Mission Discovery: Think Outside The FX Box

Very good chart! You've identified two strong areas of support and resistance. Your upper ellipse doesn't allow the candles to close inside the channel and your lower one doesn't allow low closing candles either. I would watch both of those channels carefully for a close into one of them. The result will probably determine a good move in one of the two directions.

I was looking at your chart again and I couldn't tell about that dogi. If that dogi closed low in that lower channel I think the middle line could be hit again.

Scotty B’s Japanese Fan Trading Strategy

I have always held the belief that every two points on a price chart share a special relationship. This can be seen practically by looking at Gann lines. When two points are connected on a chart, angles are created. Some of these angles the market will use over and over and can be very helpful in defining range, as well as helping with entries and targets.

As I said with the ellipse strategy, that ‘method,’ was born out of frustration and lots of experimentation. I hope some of you found it useful or at least fascinating. The technique I am about to present came to be in much the same manner.

It is common when working with charts to see lines; lots and lots of them! Some times there are too many. I never liked the fact that they were so subjective, in the sense of systematically trading off of them. That’s why Skunny’s thread got me so excited. His lines were what I would call objective, in that they could be systematically traded off of; the same method, time after time with consistent results. I am speaking of Fibonacci lines of course, Skunny’s specialty, they are horizontal and not the type I am about to explain, but a good example of line reliability.

I call this method the Japanese Fan Technique because you end up with four significant lines on your chart that look like a Japanese fan. Also, what a better name when in the midst of Japanese candle sticks? Two of the lines are hint/decision lines and two are target lines. This technique will not net you every pip on the chart, but is very accurate and reliable.

All you need to do to start the line making process is pick out two candles on your screen. They should be close on the horizontal axis, meaning don’t pick an extreme swing low and swing high. This will put the market under strain in terms of it hitting your target line. The more extreme your angles, the less reliable this will be. The goal is to forecast natural market movement.

When your two candles are picked out, the first step is to draw a line from the high of the first candle to the low of the second candle, and from the low of the first candle to the high of the second. These lines should be drawn with your horizontal line tool in MT4. (See Chart 1)

These two lines have predictive value that not a lot of people would see. These first two lines I call the ‘decision’ lines, being properly borrowed from Islanders methods. Thanks Islander in advance!

Now for target lines. Select both lines you have drawn, and while holding down your control key click on them and drag them. This should copy your lines. Once you have a copy of each line, move the line from the high to low, to the low of the first candle, then move the copy of the low to high line to the high of the first candle. (See Chart 2)

You should end up with a fan formation on your chart.
Rules: We buy if the upper decision line is CLOSED past, and we sell if the lower decision line is closed past. Take profit on your buy when the top target line is touched, and the same for your sell order when your lower target line is touched.

You will have to experiment with this idea for a little bit, but I think you will all get the hang of it. This idea can even be applied from small swings to swings. Just play around with it!

It's Doji, not Dogi! LOL!

Whoopsie daisys

What do you think of the new concept?

I figured the dogi was a new Scotty B concept soon to be followed by the woof trade!

Just found this thread Scotty B and look forward to practicing your "new concept".

I'm still unsure about how to choose the two candles besides that both are roughly on the same horizontal axis.

I took a quick look and worked it on a couple of examples, but I'm already overloaded with work on my existing projects, so will have to leave an in depth look until I'm finished.

Using the Japanese fan, if the current hour candle can close above my buy decision line, I think price will go to at least 206.25. I picked 206.25 because it is the closest conservative target using this method.

This Japanese fan put's a target up at 205.03
Maybe a little easier to reach....This beast has been nuts lately!

"I have no special talent. I am only passionately curious."

-Albert Einstein


When asked what the greatest discovery of the 20th Century was ALbert Einstein also said, " Compound Interest. "

If I lost it all tomorrow I would scrape up the money and start over. I'll take a porta-potty and a T1 connection because Forex works!

Good words brother.. It's amazing what all of us are capable of if we just believe we can do it. We all have a super computer in our heads called a brain, and we are trained from infancy not to use it. Sad but true.

I want everyone to see the Japanese fan buy line holding the price up like that scene in cliff hanger. Its been interesting to watch things evolve over the last few hours.

It's been a pretty good week using the Japanese fan. This morning price hit 205.11-fulfilling the ultra conservative target I had up @ 205.03. Next week I plan on doing a lot more gbpjpy discussion here on this thread using this technique alongside others- mainly fibs. Have a good weekend everyone!

Chart for tomorrow and early next week. I'll throw up a couple more time frames later. Things heading to yellow line.

Small sell trigger to 203.49 right now on 5 min chart. Based on Japanese fan and rsi below 50.

Scotty, The Jap fan Strategy dosent seem to be working for me.

Do you choose a specific timeframe.

Do you choose the candales at the start of the day.

Works on all time frames. Keep angles low. Post your chart so I can see how you are setting things up.

Is this the right way to do it?

This particular trade worked, but those angles were really steep. My advice would be to space your candles out more, meaning pick a candle farther back on the chart to lower those angles because the price doesn't always move fast enough to catch and touch the very steep target lines. Also you need to have your decision lines drawn so you know which way to trade; from high to high and low to low.
Thanks for the example

That would have been a 30+ pip trade to boot. Good work!