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Weekly COT report Analysis + Trade Ideas

  • #9,801
  • Dec 6, 2020 5:23am Dec 6, 2020 5:23am
Quoting C-12
Someone gave me a heads up on "Quarters Theory" which proposes that all major currencies move in Whole, Half and Quarter numbers across all timeframes. The book, which is over 10 years old mentions USDJPY specifically moving off Quarter levels which I have found to be very accurate. I have only skimmed it so far, but looks interesting and related to what we do here. Also discusses fib levels, price patterns and EW. https://www.forexfactory.com/attachm...5&d=1607181934 (very temporary link) {image} {image}...
Yea, the Quarters Theory is a very good concept. If someone is too lazy to read the book, they can google "Ilian Yotov, The Quarters Theory- Part 1: Introduction" and watch the youtube video. Ilian Yotov is the author of the book.
  • #9,802
  • Dec 6, 2020 5:42am Dec 6, 2020 5:42am
Quoting C-12
{quote} I like your ruthless approach and not being concerned about small 1R loss in the grand scheme of things. We know not every single RN is going to produce a setup and there are structural areas on a chart to improve our strike rate. Your EURCAD setup the other day off 1.57 was an excellent RN reversal with a clear swing high and false breakout (FB). A+ grade setup. A straight 8-10 RR setup that only required a 20 pip SL Perhaps the stand out trade of the week. Although GBPUSD long off 1.33 was super quality as well. {image}
C-12, your appreciation of risk management and using a high RR comes from your +10 years experience trading financial markets. I find it very disappointing when some traders (some of them are red diamond members) advocate trading without SL (or a +800 pips sl in one particular case). Novice traders should understand that taking small loses is part of the game. Imagine you are a small business owner. You will always have some expenses (e.g. staff, rent, utilities, etc.). Why do they think trading is any different? Cut the losers fast and let the winners run. It is an easy concept but underappreciated.
  • #9,803
  • Edited 7:57am Dec 6, 2020 6:43am | Edited 7:57am
Quoting shahab8b
{quote} C-12, your appreciation of risk management and using a high RR comes from your +10 years experience trading financial markets. I find it very disappointing when some traders (some of them are red diamond members) advocate trading without SL (or a +800 pips sl in one particular case). Novice traders should understand that taking small loses is part of the game. Imagine you are a small business owner. You will always have some expenses (e.g. staff, rent, utilities, etc.). Why do they think trading is any different? Cut the losers fast and...
Yes, it seems people are very attracted to lossless trading and trade explorers, but I think that tide is turning after a few public blow ups early in the year.

I’ve noticed that this thread is now regularly becoming top of the daily likes list when I sign in.

Also on the positive side. I did a very quick crude review of last week. I looked at all 28 pairs and every single possible setup (retracement, range and counter reversal) and I was quite shocked what I found.

I calculated a potential of over 300R using a 25 pip SL as base and a fixed TP of either 50 (counter) 100 pips (range), 200 pips (trend). That included every losing trade. I really need to double check with more focus (and less beer!). There were countless setups. It was an average of over 10R on each pair and many setups had zero DD.

Of course, a 300R+ gain in a week is never going to be attainable due to margin constraints, swap fees, spreads, slippage, execution errors and just actually having a life! The sheer volume would be impossible to monitor and manage.

Either way, it highlighted the potential of precision trading using clean confluence levels, tight risk management and flawless execution. I don't think there's any other method that compare and without needing to go down to ultra low timeframes.
  • #9,804
  • Dec 6, 2020 7:35am Dec 6, 2020 7:35am
Quoting shahab8b
GBPUSD, D1 close is bearish. I am expecting more downside pressure to 1.34 and 1.33 in extension. The trend remains bullish above 1.33. The structure is starting to look like a wedge formation. Possible long setups @ 1.34 and 1.33. Short setups @ 1.355 and 1.36. I went short on Friday afternoon and left it open over the weekend. There is an asymmetric risk to the downside in the short term. In the long term I think the uptrend will continue to +1.40 next year. I have a long term target of 1.48-1.50 based on the saucer pattern. {image} {image}
i have my buy levels at 1.3327 and 1.3359
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Le$$ I$ More
  • #9,805
  • Dec 6, 2020 7:53am Dec 6, 2020 7:53am
On 4hr GU is currently above the previous week HVC so I expect more push up.

