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4 Hour Strategy (MACD)

  • #7,861
  • Oct 31, 2007 4:21pm Oct 31, 2007 4:21pm
An observation on the $Yen:

Initially, price broke above the 21, came back down, and returned to the upside. The triangle formation was broken out of, 115.00 was taken out and the 89 'area' was hit. The 200 is now about 30 pips away. But, always a but, price is now hitting a previous support line that might now become a resistance line. Pay no attention to what the MACD is showing right now, this is ONLY 1st hour of this 4hr candle. The 'lesson' here is to:

1) Have you trendlines drawn and previous support and resistance line on the chart even if there are 'old' lines.

2) Note where the price 'is'. Are we at a whole number? 1.4500, 115.50, etc. Those can act as s/r lines all by themselves.

3) It never hurts to check the daily or even monthly. Those trendlines can come into play as well.

4) Know what your trade is waaaay before the signal occurs. If price is doing this I'm doing that. If price is doing that I'm doing this. Write this down.

At some point down the road when you are looking at the close of a candle on a 4hr chart it should only taken you a few moments to know what you are going to do. Why? Because you know what your trade is waaaay before the signal occurs.
Attached Image
  • #7,862
  • Oct 31, 2007 4:49pm Oct 31, 2007 4:49pm
I was going to take the JPYUSD long, but held off due to the fed announcement.

GRRRR.
  • #7,863
  • Oct 31, 2007 4:51pm Oct 31, 2007 4:51pm
Quoting unlv_tj
I was going to take the JPYUSD long, but held off due to the fed announcement.

GRRRR.
I promise you there will be another trade later
  • #7,864
  • Oct 31, 2007 4:57pm Oct 31, 2007 4:57pm
Quoting Palmer
I promise you there will be another trade later
Yes, you are correct Palmer, and I am only paper trading at this point.

When will the fed announcing, I am waiting on pins and needles over here?
  • #7,865
  • Oct 31, 2007 5:15pm Oct 31, 2007 5:15pm
That was released this afternoon at 1:15 EST USA. They lowered .25 as expected...

More USD news tomorrow morning as well.
  • #7,866
  • Oct 31, 2007 5:37pm Oct 31, 2007 5:37pm
Quoting Palmer
That was released this afternoon at 1:15 EST USA. They lowered .25 as expected...

More USD news tomorrow morning as well.
More USD news tomorrow? Really? I guess I will keep sitting tight then.

I don't get a financial radio station, and I was not certain if it would be a big annoucement or not. Thank you!
  • #7,867
  • Oct 31, 2007 5:40pm Oct 31, 2007 5:40pm
EUR - Looks to be testing the all time highs here ever, if it takes out 1.4535 who knows where it stops, I am not going to trade it here due to big resistance, if it takes this out and pulls back I will get long.

GBP - Could be a nice TC trade if we get a pull back.

JPN - May have a long in the works, would not want it to close under the 89ma.


Hope this helps some.
-Ryan
Keep taking CT trades, I need more money
  • #7,868
  • Oct 31, 2007 6:59pm Oct 31, 2007 6:59pm
Looks to me like there is a lot of resistance above the Yen right now:
89 SMA
50% retracement
trendline
and the 200SMA not far above that
Attached Image (click to enlarge)
Click to Enlarge Name: yen.jpg Size: 110 KB
"The market pays you to be disciplined"
  • #7,869
  • Oct 31, 2007 9:26pm Oct 31, 2007 9:26pm
This is the trade i made today in the audusd. I took the trend continuance signal on the Macd. (When the red turned to green). At the close of the 4 hr candle I got in the next candle at .9216. I set my profit target a little below at the previous high but as time went by I lowered it some as fed news got closer. I wanted to be out by the time the craziness hit. I took profit at .9258. Then as you see on the next candle it went all the way down to .9212. before up........crazy. Glad I was out of the trade by then. I initially set my stop just below signal candle at .9178 about 38 pips below. And initially my target profit area was 50 pips up at .9266. So risk to reward ratio was good. Now the hard part. The wait..........as you can see for 12 hours it made small candles. I moved my stop up a little but still kept it below the yellow 8ema. At the end of the 4th candle almost 16 hours later. I reached my target area and took profit at .9258. I was trading live mini account so each pip was a dollar. 42 bucks in my account. Thanks Phillip. Not for the money but once again for having the heart of a teacher. You are truly a friend to us all. pipip ...........JimDandy........
p.s. Notice the divergence now forming..........
Attached Image (click to enlarge)
Click to Enlarge Name: audusd trade.gif Size: 18 KB
  • #7,870
  • Oct 31, 2007 9:49pm Oct 31, 2007 9:49pm
Jim, do you normally play the MACD divergence, and if so, how do you play it?

