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EUR/USD Strength 3 replies

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Attachments: The Strength of USD
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The Strength of USD

A deep correction is not a guarantee that the next impulse wave won’t make a HH/LL …
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Learn to read the market by its swings:
1. Previous impulse swing = 91.78 —> 93.75 … (bullish impulse wave)
2. Previous corrective wave = 93.75 —> 91.80 … (a 99% correction)
3. Current impulse wave = 91.80 —> ?? … (already registered a high above 93.75)
Market is not random but unpredictable
A system is profitable if its win-rate is bigger than the percentage of “(average risk) / (average risk + average reward)” …

For example, let’s say a system has 1:3-RRR (Reward = 3xRisk). It is profitable if its win-rate > 25% [= (1 / (1+3)) x 100%]
If a system has 2:1-RRR (Reward = half the risk), it is profitable if its win-rate > 67% [= (2 / (2+1)) x 100%]

So, from the above formula of profitability, it is useless to predefine the risk (e.g., 1% on a trade) without knowing its possible reward. That’s why predefining where we will take profit (TP) is as important as defining where we will cut loss (SL) before initiating any trade …

Btw, having a profitable system to adhere to is one of the requirements to increase our chance to be successful in trading … (patience and discipline)
Market is not random but unpredictable
Knowing the win-rate by itself can’t tell if a system is profitable or not without knowing its average risk-to-reward ratio …

Let’s review the example below:
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Most people think that trading is a win-or-lose endeavor, so a 66.7% win-rate might look like a good number. But, upon further investigation, this system needs a win-rate greater than 84% to be profitable … [(26 / (26+5)) x 100% = 84%]
Market is not random but unpredictable
Here’s another example of “Don’t be fooled by high win-rate” …
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At one point, this account grew by over 42,000% and had a “high” win-rate of 79.3%, but was finally blown away because it didn’t employ a proper risk-to-reward management …
Market is not random but unpredictable
Patience and discipline in following your trading plan …
A trading plan based on guesswork or instant analysis is as worthless as a coin toss. A proper solid trading plan should be based on a proven profitable technical setup.
Find that first before applying patience and discipline so we know exactly what we are waiting for and what to adhere to …
Market is not random but unpredictable
Quoting 4for4
… Current impulse wave = 91.80 —> ?? …
This week’s harami candle made the last bullish impulse wave of USDX peaked @ 94.49, and it has made a 31% correction to 93.65 so far …
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Read the market by its swings:
1. A break of previous candle’s high creates a support,
2. A break of previous candle’s low creates a resistance,
3. An engulfing or harami candle creates a S/R …
Market is not random but unpredictable
Quoting 4for4
{quote} This week’s harami candle made the last bullish impulse wave of USDX peaked @ 94.49, and it has made a 31% correction to 93.65 so far … …
Do you have a source for the definition of "harami" in the way that you are suggesting here?

Assuming that you mean Bearish Harami, this is what I found -

https://www.investopedia.com/terms/b/bearishharami.asp

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Maximize wins, minimize loss, stay in the game as long as you can
Counter-Trend Entry Return This Week: -5.7%
Quoting Erebus
... the definition of "harami" in the way that you are suggesting here ...
It is my “simplified” definition of harami where the current candle’s high-and-low do not exceed previous candle’s high-and-low. And I refrain from categorizing it as bullish or bearish because, I think, the terms “bullish and bearish” are appropriate only to describe the state of a trend.

For me, out of my own experience, a harami pattern is just a stalled market condition and it is not an indicator of whether the market will continue or reverse the ongoing trend.

