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Trading the Cable swings via averages

  • #921
  • Edited 8:21am Jan 8, 2019 8:07am | Edited 8:21am
Quoting Riaanvw
Thanks Alan, what is the significance of the 1.27489 level to close below?
Sorry about the delay Widows did an update and I lost the plotting on the charts because they were not saved.

Yes that's all that was a two bar test. If it had closed below then it would have been a continuation to the downside from the hidden divergence. Actually I adjusted the line a little later to 1.27441, the next bar pushed down to 27443 pretty accurate hey!

This is simple geometry to plot. Draw the two bar test line, put a vertical line where the next bar will open and then put a horizontal line at the intersection of the two.

This will then show us if the price is going to break the two bar test and if not it will close below the horizontal and the down move would continue.

In this case it broke the two bar test and then retested it, failed and went up again running into hidden divergence for the third time .
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  • #922
  • Jan 8, 2019 8:10am Jan 8, 2019 8:10am
Thanks for the recent charts Alan! I'll study them when I get home. Unfortunately, recently I started a new job that doesn't let me daytrade at the times around the 108 bar. Still I'll keep reading and studying the thread. But here's my question (and sorry if this has already been answered): is it posible to trade this system with a higher timeframe, instead of 1h swings, 4h or 1d swings, and using the 1h to look for enters. I understand that there will be less oportunities though, but better than nothing.

Thank you!
  • #923
  • Jan 8, 2019 8:21am Jan 8, 2019 8:21am
Quoting Gleam
{quote} I guess.. it was two bar test

Can somebody doff his hat for the latest Alan's div on M30. For one hour I thought the div had failed and that would have been a first for me. From what I have noticed the regular divs can fail but Alan's divs rarely fail.

Yes, GU is bearish-inclined at the moment but the M30 div is pushing the bears back with intent
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  • #924
  • Jan 8, 2019 8:32am Jan 8, 2019 8:32am
Quoting hocius
Thanks for the recent charts Alan! I'll study them when I get home. Unfortunately, recently I started a new job that doesn't let me daytrade at the times around the 108 bar. Still I'll keep reading and studying the thread. But here's my question (and sorry if this has already been answered): is it posible to trade this system with a higher timeframe, instead of 1h swings, 4h or 1d swings, and using the 1h to look for enters. I understand that there will be less oportunities though, but better than nothing. Thank you!
Certainly but the signals for these higher time frames come few and far between. I would stick to the 1hr and look for opportunities happening in the US session if you can catch that. Catching just ten pips or so at a time can add up to a tidy sum.
  • #925
  • Jan 8, 2019 8:38am Jan 8, 2019 8:38am
Quoting Nala66
{quote} Certainly but the signals for these higher time frames come few and far between. I would stick to the 1hr and look for opportunities happening in the US session if you can catch that. Catching just ten pips or so at a time can add up to a tidy sum.
Ok!! I'll try to do that!

Thanks
  • #926
  • Jan 8, 2019 8:45am Jan 8, 2019 8:45am
Quoting Bydyke
{quote} Can somebody doff his hat for the latest Alan's div on M30. For one hour I thought the div had failed and that would have been a first for me. From what I have noticed the regular divs can fail but Alan's divs rarely fail. Yes, GU is bearish-inclined at the moment but the M30 div is pushing the bears back with intent {image}
I don't use the 30m chart but the story is the same. I would have drawn it like this (on your chart)
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  • #927
  • Jan 8, 2019 8:53am Jan 8, 2019 8:53am
Quoting hocius
{quote} Ok!! I'll try to do that! Thanks
Sorry I can't give you any stats on the US session because I am usually done and dusted by then.

This whole thing is about the London session which reliably gives us 50pips a day. Even if we have to change direction on occasion. As with today we have had some nice 30/40 pip swings, well over our requirement.
  • #928
  • Jan 8, 2019 8:59am Jan 8, 2019 8:59am
How I trade the hidden divergence...

When I see there is a possibility of a move running into hidden divergence (in this case short) I place a pending short order well below the price action in other words out of the way. Then when the price moves into the divergence I slide the order up so that I catch the spring back
  • #929
  • Jan 8, 2019 9:05am Jan 8, 2019 9:05am
Can you all see what is happening here on the 5 min. This could be a trend direction change to the downside as the average makes the LL's and LH's
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  • #930
  • Jan 8, 2019 9:07am Jan 8, 2019 9:07am
0130 for me so I am off to bed. Catch y'all tomorrow
  • #931
  • Jan 8, 2019 10:14am Jan 8, 2019 10:14am
Quoting Nala66
{quote} I don't use the 30m chart but the story is the same. I would have drawn it like this (on your chart) {image}

Thanks. My joy is that Alan's div is ever reliable. From my post, even if one had bought at 2738, the div would have helped one to close out without a loss
  • #932
  • Jan 8, 2019 10:44am Jan 8, 2019 10:44am
Quoting Nala66
{quote} Sorry about the delay Widows did an update and I lost the plotting on the charts because they were not saved. Yes that's all that was a two bar test. If it had closed below then it would have been a continuation to the downside from the hidden divergence. Actually I adjusted the line a little later to 1.27441, the next bar pushed down to 27443 pretty accurate hey! This is simple geometry to plot. Draw the two bar test line, put a vertical line where the next bar will open and then put a horizontal line at the intersection of the two. This...
Hi Alan,

