Fibonacci Trading with Bobokus

Sometimes if there have been several days of a certain type of trade opportunity such as in an uptrend or in a range, and then the approach has to be changed for a new set of trading days, I end up forgetting what I previously learned.

When I'm used to looking for intraday long or short bounce opportunities I forget when it's good to look for a swing area break, or why I would have been confident about a certain swing break at the time it occurred but the following week I go back over the candles and don't know why I thought it would work out.

I know I've learned a bunch of techniques in the past month and have been proficient with them at some point but every day I find myself doubting my thinking about where things may go or why.

So I decided to start logging my daily forecasts and why I think things may work out a certain way, including screen shots of the setups and results. This way I can go back over it like a course and remember how to use the techniques in my own way and how to evaluate various setups when I'm staring blankly at a tight candle Asian session wondering what to do at 1am EST when things start moving.

I'm doing this offline in a Word file since it's easiest for me (not ready to start a journal forum, not trading yet). I have so far written my views of yesterday and in the process I discovered I was forced to think more and evaluate more objectively as if I were writing a formal paper on the subject, and I think I saw some things more clearly. I ended up with 2 full pages including 2 screen captures just for yesterday.

The most interesting part was how I ended up realizing I expected a retrace toward intraday long (with hope for a bounce) before any long move occurred, rather than a pure break of the intraday high going long. Yesterday I wasn't thinking there WOULD be a bounce, I just knew it could happen.

When I was forced to evaluate it officially I reasoned that Friday ended with a sudden big move upward and remained right up there until the end of the day, so there should be some kind of fib retrace on Monday to compensate for that and equalize the pressure of the surge. That doesn't mean it can't just continue on upward without a retrace, but what it empowers a trader to do is more intelligently consider various strategies for the session such as a scalp trade on the short side when London opens.

If a retrace is considered likely, one can place a swing area short entry with small profit targets between the session open and the retrace zone. Another day there may be a reason to let a swing breakout move more before exiting.

Today (right now, just after London open) for example we are starting out at the bottom of the Monday move down, but the move downward from yesterday wasn't an uncompensated surge. There was a 50% retrace of the first intraday down surge, and then it continued down and stalled. So a retrace to the intraday fib isn't as-expected as yesterday, making a long scalp entry out of Asia not so much of a good idea, especially since the swing high is so close to the intraday short today, not much room before resistance could occur.

Of course there was a big up surge, but that would be an anomaly for me because it happened a bit earlier than I'd expect any such move to come in a session. At best this surge would only help me consider changing my bias from short to long for today if it stays above the intraday pivot.

One thing I've learned to do in the past month is view things like a missed surge as a new opportunity, not a missed one. Instead of wondering if I should jump in late, I now know to observe for a small retrace to stabilize it and give it validity and then consider taking it at the appropriate intraday or swing opportunity.

At this moment the intraday pivot is being tested. If things open outside intraday long I'd be thinking it's time to go long. If things go back down toward intraday short I'd consider the surge to be a glorified daily retrace/bounce and get ready to proceed with a short opportunity as expected before London started.

After evaluating so many trading sessions I think most of the scenarios of how things will go, will be clear. It doesn't mean we'll know which way things will go, it means no matter which way they do, we'll be ready for them, even if they change their course mid way. We already know this pair responds well to fib levels by nature, so it's a tamed volatile beast if we can become one with it. By thinking, observing, and writing about it every day I expect to learn to handle it some day.

I called an entry long for tonight as I wrote my projections in my journal and then it happened as I was describing how it may happen.

The first surge candle at 06:00 was a surprise move and a missed opportunity because I wouldn't have wanted to go long with a short bias,and intraday short so close overhead, but it did....so then I observed how it moved and made a new long call.

When that surge started receeding there was a new peak to pull the swing high, with the swing low being at the bottom of the thrust area. A retracement of the surge occurred to the 38% level, which was also at the intraday pivot.

Since the thrusting candle had risen past intraday pivot, I was ready to consider a long bias if price could find support above pivot by retracing somewhat and proving it won't just collapse right back down. It did this by staying above pivot, and the fact that this was also swing long, it bounced in a long-looking way with lots of support.

So I made the call that if price can now break the swing high, it would work out. T1 and T2 were met.
It's an example of what I meant in the last message about seeing a sudden big move and making a rational decision to get onboard or stay out, without even worrying about it (no emotions allowed).

