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Trading the Cable swings via averages

  • #4,021
  • Jul 5, 2019 2:46pm Jul 5, 2019 2:46pm
Quoting luckyvictor
Alan At the time of trading, would you consider this as two bar test btw? I entered in the green bar in the circle as the previous bar close above the bottom, also taking the inference from H1, but obviously it failed. {image}
Why look for longs?
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  • #4,022
  • Jul 5, 2019 2:47pm Jul 5, 2019 2:47pm
Quoting luckyvictor
{quote} at that time, looking at the H1, it was in the oversold zone already
No such thing as oversold.
  • #4,023
  • Jul 5, 2019 2:58pm Jul 5, 2019 2:58pm
Quoting Nala66
{quote} No such thing as oversold.
But fast RSI on H1 was below 20.

And after that, price kept dropping and fast RSI on H1 couldn't catch that speed, so at that time, while the H1 candle was forming, it looked like a rsi to price divergence.

That's why I went to M5 look for further bullish divergence.

So how should I read the graph today please

I feel like I still have some misunderstanding on some key concepts, but I don't know what I am doing wrongly
  • #4,024
  • Jul 5, 2019 3:03pm Jul 5, 2019 3:03pm
Quoting luckyvictor
{quote} but according to Alan, we just need to look at the price action, the signals
That is the first thing you have said correctly.
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  • #4,025
  • Jul 5, 2019 3:17pm Jul 5, 2019 3:17pm
Quoting luckyvictor
{quote} But fast RSI on H1 was below 20. And after that, price kept dropping and fast RSI on H1 couldn't catch that speed, so at that time, while the H1 candle was forming, it looked like a rsi to price divergence. That's why I went to M5 look for further bullish divergence. So how should I read the graph today please I feel like I still have some misunderstanding on some key concepts, but I don't know what I am doing wrongly
I don't think you are even plotting your charts... This simple AB = CD is not even mentioned in your study.
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  • #4,026
  • Edited 4:05pm Jul 5, 2019 3:20pm | Edited 4:05pm
Quoting Nala66
{quote} That is the first thing you have said correctly. {image}
Alan, on the attachment below

1. The red line in the RSI indicator, is it a valid rsi/price divergence? could you ever consider this a bullish divergence that terminates the short signal? At least do a hedge in here?

2. The yellow, green, and blue line, again, are they all valid rsi/price divergence? should we ignore them or take action?

3. Will you take short at the red circle? ( I know it happened late and you would have done the day, just imagine it happens earlier in the day)

4. Are you taking long as primary only when the H1 has formed divergence? meaning the candle is printed, that should be after the first H1 yellow bar from that dip. Because when it was in real time, when the price dropped during this hour candle, the RSI on H1 couldn't be returning to waterline and form the trough, it only went south.

Many thanks for clearing my questions.
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  • #4,027
  • Jul 5, 2019 4:12pm Jul 5, 2019 4:12pm
Quoting Nala66
{quote} No such thing as oversold.
Yes that’s correct, oscillators were never meant for that use at all, ppl just started using that term etc.
  • #4,028
  • Jul 5, 2019 4:23pm Jul 5, 2019 4:23pm
Quoting 4xtrader41
{quote} Yes that’s correct, indicators were never meant for that use at all, ppl just started using that term etc.
Basically, I am just trying to express that the bear power may come to the end, and I should be aware now.

So how should I see/read it?

I am saying all these not trying to defend myself and saying I am right, I am indeed showing you all honestly how I think/read/see and wish you guys and show me what/why I have done wrong and how I should correct my thinking.

I am quite disappointing on myself today because I realise that I read the chart so wrongly, I read the pdf twice now (limited time due to work and family), and I don't think I get the concept.

Btw, I use the term 'oversold' from post 60, i thought this is how we see this signal.

Now do you think even for 1 minute that the average swing at X has any chance at all to drive down to the level of A. Well it could but not yet because this is an oversold situation and it hasn't even broken the swing at S. We could also call this bearish failure. The market will jump on the failure and will begin to test the opposite side... Which it did, level S1.