 

  1. My buy levels are the lines in red.
  2. The zone shaded red are where the volumes accumulates.


But my obvious pick is the previous WOP before any major uptrend resumes.

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Le$$ I$ More
  • #9,806
  • Dec 6, 2020 9:56am Dec 6, 2020 9:56am
Quoting shahab8b
{quote} Yea, the Quarters Theory is a very good concept. If someone is too lazy to read the book, they can google "Ilian Yotov, The Quarters Theory- Part 1: Introduction" and watch the youtube video. Ilian Yotov is the author of the book.
Interesting discussion Shahab and C12. I went through part 1 of the quarters theory by Ilian Yotov. Thanks Guys.

We went through the full large quarter range of 1000 pips on GbpUsd and currently 500 pips above at 1.35000 with more than a 1500 pip range for this year. Logic tells me that we are in a new 1000 pip range above 1.3000 and I can hardly imagine that 1.4000 will be reached this year. That would be miraculous with more than 2000 pips up in a year. Anyway, with this kind of analysis I tend to think that GU will meander towards 1.3000 to start the new year. Speculation of course

Thanks Guys I learn new things all the time.

Cheers
Leon
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Trade to trade another day
  • #9,807
  • Dec 6, 2020 10:09am Dec 6, 2020 10:09am
Quoting Wavegarrick
{quote} Interesting discussion Shahab and C12. I went through part 1 of the quarters theory by Ilian Yotov. Thanks Guys. We went through the full large quarter range of 1000 pips on GbpUsd and currently 500 pips above at 1.35000 with more than a 1500 pip range for this year. Logic tells me that we are in a new 1000 pip range above 1.3000 and I can hardly imagine that 1.4000 will be reached this year. That would be miraculous with more than 2000 pips up in a year. Anyway, with this kind of analysis I tend to think that GU will meander towards 1.3000...
You are a beast. Holding those positions is a market of true traders.
Le$$ I$ More
  • #9,808
  • Dec 6, 2020 10:21am Dec 6, 2020 10:21am
Quoting Wavegarrick
{quote} Interesting discussion Shahab and C12. I went through part 1 of the quarters theory by Ilian Yotov. Thanks Guys. We went through the full large quarter range of 1000 pips on GbpUsd and currently 500 pips above at 1.35000 with more than a 1500 pip range for this year. Logic tells me that we are in a new 1000 pip range above 1.3000 and I can hardly imagine that 1.4000 will be reached this year. That would be miraculous with more than 2000 pips up in a year. Anyway, with this kind of analysis I tend to think that GU will meander towards 1.3000...
Now that is one hell of chart if ever I have seen one. How you can hold 7,000+ pips like that from the Covid-19 spike lows is nothing but incredible.

That really does look like a strong inverted HnS on that W1 chart and perhaps 1.35 will give us a nice retracement back to the 1.30.
  • #9,809
  • Dec 6, 2020 11:28am Dec 6, 2020 11:28am
Quoting C-12
{quote}Now that is one hell of chart if ever I have seen one. How you can hold 7,000+ pips like that from the Covid-19 spike lows is nothing but incredible. That really does look like a strong inverted HnS on that W1 chart and perhaps 1.35 will give us a nice retracement back to the 1.30.
Hi C12,
I am glad you are asking. As Shahab mentioned earlier. The idea for me is to lock in quickly. If my stop losses are taken out I move on and look for new trade setups. I have had multiple trades taken out for a few pips profit on locked-in trades. This would be hard for some to fathom, especially when a 50 pip winning trade turns into a few pip profits, very frustrating to say the least. It is a mindset and not for all. But with this mindset, I trade short to longterm. I get trades taken out and those that survive serve me well in a long-term setup and are my core trades. I trade in between with scalps and so forth and essentially forget about my long-term trades. Of course, trading small helps me with this, depends on one's account size.