The MACD is not as high, but the price is higher than the recent MACD high. So I am thinking there is enough momentum to send price even higher. Is this how you would play the divergence?
  • #7,871
  • Oct 31, 2007 10:25pm Oct 31, 2007 10:25pm
Yes you can learn alot from your mistakes. But i'd rather you learn this lesson from my mistake...........I entered this trade after the signal candle and placed the stop 30 pips below......wish i had made it 35. Using this strategy on a small live mini account. I dont have the option to trade micros. But may change to a broker that provides it. I should have placed the stop below the signal candle. As you can see it went 3 pips below my stop and then went right to my profit target. Leaving me behind.....This system does work,,, but not if you do this........Now you see why on the audusd trade i kept my stop down below the yellow line.....I did not want to lose more than 30 dollars and all i did was insure my demise..... I would rather have lost 50 bucks from the market not doing what i expected than to lose 30 bucks to watch the market do just what the strategy told me it had a high probability of doing.......What i should have done was either take the risk or not take the trade. To manage the risk you should put the stop where it will only get hit if the market strays from what rythym it had......Then adjust the size of the trade you put on. For instance trade 4 micros and reduce the risk to 20 bucks. Risk/Reward ratio still would have been 1:1 .........Hope this helps someone ..........pipip........Jimdandy

If i had not made this mistake today. I would have been up 92 pips today instead of 12. I like trading with real money because i have a tendency not to forget my mistakes so quickly. I sold some trinkets and opened a small account for learning.......when i get proficient i'll trade with full lots. But only after much much more lessons learned and good track record behind me.......
Thanks Phillip for teaching us how to fish.....instead of giving us a fish....
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd poor stop..gif Size: 15 KB
  • #7,872
  • Oct 31, 2007 10:28pm Oct 31, 2007 10:28pm
Quoting unlv_tj
Jim, do you normally play the MACD divergence, and if so, how do you play it?

The MACD is not as high, but the price is higher than the recent MACD high. So I am thinking there is enough momentum to send price even higher. Is this how you would play the divergence?
Wish i could give you a definitive answer but maybe one of the others can tell you how to best utilize this "divergence" info. I've been wondering the best way to "play" divergence. Howboutit pips or ryan or palmer can you shed some light???......pipip Jimdandy.........

I will do some searching on FF and see what
i find.........
  • #7,873
  • Oct 31, 2007 10:33pm Oct 31, 2007 10:33pm
Quoting JimDandy
Wish i could give you a definitive answer but maybe one of the others can tell you how to best utilize this "divergence" info. I've been wondering the best way to "play" divergence. Howboutit pips or ryan or palmer can you shed some light???......pipip Jimdandy.........

I will do some searching on FF and see what
i find.........
Jim it is exciting to read someone so interested and motivated, thank you for all your share.

What I posted about the price being a higher high, but the MACD being lower high, meaning there is more momentum to take price even higher, is just what I have read in trading books (I believe it is correct). A bullish divergence, I believe is what it is called. Where as if the MACD made a higher high, but the price was a lower high, it would be a bearish divergence.

I think anyway, but I am new to all this.
  • #7,874
  • Edited 11:02pm Oct 31, 2007 11:00pm | Edited 11:02pm
For the divergence... it#s the contrary.
If you have the highs of the the price going up, but the highs of the MACD going down it's a sign that the price might ( I said "Might") follow the MACD down.

On the picture you see the 1st divergence on Oct 21st.... just after the bearish divergence the price dropped.
And now we have 3 more bearish divergences. The first 2 didn't really worked out... the last one "Might" predict a drop.
But as the highs of the MACD are getting higher as well, this makes the drop due to the divergence less likely.

Hope that helps.
Attached Image
"The only successful substitute for brains is silence."
  • #7,875
  • Oct 31, 2007 11:10pm Oct 31, 2007 11:10pm
Thank you DXTrade, I had it backwards then.

I need to read up on the divergences again, so much to learn, but even more to remember.
  • #7,876
  • Nov 1, 2007 12:51am Nov 1, 2007 12:51am
I have a question for some of you more experienced guys. I've been printing out charts and covering up the page with another page and sliding it along and making trading decisions. I've found a problem. Take this chart for example:

Let's say I missed the optimal short entry point with the TC and resistance from the 21-EMA (which i've marked with a green circle)

So I know a good trend is in place and i'm sitting on the sideline being patient and waiting for a high probability trade (like a pullback to the 21-EMA) or a significant TC signal. But it just keeps on going.