Our targeted distance is from A to B and for the average swing at X to break the level S1 but this didn't happen because look at the RSI there was divergence between the fast and slow RSI and we CANNOT ignore this so we would close this long trade and begin to take a short trade.

Again the we see a divergence on the RSI at B2, way oversold for the average to make the lower low so again a place to exit and look to go long again. However why would you bother because you have made well over your 50 pips in this case.
  • #4,029
  • Jul 5, 2019 6:19pm Jul 5, 2019 6:19pm
Quoting luckyvictor
{quote} Basically, I am just trying to express that the bear power may come to the end, and I should be aware now.
The first sign of bear power coming to an end will be a 1m bull support on the other side of the 26 ema. Even then there needs to be something on the higher time frames that indicates a turn around point to start trading in that direction
  • #4,030
  • Jul 5, 2019 8:11pm Jul 5, 2019 8:11pm
Quoting luckyvictor
{quote} Alan, on the attachment below 1. The red line in the RSI indicator, is it a valid rsi/price divergence? could you ever consider this a bullish divergence that terminates the short signal? At least do a hedge in here? 2. The yellow, green, and blue line, again, are they all valid rsi/price divergence? should we ignore them or take action? 3. Will you take short at the red circle? ( I know it happened late and you would have done the day, just imagine it happens earlier in the day) 4. Are you taking long as primary only when the H1 has formed...
How many times do I have to say this, it is now becoming a pain in the neck.

The signals you are looking at are only on the 5 min chart so your inference is based on that chart. Now you have to drop to the 1minute chart to look for entries based on those inferences. Since now you are trading the 1 minute chart against the trend of the 1 hour chart DO NOT expect too much from it if anything at all.

The I minute chart can easily get from the bottom end of the RSI to the top end and yet price itself may only move 2 pips or so.

As for oversold I am comparing the fast RSI to the slow in the post you mention. Where the slow has only made etc….
  • #4,031
  • Jul 5, 2019 8:38pm Jul 5, 2019 8:38pm
Where is the recognition of:

1) Higher Time frame trades or Market maker trades as opposed to Lower Timeframes trades or routine trades

2)Ranging/consolidating versus Trending

3)Non-economic factors pervading the market such as Brexit or other Political events
  • #4,032
  • Jul 6, 2019 12:44am Jul 6, 2019 12:44am
Quoting DonFF
Where is the recognition of: 1) Higher Time frame trades or Market maker trades as opposed to Lower Timeframes trades or routine trades 2)Ranging/consolidating versus Trending 3)Non-economic factors pervading the market such as Brexit or other Political events
May I ask you first, how far are you with reading this thread?
Trading S/R with PA only. No indicators anymore!
  • #4,033
  • Jul 6, 2019 2:03am Jul 6, 2019 2:03am
Quoting Nala66
{quote} How many times do I have to say this, it is now becoming a pain in the neck. The signals you are looking at are only on the 5 min chart so your inference is based on that chart. Now you have to drop to the 1minute chart to look for entries based on those inferences. Since now you are trading the 1 minute chart against the trend of the 1 hour chart DO NOT expect too much from it if anything at all. The I minute chart can easily get from the bottom end of the RSI to the top end and yet price itself may only move 2 pips or so. As for oversold...
Hi Alan

Thanks for the reply and sorry for being so stupid.

However, I did use H1 for my inference, and this is why I said before, I saw the oversold situation (RSI fast went to extreme), on H1 average swing made LL already and start looking for bullish divergence in M5, i didn't start from M5 and trade in M1.

So I really want to look which part is my thought process went wrong, and how should I read the graph.

More importantly, whether I correctly define those RSI divergences (and by this I mean really defining the divergence itself, whether we take action that would depend on the inference from H1).

