart. I also show T M1 at the end of the Counter Trend (CT) at the LH on the H1 chart.

Essentially, I entered on an M1 Bearish SETUP hidden away at the LH - CT top - of the H1 chart.

My risk was about 14 and my reward turned out to be about 83 on the M1 E line entry with the M15 manager. I was confident in that M1 bearish SETUP as it took off , so I added on another lot at a break out level on an M5 fractal. (Each lot size was 0.20 in case somebody wants to know.)

Once again the market has a CT to a new M5 SETUP at its most recent LH on the H1 chart. I entered a trade there (little late) which is currently running.


8tango asked about the winning ratio?

That all depends on how well you do your homework 8 tango. It will vary from trader to trader. If you follow the process and are meticulous you will do well. If every trade was taken exactly as the method suggests I think you would do very well. It all depends on you.

You are the system. Not everyone will be able to do this, just as not everyone can trade Elliott Wave or Bill Williams Methods or any of a dozen other good systems. Winning Ratio depends on you and you alone. A lot of people will look a this and few really try it seriously and a few of those really study it and develop the discipline need to use it.

Most people want an easy fix or a magic robot. We all know how well that works. You have to be the magic robot and program your brain to do this.

maybe these indicators be useful

Might want to check the H1 GBPUSD. See what you find.

waiting for "P" as re-entry sell?

Hi,

You might also want to check EURJPY H4 for a SETUP (P not yet formed)

Best regards,
Dragos

Meanwhile I am looking for a bullish reversal on M5, on H4 U area

See if you can drill down and get into that EURJPY H4 at H4 P with a LTF SETUP dragos.

Same things with the GBPUSD H4 arya.

Get inside P and have some really good fun in an H4 run.

8tango when you get an E fractal, price has to go to U and then P. Often P is back past E and that is the best place to enter. AN n entry as soon as E is hit will be good at first, then suffer draw down en route back to P. If you get a second pass of the E line after P arrives, that is a great Entry. No draw down stress and U is also clear for an add on position.The best entry is at P if you can get in on a LTF SETUP. It is tricky but wonderful when you pull it off, add on at E and U break outs and sit back and enjoy the ride for as long as it takes for the opposite E line to arrive.

Hi WAB,

Firstly, I would like to say a BIG THANK YOU!!!! to you for your very very insightful thread back at Animal Farm and now this SETUP thread. I have learnt alot alot from you. Thank you!

I have tried to identify the EURJPY short trade using M5 timeframe and found the setup as show in the attached chart. Would like to check with you if the entries were correct? I have also moved the stop loss to above the last up M5 fractal. There is a sell stop order waiting at the break of the H4 E line. Just to check, on which timeframe do you manage your stop loss? Is it on the HTF where you first spotted a change in trend or is it on the LTF where you found your entry point?

Would like to ask if you plan to implement the SETUP on renko charts at a later stage just like in Animal Farm thread. I personally prefer the Renko Charts as it is much easier to detect trend change patterns like the SETUP there. And also, I would like to ask if this strategy is basically the same as that in Animal Farm? From what I have read, I find that both are trading off a change in trend pattern. Would you be able to share your insights on the differences please? Thanks in advance!

Hi fanatics.

Your chart looks good. If you plan on trading the HTF move your stops down fractal by fractal on that time frame. You can't stay in an H1 for long on an M5 trailing stop because the H1 CT will come along and you will be stopped out. A stop just above H1 P is safe enough, once you are sure that it is actually is the LTF SETUP identifying it as H1 P. Always check to see where the HTF T - U fib levels are as they are important and price usually turns at or around them.

I will do some Renko stuff in a while. (I haven't got to the C forks here yet. They are nice on Renko.)

I still like Renko, but wanted to develop this here on regular charts.

Thanks for the the thanks. Good luck.

Hi Wab, yes you are right that stop loss should be managed on the timeframe that you found the initial entry on. I have been stopped out of the trade already. But I think I made several mistakes in the trade. First is the management of stop loss (but it was lucky I got out without losing money). Second was that the retracement to P seems incomplete.

Anyway, I have been mulling over how to draw HH HL LL LH sequences correctly. Not sure if this is the right place to ask. But I still need your guidance and think that I should ask here so other people can benefit too. In the attached picture, I marked some labels on the chart. What I'm not sure are the ones with question mark. The previous HH has not been breached yet. Is there some guide or rules to dictate how HH HL LL LH sequences should be drawn? I know that HL can only be confirmed by a HH, and a LH can only be confirmed by a LL.

Catching P is difficult. I tend to try and catch it too close and get burned at times. As long as your stop is above T you can weather the drawback but you have to be confident of the SETUP you plan to trade and the direction it is to go within the HTF context. Keep checking up and down the time scales and look carefully. Go away then come back and look again, as we all tend to see what we want to see, not what is actually there there at times. That is the problem with Elliott Wave, it gives too many alternative counts and we pick the one we like. SETUP doesn't do that. Several traders using SETUP should reach the same conclusion on what is happening in real time in each time frame.

Your count is correct fanatics. when price dropped below the last green HL you had a change in trend. I can't see more of the chart to be sure how it fit in with everything else. Seeing all of the chart is important as we can get lost when too zoomed in and cannot see the bigger picture.

Currently your white labels are in a corrective wave, note how the fractals overlap. I would suspect that when your LH is broken a down wave will be a strong impulsive one.

Also pay attention to the tails in Renko. A tail is a tip on a smaller block chart. When I get time I will do some of this with Renko on Animal Farm. Renko is a bit different as we cannot see the higher brick frame count by just changing time scale.

Chin Bars indicator.

I have attached the Chin Bars alert to the first post.
It is handy indicator for those times when you are monitoring different levels and need a convenient alarm for E lines etc. while you are doing other things.

Chin bars can also be used diagonal.

EURJPY as I see it

D1 - Just had its E and U broken so this might qualify is CT trading.
H4 - I've marked the S and E areas, a definite T and the P area.
I usually try to avoid trading on Fridays but I placed some sell stop, I'll see what to do about them next week.


M5 - I've marked what I think is the E, if it gets broken I'll be more confident in this setup but will not place trades on the E or U since I'm not sure if it's a CT or not and I wouldn't want the price triggering my trades and then reverse.