So tonight I saw this, it made sense, and it unfolded as expected, but next week I'd probably have trouble remembering how I figured it out. Now it will be logged with pictures so I can review.

Very good, You dont want to predict the market only react to it. If you get into predicting it to much you will be single minded into what it will do and get confused when it doesnt do what you wanted it to do.Support and Resistance either holds or it doesnt its that simple.
Tonight for instance I was looking for the bounce up and then possibly take it short again but Support in the Intrday fib levels is holding and I am changing my bias as it unfolds.Following along with the Swing fib may produce another long position and the Intraday Fib is showing a break of the Long fib already, so you do have to adjust on the fly to react to what unfolds as the market changes.
One thing to note is price has crosses the envelope to indicating chances are high that we could go into ranging.

Hi Bob,
Your swing high (2.0883) candle is bearish, whilst on my chart it is bullish....is it due to broker price or time differential ??????.
Adam
PS I am Gmt +1

Most likeley its the brokers, we see an artificial price generated by their feed of the actual market prices

GBP very close to giving a short signal but I have no faith in a short until the lower trendlines can give way also, a break there and I will be short targeting the T1 and T2 levels of the Swing fib.Im gonna wait a few candles before I pull my swing fib up since it is showing a rejection from the swings long fib level ,if the low here doesnt give way or the trendlines hold I will pull the Swing fib up then and look for it to signal a long with the break of the Swings long fib since price is already above the Long fib from the Intraday set and it has shown good support once.

Did anyone get in on either of these 2 long's? The first one came way too early before London, I wouldn't have been likely ready for that one, but then the latest up surge, I am not sure if/how I would have played that one, but in my notes I have 2 excuses that could have gotten me in for the second long surge (easy to write about after the fact, don't know if I'd even act on them in real time).

After the first up move there was an immediate 38% retrace of the thrust on the same candle, arguably giving the thrust stability from a further collapse if things "look up" on the next candle...and they did. The candle after the thrust opened at the retrace and showed only upward signs of strength. A daring person could look at that move and notice that it has moved in a range almost the same as the expected daily range of this pair, and the swing fibs from bottom to top of the thrust, along with the "long bounce", could be traded as if it were an intraday fib and a long position could be taken. The stop would be near by at the swing pivot or short so the risk would be minimized comapred to taking a trade at the break of the high of that thrust. That is excuse or observation #1 I've written on the move for today in my notes.

Part 2 is what to do about a potential break of the swing high, the top of the surge? My instincts told me at the time that it would be a bit too unsettling to expect things to go surging any more past the high, and I'd expect any nudges above the swing high to be false breaks. I'd like to treat the whole move as if it were a day's work complete and expect a consolidation time out like an Asian session. That's exactly what happened, including a few false nudges above the swing high as I anticipated.

If a trade were taken at those points, as it turns out with a reasonable stop it would have eventually worked out on the second surge up above swing high, but looking back, I don't feel any different, I wouldn't have wanted to place a pending long entry above the high of the first surge when the first surge occurred. Besides, if I were in a long trade from the swing long fib bounce, I'd be managing that trade rather than thinking about going long on the break of the high so maybe it wouldn't even be an issue to worry about.

But a few candles before the second surge occurred, the most recent high (one of the false breaks) gave a point to place a swing high, and I think given that the first surge had retraced, I'd place my swing low at that retrace candle level as shown in the image. There's almost 40 pips range so it is a valid swing range to pull. I'd do this when I saw that the candles had started finally retracing downward, generating an actual swing rather than a bunch of sideways consolidating noise. At this time (excuse/observation number 2 in my notes) I'd be willing to place the pending long order above the swing high and I'd catch the second surge up (or I'd still be in a long trade from the swing long bounce of the first surge). With the swing as shown, the candles never broke below the swing short, and the real bodies all remained above the swing long, supporting a possible long bias.

So I don't know if this is wishful thinking or valid objectivity, but that's what I'm writing down in my notes and maybe if similar price action shows up in the future and my analysis fails, I'll have that noted too to learn from, no harm done. Either way, proper stop placement is always possible using the pivot and long/short sides of the fibs so worst case, a bunch of trades fail and new things are learned.

Eventually I'll have enough observations of good and bad times to focus in even better, whether that means making better judgement calls from what I see on the screen, or just knowing when to stay away from trading because the probability of a certain setup isn't so great. I feel time is the key now, I think I know how to evaluate my options and it's all about doing it often enough to turn it into a skill.

