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  • #521
  • Apr 30, 2008 11:37am Apr 30, 2008 11:37am
Here's another interesting chart. With the recent wave going down, there was a slight collapse as price fell below the wave base. When I see that sort of behaviour, I start looking for an entry to short. Right now price is at 1.9828 with the high around 1.9915. If I wanted to trade this aggressively I would short now and place stops around 1.9915. However... that's not the point of this exercise. Instead I'm going to wait to see if it actually does turn around and if it does, that's when I'll short targeting the new base below the orange line and beyond.

IF price ends up going higher and breaking the area where the blue line is placed, it tells me there is a possible trend change. That means I'll wait for price to fall and bottom out then start buying the dips. That's all I'm really doing.
Attached Image (click to enlarge)
Click to Enlarge Name: cable_4hour.gif Size: 10 KB
  • #522
  • Apr 30, 2008 12:02pm Apr 30, 2008 12:02pm
Hey Zoop, your new or should I say alternate way of looking at charts, made me think, which is a great achievement considering my hectic trading results.
See my recent Head and shoulders early entry in Aussie and with it the inevitable loss. In spite of all that, there is one thing which demands some consideration. We both dislike the indicators, but the line charts got also quite a number of fake movements and I was wondering if we could find a way to at least partially prevent or minimize them. Then again, maybe I am asking for too much, after all no system is foolproof. You are doing great, luck come to those that work hard. Thanks.
  • #523
  • Apr 30, 2008 12:30pm Apr 30, 2008 12:30pm
Quoting milan47
Hey Zoop, your new or should I say alternate way of looking at charts, made me think, which is a great achievement considering my hectic trading results.
See my recent Head and shoulders early entry in Aussie and with it the inevitable loss. In spite of all that, there is one thing which demands some consideration. We both dislike the indicators, but the line charts got also quite a number of fake movements and I was wondering if we could find a way to at least partially prevent or minimize them. Then again, maybe I am asking for too much, after all no system is foolproof. You are doing great, luck come to those that work hard. Thanks.
Milan

Even though there may be fake moves, chances are the candlestick/bars would be worse. When you look at candles and bars, it "maps" out the movement from high to low and gives you the opening and close of price. The line chart on the other hand I believe plots the closing price then maps it out in the form of a line (could be wrong). The information that I'm really after is what price ends up doing after a 4 hour or daily period (ie. is it up or down?). Another thing to also point out when I analyze these waves, I look for the big waves, ones that really stick out like a sore thumb because that gives me the most information when it comes to where price may be headed next.

The reason why I pointed out the eurusd 4 hour wave (which in my opinion is small compared to the one that collapsed from the top) is because the major trend is up. However... if we were to head up, I would be biased to the downside because of how that wave broke down. There's also a good chance that we won't be hitting a peak as high as 1.6008 or around there.

Whether this approach works on it's own I have no idea yet. What I'm more interested in is how to detect when a trend changes and when it continues without the use of any other tools but just a simple line chart. I'm trying to train my eye to see these things without actually having to figure it out. Not sure if you know what I mean?
  • #524
  • Apr 30, 2008 1:10pm Apr 30, 2008 1:10pm
What I'm hoping to do in the next few posts will be to demonstrate how all of these wave "exercises" comes together and can help with your trading. I'll post two ways I'm thinking of using it with regards to Jacko's method and I'll post another way that PA traders could use. Keep in mind I regard these more as "tools" than actual methods. I just wanted to illustrate how simple trading can be and how important the basics are.
  • #525
  • Edited 1:50pm Apr 30, 2008 1:39pm | Edited 1:50pm
Approach ONE
On the daily chart, I'm applying support levels based on peaks/valleys (keep in mind the concept of waves breaking to the upside and collapsing). There was a reason why 1.5600 was somewhat of importance to me and now I'll show you why that area (1.5650 through to 1.5550 - 100 pip radius) becomes the "focus". Since I now have an area to "hunt", I'm going to start looking for the beast and the 4 hour is going to help me in identifying what it looks like.

Approach TWO
On the 4 hour chart, I have mapped out the 4 hour wave. I have also indicated a small wave which was of importance but what I'm really interested in is the area where the green line is (top of the wave). I'm using this wave as reference because it's more defined and visible than the smaller one highlighted by the orange line. When price breaks/pierces the green line, I'm going to wait and look to see what round numbers are in the vicinity and will use that to base my trade. Keep in mind, if we are wrong, we have the AH to help us.

Something to keep in mind. Because of the recent break down where the wave collapsed, this may be an "early indication" that although we may head up higher, the high may not be as high as the peak at 1.6008 (I could be wrong but we'll see what happens).
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd_daily_linechart.gif Size: 8 KB
Click to Enlarge Name: eurusd_4hour_wave.gif Size: 9 KB
  • #526
  • Apr 30, 2008 2:04pm Apr 30, 2008 2:04pm
Great work Zoopy.

I think this is a great way to look at the trend, it's sometimes hard to know exactly what marketconditionsyou're looking for when looking for an entry. This approach gives a very easily defined way to establish when the trend has changed (or resumed). Of course you can do the same thing with bar charts, but your way is more clear and concise.

I am staying out this sucker until it can hold above 1.5700.

The Fed only cut by .25%.... does anyone think this is enough to restart the uptrend.... I am not convinced.