Do I just sit this one out and watch the 200+ pip move? Or do you guys know of a good entry for this situation?

Thanks!
Merritt
Attached Image (click to enlarge)
Click to Enlarge Name: fast trend.jpg Size: 61 KB
"The market pays you to be disciplined"
  • #7,877
  • Nov 1, 2007 2:06am Nov 1, 2007 2:06am
Quoting Palmer
An observation on the $Yen:

Initially, price broke above the 21, came back down, and returned to the upside. The triangle formation was broken out of, 115.00 was taken out and the 89 'area' was hit. The 200 is now about 30 pips away. But, always a but, price is now hitting a previous support line that might now become a resistance line. Pay no attention to what the MACD is showing right now, this is ONLY 1st hour of this 4hr candle. The 'lesson' here is to:

1) Have you trendlines drawn and previous support and resistance line on the chart even if there are 'old' lines.

2) Note where the price 'is'. Are we at a whole number? 1.4500, 115.50, etc. Those can act as s/r lines all by themselves.

3) It never hurts to check the daily or even monthly. Those trendlines can come into play as well.

4) Know what your trade is waaaay before the signal occurs. If price is doing this I'm doing that. If price is doing that I'm doing this. Write this down.

At some point down the road when you are looking at the close of a candle on a 4hr chart it should only taken you a few moments to know what you are going to do. Why? Because you know what your trade is waaaay before the signal occurs.
Thanks Palmer! Very helpful!
Phil419
  • #7,878
  • Nov 1, 2007 2:10am Nov 1, 2007 2:10am
Quoting Ryanmcd
EUR - Looks to be testing the all time highs here ever, if it takes out 1.4535 who knows where it stops, I am not going to trade it here due to big resistance, if it takes this out and pulls back I will get long.

GBP - Could be a nice TC trade if we get a pull back.

JPN - May have a long in the works, would not want it to close under the 89ma.


Hope this helps some.
-Ryan
Great stuff Ryan! This really helps. For me personally I use this type of information as confirmation of my own market analysis. The idea is never to purely listen to what anyone else says, but to do my own analysis, prepare my own strategy (as Palmer said) and if I get a confirmation like this from someone who has been trading for a living then I know I'm looking at high probability.

Regards
Phil419
  • #7,879
  • Nov 1, 2007 2:21am Nov 1, 2007 2:21am
There was a very nice post on divergence by Pips, too bad I don't remember the page, but I have made some notes.
First of all we do not trade divergence alone, it can last very, very long! Then you have to define support or resistance lines. It would be preferable if price bounces of that line for a few times. There should be 3-4 small candles bouncing of that level. There can be an IT also, or a double or a triple top. And look for some candle patterns as conformation like doji, or stars, or some other reverse patterns. Don't forget to move your SL to breakeven as soon as possible.
Pips, please correct me if I'm wrong.

I also would like to say that I completely agree with Phillip about the atmosphere on the thread. When I first came here I was pleasently surprised by all the people willing to help each other. We all were newbies, and I still think I am, so it's all understandable. You must read 526 pages to find out if the system hasn't been changed and still workes. Because it happens very often. I personally have been reading this thread for two weeks and at that stage it was only 280 pages! So it's not hard for us to write a few lines and answer newcomers' questions, let's keep this thread positive and helpful!
  • #7,880
  • Nov 1, 2007 2:23am Nov 1, 2007 2:23am
Quoting merrittb
I have a question for some of you more experienced guys. I've been printing out charts and covering up the page with another page and sliding it along and making trading decisions. I've found a problem. Take this chart for example:

Let's say I missed the optimal short entry point with the TC and resistance from the 21-EMA (which i've marked with a green circle)

So I know a good trend is in place and i'm sitting on the sideline being patient and waiting for a high probability trade (like a pullback to the 21-EMA) or a significant TC signal. But it just keeps on going.

Do I just sit this one out and watch the 200+ pip move? Or do you guys know of a good entry for this situation?

Thanks!
Merritt
Hi Merritt

This is a very good question and I was wondering the same thing! I'm guessing it might have something to do with the "angle" of the 8 and 21, but I have been known to be wrong!

I am also very interrested in an answer.

Regards
Phil419
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