Yes, that inverted Hns certainly something to consider. Thanks Bud.

Cheers
Leon
Trade to trade another day
  • #9,810
  • Dec 6, 2020 11:38am Dec 6, 2020 11:38am
Quoting Wavegarrick
{quote} Hi C12, I am glad you are asking. As Shahab mentioned earlier. The idea for me is to lock in quickly. If my stop losses are taken out I move on and look for new trade setups. I have had multiple trades taken out for a few pips profit on locked-in trades. This would be hard for some to fathom, especially when a 50 pip winning trade turns into a few pip profits, very frustrating to say the least. It is a mindset and not for all. But with this mindset, I trade short to longterm. I get trades taken out and those that survive serve me well in...
It's a great strategy you have and absolutely polar opposite to the retail style of risking 800 pips for a 16 pip reward.

You may find in between those longer term trades, some of these setups Shahab8b is taking should help fill in some spare time.

Actually, I have already seen you've been catching some very sharp RN setups.
  • #9,811
  • Edited Dec 7, 2020 2:56am Dec 6, 2020 11:44am | Edited Dec 7, 2020 2:56am
Here's a mechanical strategy (trading plan) that anyone can follow based on the setups in this thread. Feel free to do anything with it, edit it. It's fully open to suggestions and changes. I am certain it can be improved upon. I will try dig out some further annotated chart examples but this thread is already packed full of examples. Many of Shahab8b's trades are similar to the 3 setups scenarios below. Now we can all trade like him.

The Confluence Method v1.0
The Confluence Method is a mechanical strategy that aims to capitalise on a W1/D1/H4 chart scenario (trend, range and counter trend) with a precision entry using multiple confluence factors. Most setups involve directly entering at round numbers (RN) and setting TP on opposing RN. It can be used on all 28 FX pairs and aims to provide the user with the ability to trade successfully in most market conditions. Make sure to demo in advance before taking any new strategy to a live account.

I have not included Risk Profile (i.e. risk % per trade or total account exposure) That is trader specific but I would suggest starting with 0.25% per trade and work up to 1% as confidence grows, and max 3-5% open total. In many setups your entries will have zero DD, but best keep the position sizing based on 25 or 30 pips.

This strategy requires a foundational grasp of Supply Demand zone concepts, Support and Resistance, Fibonacci levels and False Breakouts.

Chart structure:
• Supply or Demand zone (SD)
• Support & Resistance (SR)
• False Breakout (FB)
• First Time Back (FTB) – The first touch of an SD zone or Round Number.

Confluence factors:
• Round Number (RN) and 0.5RN (0.25RN Majors only).
• Fibonacci levels (Fib) 38.2 / 50 / 61.8 / 76.4.
• Trendline (TL) and chart patterns / Elliot Wave (EW) (optional - advanced).
• Oscillator Divergence (RSI/Stochastics/MACD) - (optional - advanced).

Trend Retracement setups: (Low frequency - High RR) *There is a routine intraday version of this setup*
• Identification of W1/D1/H4 trend direction.
• Identification of retracement confluence factors visible on D1/H4/H1.
• Entries placed directly on RN /0.5RN with either SR/SD/Fib/TL present at the level. (more confluence = more confidence).
• Stop Loss - Fixed 25/30 pips or behind SD zone (Break even at 25 pips)
• TP at opposing RN at 100 pips or 200+ pips (user preference).

Range setups: (Medium Frequency - Medium RR)
• Identification of D1/H4 sideways range.
• Identification of RN/SD/FB at both edges of the range.
• Entries placed directly on RN with SD zone or FB present.
• Stop Loss - Fixed 25/30 pips or behind SD zone (Break even at 25 pips).
• TP at opposing RN 100 pips or opposing range SD zone.