I apologise I have to ask you about 2 bar test line as I have trouble understanding it. Is this the correct 2 bar test line as shown in the chart? Thanks
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  • #933
  • Jan 8, 2019 1:24pm Jan 8, 2019 1:24pm
Quoting Nala66
Can you all see what is happening here on the 5 min. This could be a trend direction change to the downside as the average makes the LL's and LH's {image}
Alan, would you say that price has a tendency to gravitate toward levels that haven't been tested yet and would you place high significance on this fact? both on the 5min and 1hr? or is this just a natural occurrence for high time frame ranging behaviour

I spent some time looking back a fair way on GU on both 5min and 1 hr timeframe and discovered it rarely misses a level,
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life is a reflection of what we allow ourselves to see
  • #934
  • Jan 8, 2019 3:01pm Jan 8, 2019 3:01pm
Quoting Nala66
Can you all see what is happening here on the 5 min. This could be a trend direction change to the downside as the average makes the LL's and LH's {image}
Thanks Alan, yes.
  • #935
  • Jan 8, 2019 9:05pm Jan 8, 2019 9:05pm
Quoting mickmack5
{quote} Hi Alan, I apologise I have to ask you about 2 bar test line as I have trouble understanding it. Is this the correct 2 bar test line as shown in the chart? Thanks {image}
No apology required some things need more explanation because we all see things differently depending on our points of view and our preconceived notions.

A two bar test is generally used when we spot divergence. I would imagine many have experienced the problem of taking a divergence and price fails to react to it and continues on its merry way. This is because price is heading for a level and divergence will not stop it from getting there. So the best divs happen at these levels because that is the expected turn point to test the opposite direction.

On your chart you have the correct start point but the test is not a horizontal line as you have drawn it but should be drawn connecting the bottoms of the candles (should be bars, easier to see). So the test line becomes in effect a mini trend line we need to see broken and our stop is placed above or below the bar being tested.

Don't assume the test can be applied all of the time, it can't as I will show on a chart directly.

Now I said it can be applied at divs but it can also be applied at supports, bullish or bearish.

Take a look at this very informative 15min chart it has a lot of stuff going on....
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  • #936
  • Jan 8, 2019 9:54pm Jan 8, 2019 9:54pm
Lets first look at the stuff in the red box.

1) was and RSI div so we want to test the bar at 1 but look closely and the entry point would have been at 2 HOWEVER 2 was also an RSI div so there was no long opportunity from 1.

2) Moving now to the diiv at 2 there was no place to place the test line so again nothing for us there either. Price moves down to 3.

3) This was a regular div so we need to test the bar at 3 so we wait to get our test on and 4 presents us with the long entry. All goes well from this point and the div causes the cross of the EMA so now we are out of the box going long.

Price makes its pull back (in this case 2 bars) to find bullish support where we can again apply the test as shown. Price passes the test and on the close it gives us another long entry and we have establish a bullish support level. All well and good so far (I hope) but then a problem starts to show its ugly head in the form of a bearish RSI Div.

We can't ignore this, we have to take some form of action.

9 out of 10 times the best action to take is to hedge the 2 long trades by taking the same sum of lots in the opposite direction. This is done because we cannot be sure that the bears will take out the bull support, remember that this div could recross the EMA. We see the price could not break the bull support so we can now close the hedge and take the profits from it. Remember if the div does not cross the EMA then price is going to make the HH, hasn't happened yet but it probably will.

So we have made some profit from the hedge and we still retain the two long trades accumulating towards our total and can move the stops for these two to just below the EMA to lock in some profit.

Now the bounce off the support gives us the opportunity to make a third two bar test and get a third long entry on still hoping we are going to make that HH with price, indeed we are hoping price moves to the average swing high and tests that level.
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  • #937
  • Jan 8, 2019 9:57pm Jan 8, 2019 9:57pm
Let's wait and see what happens.. We could be stopped out but if any loss is made it would be tiny because the first trade is well in profit and we have made profit from the hedge also. It is not over until the fat lady sings.
  • #938
  • Jan 8, 2019 10:06pm Jan 8, 2019 10:06pm
Quoting mikeeating
{quote} Alan, would you say that price has a tendency to gravitate toward levels that haven't been tested yet and would you place high significance on this fact? both on the 5min and 1hr? or is this just a natural occurrence for high time frame ranging behaviour I spent some time looking back a fair way on GU on both 5min and 1 hr timeframe and discovered it rarely misses a level, {image} {image}
Not always sometimes it leaves levels well behind as it creates new ones.

It is like a coiled spring having to pull back to get the energy to go forwards again. At the average fail points it turns to test the opposite side releasing the stored energy it has accumulated. Price will usually make the next level to the one the average is aiming for. This is why wide swings are desirable so we can get our 50 pips more efficiently.

It is surprising just how accurate these average swings present as resistance levels for price.
  • #939
  • Jan 8, 2019 10:38pm Jan 8, 2019 10:38pm
I just calculated on that 15 min trade that if it hits the stop the total trade would result in a $4 loss so moving the stop just one more pip will result in a profit of $21, going at $25 per pip at the moment.
  • #940
  • Jan 8, 2019 10:56pm Jan 8, 2019 10:56pm
Quoting Nala66
3) This was a regular div so we need to test the bar at 3 so we wait to get our test on and 4 presents us with the long entry. All goes well from this point and the div causes the cross of the EMA so now we are out of the box going long. {image}
Hi Alan,

In your Two Bar Example you chose to go long on bar 4. However, to me it looks like you had a bearish divergence right beforehand (which in my mind would have told me to be on the lookout for going short). Am I missing something here, and if so what is it?
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