I think everyone was caught off gaurd with the first spike. I placed a buy stop above the peak once it retraced but it rolled back on the trailing stop before it hit its peak the 2nd time.

Hi Bob,
In one of your earlier posts you mentioned that you were not going to move your long term fib levels because you wanted to see if the target levels would be met........well for a novice it was quite incredible to see the price action today reach the Daily T1 of (June 8th).
Adam

Yep, were gonna be pulling those fibs up now once price finally hits a top here.

Daily T2 2.1275 here we come......possibly

That one may take a little longer.
But after last nights surprise it doesnt seem out of the question.
Everyone is wondering how high is it gonna go, well just keep pulling the fibs along with the price here and we can see where its going. If the high of 2.1052 gives way were looking for 2.1099/2.1128.

Looks to make an attempt on the high again.

Agreed.....
The most profound concept that i have learnt this week is from your earlier post is that "we do not predict price action...it either breaks support or resistance". Whilst per se it seems a very general observation, however, if one reflects upon its deeper meaning, it has a very profound message fo the novice and dare i say experienced trader alike.
After spending a good part of a day going over my brief trading history, i realised my successful trades were taken when i practised the above maxim...invariably the not so successful ones were where i had an opinion about the likely direction of the market.
I see the following benefits of following the maxim for me.
1) If i am going long/short with the break of resistance/support....i am going with the prevailing trend...thus increasing the probability of a successful trade.
2) If i am not predicting....i am less likely to move my stop loss(turning a small loss to a big one) to accomodate my ego....a mistake that i have made on more ocassions than i want to admit....
3) The trade is likely to be less stressful....i have observed that my winning trades seldom move too much against me.
4) Since i am not predicing there is less pressure on me....the market does exactly what it wants to....if after going with the trend i am stopped out then too bad...i won't beat my self up because there is nothing more that i could have done to put the odds in my favour(I know the savvy traders amongst you are probably saying that there is more to trading then simply selling support and buying resistance......i guess we all have to start somewhere).
5) I am more likely to have a panoramic view of the market, thus enabling me to have a clearer picture of the likely direction..a mistake that i have made on more than one ocassion is after reading the opinions of some guru about the likely direction for the following day i will more or less blindly go with the prediction of the guru....even though the market is screaming at me saying you dumb twat get off me i am going the opposite dircetion to where you want me to go...of course my ego coupled with inexperience will say what do you know....i know better because so and so guru has told me...within no time it is 60 odd pips against me(bearing in mind my profit target was only 30 pips) and i would say brilliant now i have an opportunity to buy it even cheaper.....i am sure you know the rest....
For fear of boring you i will stop here......
A big THANK YOU for the light...Bobokus....now i feel compelled to have the electricity installations done in my my mud hut.....

Exactly, you never trade off what you want it to do or what someone tells you it will do.You trade from what you see happening, Support and Resistance either holds or it doesnt...it really is that simple. It doesnt mean you will be 100% with your trades but it does increase the probability of thier success.Even breakouts that are picture perfect will sometimes turn against you almost immediately but the chances are much less if you have patience and let the market come to you.Every day i will write down my trading plan for the next day based on where the fib levels are, what is the current market direction.What will it take to change the direction of the market,If support or resistance breaks where does price have the potential to go and so on. Then the trick is to stick to your plan, try it a couple of days and you will see what i mean.If you have any doubts then and want to enter blindly because price jumps 20 pips or something like that...refer back to your trading plan for the day and ask yourself has a support or resistance level been broken or resisted price and if I do enter am i following my trading plan.Dont trade just because price starts to move...Patience !...It is better to miss a trade than to loose one.

Look at this chart for the Euro based on what we knew last night, after that big sudden move up and tell me is it any surprise as the where price finally ended ?.That doesnt mean it cant go higher ,who knows tomorrow may be a repeat of today...just have to wait and see prices reaction to support and resistance zones.

With each priceless advice....i call the electrician to enquire about when my mud hut will be lit...thank you for the very sound advice.....

Still looking at the Euro now where is price headed.
If the Swing low holds we can expect price to bounce between 4657 and 4685...Long if a candle opens above 4702 to retest the highs again...4750/4770 if the high breaks. Short on a candle opening below 4857 but most likely not to fall more than 4629/4612...Strong uptrend is still inplace and Intraday fib levels are gonna provide strong support.

Can anyone tell where GBP/Yen is going ?

Alot of it depends on what this pair does...USD/Yen