In the example above (post #626), if next week’s candle breaks low, it just means the correction is continuing to new low. But if next week’s candle breaks high, a new bullish impulse wave will be started and has a good chance of making HH because of the shallow correction and 93.65 will become a new support. There might be a chance of making a trade if the latter happens ... (I will make an update when there’s a development)
Market is not random but unpredictable
Quoting 4for4
{quote} It is my “simplified” definition of harami where the current candle’s high-and-low do not exceed previous candle’s high-and-low. And I refrain from categorizing it as bullish or bearish because, I think, the terms “bullish and bearish” are appropriate only to describe the state of a trend. For me, out of my own experience, a harami pattern is just a stalled market condition and it is not an indicator of whether the market will continue or reverse the ongoing trend. In the example above (post #626), if next week’s candle breaks low, it just...
Basically described an Inside Candle

Trade the breakout of high or low

Maximize wins, minimize loss, stay in the game as long as you can
Counter-Trend Entry Return This Week: -5.7%
Quoting Erebus
{quote} Basically described an Inside Candle Trade the breakout of high or low
If it’s that simple, there would be a lot of winning traders …
Market is not random but unpredictable
Quoting 4for4
{quote} If it’s that simple, there would be a lot of winning traders …
There would be, but Mr. Market is smarter than that

Maximize wins, minimize loss, stay in the game as long as you can
Counter-Trend Entry Return This Week: -5.7%
Quoting Erebus
{quote} There would be, but Mr. Market is smarter than that

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Market is not random but unpredictable
Quoting 4for4
… if next week’s candle breaks high, a new bullish impulse wave will be started and has a good chance of making HH because of the shallow correction and 93.65 will become a new support. There might be a chance of making a trade if the latter happens ...
By breaking last week’s high, a new bullish impulse wave was started, making 93.65 as the current trend-reversal level for USDX, and it has a good chance of making HH up to 94.92 or higher.

Given the waited breakout signal and its predefined playable range, we can now plan a 1:3-RRR trade as follow:
“BUY-LIMIT USDX @ 93.96 —> 93.64 / 94.92” … (-32 versus +96)

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Market is not random but unpredictable
Quoting 4for4
“BUY-LIMIT USDX @ 93.96 —> 93.64 / 94.92” …
Pending order was initiated …
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Market is not random but unpredictable
Will the last impulse wave make a peak @ 94.54?
It will if next week’s candle breaks this week’s low …
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Btw, the current uptrend in USDX will be reversed if 93.65 is broken …
Market is not random but unpredictable
looks like a profit taking, and buying up readying for an upshot post taper decision (most likely in the december meeting rather than the november, per most recent FRB minute)
Learn to read the market by the trends:
Seeing a swing is not enough, we also need to identify it as impulse or corrective wave of the ongoing trend …
Market is not random but unpredictable
To simplify the process of trend identification, forget about “phasing” the waves to identify the trend and just focus on each wave as a component of the ongoing trend ...

In the diagram below, Wave1-Wave3-Wave5-WaveB were bullish impulse waves and Wave2-Wave4-WaveA were the corrective waves. While the uptrend in the diagram peaked @ “5”, a change-of-trend took place when the last-formed support “A” was broken during the swing from “B” to “C”. Thus, making WaveC the first bearish impulse wave ...
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Notes:
1. Sequentially, in the diagram, the price made 3 higher-and-higher supports @ point 2, 4 and A during the uptrend.
2. The new downtrend will end if the last-formed resistance is broken. And the first resistance level to watch is the “B” level ... (also called the “trend-reversal level”)
3. Trend-Reversal Level (TRL) is a dynamic level that, when broken, will change the course of the ongoing trend.
During an uptrend, TRL = last-formed support. During a downtrend, TRL = last-formed resistance.
Market is not random but unpredictable
Quoting 4for4
Will the last impulse wave make a peak @ 94.54? It will if next week’s candle breaks this week’s low … {image} Btw, the current uptrend in USDX will be reversed if 93.65 is broken …
The uptrend of USDX finally came to an end, peaking @ 94.54, when the market broke 93.65 …
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Can this weak-dollar bring the price of USDX to 92.67?
Market is not random but unpredictable
A system will eventually fail if it doesn’t take the “larger” market condition into consideration.
Each system will be categorized as a trend-following or trend-reversing system and it needs to be consistently operated in the “right” market condition to be profitable.
Whether a system is traded manually or automatically, it will fail if traded in a wrong market condition … Learn to read the market first before devising a trading system.
Market is not random but unpredictable
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