RN Counter Trend Setups: (High Frequency - lower RR) *These setups occasionally evolve into high RR reversals*
• Identification of approaching RN.
• Identification of distant SD zone or FB level. Or identification a smaller fresh FB level created in front of the RN at arrival. (See chart).
• Entries on RN (FTB only).
• Stop Loss- Fixed 25/30 pips (Break even set at 25 pips).
• TP or partial TP at 50 or 100 pips for counter trend reversals. I recommend holding a 50% partial.
Attached Image(s) (click to enlarge)
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  • #9,812
  • Dec 6, 2020 1:03pm Dec 6, 2020 1:03pm
I like those Wavegarricks SL-ses on his chart.
Markets will move to the right.
  • #9,813
  • Edited 2:28pm Dec 6, 2020 1:44pm | Edited 2:28pm
EURJPY - possible setups.

1) 1.27 - Counter RN setup with possible False Breakout (FB) - D1 setup looks good for 100 pips TP, maybe 200.
2) 1.25 - Trend Retracement setup with SR and fib confluence.

Quite an attractive looking chart.
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  • #9,814
  • Dec 6, 2020 4:37pm Dec 6, 2020 4:37pm
Quoting C-12
Here's a mechanical strategy (trading plan) that anyone can follow based on the setups in this thread. Feel free to do anything with it, edit it. It's fully open to suggestions and changes. I am certain it can be improved upon. I will try dig out some further annotated chart examples but this thread is already packed full of examples. Many of Shahab8b's trades are similar to the 3 setups scenarios below. Now we can all trade like him. The Confluence Method v1.0 The Confluence Method is a mechanical strategy that aims to capitalise on...
Great post C-12! You did a very nice job breaking the confluence methods into simple mechanical steps. This is very similar to what I have been preparing in my trading manual. But you beat me to it. Well done!
  • #9,815
  • Dec 6, 2020 4:44pm Dec 6, 2020 4:44pm
Quoting shahab8b
{quote} Great post C-12! You did a very nice job breaking the confluence methods into simple mechanical steps. This is very similar to what I have been preparing in my trading manual. But you beat me to it. Well done!
Well don't let me come in here and steal your thunder! People can get started with these basic ones and then move over to the official version later.

I realised as I was writing this why so few people post setups here. It's not as obvious as it seems what you are actually doing.

Maybe we can now get some fresh faces involved.
  • #9,816
  • Dec 6, 2020 4:47pm Dec 6, 2020 4:47pm
GBPUSD, short trade, this is an example of confluence setup on M1. These setups work on any TF.
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  • #9,817
  • Dec 6, 2020 4:56pm Dec 6, 2020 4:56pm
Quoting C-12
{quote} Well don't let me come in here and steal your thunder! People can get started with these basic ones and then move over to the official version later. I actually realised as I was writing this why so few people post setups here. It's not as obvious as it seems what you are actually doing. Maybe we can now get some fresh faces involved.
I'm glad that you prepared this actually. You did a very good job. And I am very slow in writing as I am never satisfied with the result. I'm working on a more comprehensive approach based on the conceptual diagram I showed you once (the one I deleted later due to various reasons).
  • #9,818
  • Dec 6, 2020 5:03pm Dec 6, 2020 5:03pm
Quoting shahab8b
{quote} I'm glad that you prepared this actually. You did a very good job. And I am very slow in writing as I am never satisfied with the result. I'm working on a more comprehensive approach based on the conceptual diagram I showed you once (the one I deleted later due to various reasons).
Yes, I have seen your previous work and that new diagram and I am looking forward to seeing it. It's going to be a whole lot more comprehensive than my 5 step bullets.
  • #9,819
  • Dec 6, 2020 5:06pm Dec 6, 2020 5:06pm
Quoting shahab8b
EURCAD short trade, it turned out it needed a RN. The setup was combination of wedge pattern, bearish candle, and RN. {image}
EURCAD, short trade update. This one made a clean trade. It looks like we might have a long setup @ 1.55 or just a little bit below this level @ Fib 61.8
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  • #9,820
  • Dec 6, 2020 5:20pm Dec 6, 2020 5:20pm
EURGBP, I wasn't sure about the long trade so I closed it with small profit. I think 0.90 might still work for a long setup. But I'm more interested in a short setup @ 0.91 or 0.9150
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