Many thanks and I really hope to receive some guidance, I am feeling very loss even I have finished the pdf twice and gone through half of this thread.
  • #4,034
  • Jul 6, 2019 2:14am Jul 6, 2019 2:14am
Quoting luckyvictor
{quote} Hi Alan Thanks for the reply and sorry for being so stupid. However, I did use H1 for my inference, and this is why I said before, I saw the oversold situation (RSI fast went to extreme), on H1 average swing made LL already and start looking for bullish divergence in M5, i didn't start from M5 and trade in M1. So I really want to look which part is my thought process went wrong, and how should I read the graph. More importantly, whether I correctly define those RSI divergences (and by this I mean really defining the divergence itself, whether...
I have been trading Alans method from the start and I can assure you that the hardest part for me was inference from the 1hr.

For myself I am cautious when price is around or on the 1 hr EMA and also when RSI is around the 80 or 20. Remember that just because price is in div it doesn't mean that it will cross the ema so there is also that to consider when you're trying to evaluate everything else.

Took me about 3 months to see things other people saw instantly, so maybe just be patient with your learning process. Hope this helps
life is a reflection of what we allow ourselves to see
  • #4,035
  • Jul 6, 2019 2:15am Jul 6, 2019 2:15am
Quoting Jazz1964
{quote} May I ask you first, how far are you with reading this thread?
Hi Jazz

Hopefully you can identify which part of my through process went wrong as well please, and whether the RSI divergence I define are correct.

I have read the pdf twice, slowly, and I actually went back to the post in the thread and read the entire conversation, for example, if there is a reply copied in the pdf, I would go back to the post and start from the beginning of the conversation to understand where the question come from and why we reach that answer.

And I have started from page 1 in this thread, one post by one post, now at page 123.

The key concept that I have taken so far:

1. Price lead the 26 EMA, when price is below the EMA, primary trade is short, above is long.

2. RSI/RSI divergence and Price/RSI divergence gives us a signal to take action, based on the inference from higher TF.

3. Inference that comes from higher TF can be divergence, RSI at extreme, price at previous average swing high/low (a turn may happen), price at EMA (we can see which power finds support)

4. When price is away from average, and if there is a divergence signal, we may take hedge action, this may also become the primary if the power is strong.

5. Obviously, things start from bar 108, where the volatility comes in

6. Divergence usually take price across EMA

7. When 26 EMA reaches to a previous average swing high/low, since price leads the way, price itself may reach to the next level.

8. When EMA try to make a HH/LL and if it fails, it will try the opposite.
  • #4,036
  • Jul 6, 2019 2:49am Jul 6, 2019 2:49am
Quoting mikeeating
{quote} I have been trading Alans method from the start and I can assure you that the hardest part for me was inference from the 1hr. For myself I am cautious when price is around or on the 1 hr EMA and also when RSI is around the 80 or 20. Remember that just because price is in div it doesn't mean that it will cross the ema so there is also that to consider when you're trying to evaluate everything else. Took me about 3 months to see things other people saw instantly, so maybe just be patient with your learning process. Hope this helps
I agree, so there is one thing I would like to understand first, whether I correctly identify those 4 divergence, taking action is another thing, that is a decision based on higher TF, and for the result, rather it reaches the EMA, will be another thing.

But firstly, whether I am seeing those divergence correctly, only if they are valid, I can continue the path to decide whether to take action and wait for result
  • #4,037
  • Jul 6, 2019 5:32am Jul 6, 2019 5:32am
Quoting luckyvictor
{quote} I agree, so there is one thing I would like to understand first, whether I correctly identify those 4 divergence, taking action is another thing, that is a decision based on higher TF, and for the result, rather it reaches the EMA, will be another thing. But firstly, whether I am seeing those divergence correctly, only if they are valid, I can continue the path to decide whether to take action and wait for result
You did identify those divergences as divergences and there were 22 since bar 108 not including divergence within the 5 and 14 RSI. So what makes a good divergence? Out of those 22, 3 returned back to the 26 ema. There is only 1 that is the better payer marked in yellow. Would it make sense to stop trying to predict the end of a trend with a divergence and find the divergences that continue the trend? If you look at the 1 hour it has been trending down for the last 9 days and I would hate to think how many 5m divergences have failed within that time. I hope this helps.
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  • #4,038
  • Jul 6, 2019 5:52am Jul 6, 2019 5:52am
Quoting MrMagnet
{quote} You did identify those divergences as divergences and there were 22 since bar 108 not including divergence within the 5 and 14 RSI. So what makes a good divergence? Out of those 22, 3 returned back to the 26 ema. There is only 1 that is the better payer marked in yellow. Would it make sense to stop trying to predict the end of a trend with a divergence and find the divergences that continue the trend? If you look at the 1 hour it has been trending down for the last 9 days and I would hate to think how many 5m divergences have failed within...

Thanks for the reply.

The reason I ask is because I worry that I can not identify the correct divergence, only I recognize the correct divergence I can then decide the next action, for example, whether to hedge or not.

What is the zoo point that you usually take from higher TF?

I can list 4 only, extreme rsi, divergence, price at average swing high/low, price at 26 EMA
  • #4,039
  • Jul 6, 2019 6:00am Jul 6, 2019 6:00am
Quoting luckyvictor
{quote} Hi Jazz Hopefully you can identify which part of my through process went wrong as well please, and whether the RSI divergence I define are correct. I have read the pdf twice, slowly, and I actually went back to the post in the thread and read the entire conversation, for example, if there is a reply copied in the pdf, I would go back to the post and start from the beginning of the conversation to understand where the question come from and why we reach that answer. And I have started from page 1 in this thread, one post by one post, now...
@5. Things start around bar 108. It can be earlier too
@6. Divergence usually takes price back to the EMA, not per se through the EMA. I wonder if you defined that unprecise or that you still have a wrong understanding here! Such move back to the EMA can fail, so keep your stop tight!

I got the idea that you close to 100% expected a reversal with that H1 RSI <20 and M5 making bullish div.
What happened for the last two days? it was such a tight range. You can expect a strong move out of the range. You can expect a false break out. You have to be flexible. And indeed as written somewhere above here... nothing wrong with staying away out of such market.

I wonder what you see on your M5 chart in hindsight. Your trade entries and exits, where they accurate? Even if you were wrong, was your stop tight? Are entries quick?
What if you draw all bull and bear div's and HD's in your M5 chart, what does it look like... Losing day? BE day? Winner day?
Don't get married to your chosen bias. Trade what you get presented. Being on the sideline is also a position.

Trading is one of the toughest jobs in the world. Alan's method makes a lot clear and closest possible to "easy". I understand Mike fully when he writes it took him months to get there. And if it's not about to get the understanding correct, it can be hard to get rid of 'old behavior' and to get the trader mindset correct.
Success = knowledge + experience + hard work. Plus prolly a few things on top of that.
Trading S/R with PA only. No indicators anymore!
  • #4,040
  • Jul 6, 2019 6:58am Jul 6, 2019 6:58am
Quoting Jazz1964
{quote} @5. Things start around bar 108. It can be earlier too @6. Divergence usually takes price back to the EMA, not per se through the EMA. I wonder if you defined that unprecise or that you still have a wrong understanding here! Such move back to the EMA can fail, so keep your stop tight! I got the idea that you close to 100% expected a reversal with that H1 RSI <20 and M5 making bullish div. What happened for the last two days? it was such a tight range. You can expect a strong move out of the range. You can expect a false break out. You have...
Appreciate for your teaching.

I do use the word "usually" which means divergence not necessarily return price to EMA.

I think you actually understand (doesn't mean agree me) why I was searching for a reversal signal, however I failed to think in your way.

My entry is usually late, and it does cause problem, shorter range to tp, greater distance to stop, hopefully you can give me some advice.

From H1, when I see a ZOO point, I would go to M5, and in here I look for divergence signal, and I either wait until for the divergence is formed (meaning it happened in the last 5m bar), or recently I try to improve by see potential divergence is forming, this is done by comparing the distance between price to the last pivot price, and the distance between rsi to the previous rsi pivot. If for example, price drop a lot and rsi can not catch up, then I drop to M1 and look for bull div (this is the only time I look at M1), and the opposite scenario applied.

The above two methods do give me entry too late or too early (false signal).

So how do you enter please?
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