Actually I have a pretty .pdf written by Pring on this exact topic. Would you mind if I post it here?
  • #527
  • Edited May 1, 2008 5:03am Apr 30, 2008 2:06pm | Edited May 1, 2008 5:03am
Approach THREE
In this example, I am using a 4 hour line chart showing a wave that collapsed (keep in mind previous examples I have posted. When the wave breaks, the following waves may end up going lower). Because of this "collapse", I'm going to look for a pullback first. When there is a pullback, I will use PA to confirm a move down since there's a good chance that the following few waves will start going down until one of the waves breaks to the upside.

In the bar chart, you can see what's happening with price using price bars. I'm using the wave structures and the line chart to help find an opportunity. When I have found the area, I apply PA knowledge to react accordingly.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd_pa_wavebreak.gif Size: 9 KB
Click to Enlarge Name: eurusd_pa_4hour.gif Size: 13 KB
  • #528
  • Apr 30, 2008 2:14pm Apr 30, 2008 2:14pm
Quoting static
Great work Zoopy.

I think this is a great way to look at the trend, it's sometimes hard to know exactly what marketconditionsyou're looking for when looking for an entry. This approach gives a very easily defined way to establish when the trend has changed (or resumed). Of course you can do the same thing with bar charts, but your way is more clear and concise.

I am staying out this sucker until it can hold above 1.5700.

The Fed only cut by .25%.... does anyone think this is enough to restart the uptrend.... I am not convinced.
Thanks Static

I use the line chart first because I need to find the area fast. If I don't, I may become the "beasts" next meal LOL.

Not sure where the euro is going next. Seems to be bottoming out but I need more information... maybe tonight or tomorrow I'll have a clearer picture.

Right now I'm biased to the downside because of how that wave collapsed. Meaning... I'm going to be watching when we approach say 1.5800 for a drop. If we don't get a drop and break 1.6008 then we're heading higher but I won't buy then, I'll wait for it to drop first and turn around before buying.
  • #529
  • Apr 30, 2008 2:31pm Apr 30, 2008 2:31pm
Quoting zoopy
Thanks Static

I use the line chart first because I need to find the area fast. If I don't, I may become the "beasts" next meal LOL.

Not sure where the euro is going next. Seems to be bottoming out but I need more information... maybe tonight or tomorrow I'll have a clearer picture.

Right now I'm biased to the downside because of how that wave collapsed. Meaning... I'm going to be watching when we approach say 1.5800 for a drop. If we don't get a drop and break 1.6008 then we're heading higher but I won't buy then, I'll wait for it to drop first and turn around before buying.
Yeah I was thinking the same thing. If we make it that high that would be right near the 50% retrace of the weekly BEOB (at 1.5785).

If I had to bet 5 dollars, I would say we won't see 1.5800 soon.

Good trading, keep up the good analysis!!
  • #530
  • Apr 30, 2008 6:21pm Apr 30, 2008 6:21pm
Quoting zoopy
Try the wave approach using line charts. Get back to basics and learn the market from the bottom up. We all know the market moves in waves plus Jacko has described very simply how you can determine the trend. See if you can use just simple wave structures to determine where price is going next. Learn the rhythm and movement. You'll be surprised and amazed what you can do when you only have one tool to work with. You'll most likely find new and inventive ways of using them too.

Once you have done the above, try watching price at round number levels. Again... no indicators, no trendlines, no fibs, just a line chart and round number levels. Once you have gotten the hang of it, then switch to trendlines and PA. Chances are, you'll be a minimalist by then when it comes to charting and realize that the more you have on your chart, the more you're likely to lose because it creates more confusion. You'll probably also realize that in the end, trading is all about probabilities and having more trendlines or indicators doesn't necessarily increase your chances of winning. In fact... they would all just say the same thing so you may as well just use a line chart lol.
OK. I just have to use fibs. I am starting to see things a little differently now. I have a new reason to call myself K.I.S.S. Fan! I'll be posting with questions in the near future. Thanks for all your great comments here!
Attached Image (click to enlarge)
Click to Enlarge Name: Chart4.GIF Size: 26 KB
  • #531
  • Apr 30, 2008 6:34pm Apr 30, 2008 6:34pm
Quoting KissFan
OK. I just have to use fibs. I am starting to see things a little differently now. I have a new reason to call myself K.I.S.S. Fan! I'll be posting with questions in the near future. Thanks for all your great comments here!
Hey Roger

I was looking at your chart. It's ok to use fibs, however I would use it on either a candlestick/bar chart to accurately represent which areas price may bounce from. Use the line chart as reference and as a tool as well to help you determine possible support/resistance areas. The line chart isn't something I would use to draw fib levels on simply because it doesn't represent/show the highs and lows but rather the closing prices.

I'll see if I can create some charts and post it here to give you an idea.
  • #532
  • Apr 30, 2008 6:47pm Apr 30, 2008 6:47pm
Quoting zoopy
Hey Roger

I was looking at your chart. It's ok to use fibs, however I would use it on either a candlestick/bar chart to accurately represent which areas price may bounce from. Use the line chart as reference and as a tool as well to help you determine possible support/resistance areas. The line chart isn't something I would use to draw fib levels on simply because it doesn't represent/show the highs and lows but rather the closing prices.

I'll see if I can create some charts and post it here to give you an idea.
Ok, here we go. I've attached two charts.

The first chart shows a simple line chart on the daily time frame showing possible support areas (I'm using two separate charts to help you navigate through the information quicker)

The second chart is the exact same chart, but in bars with the fibs overlapping (I darkened the fib levels so that we have a hierarchy of information)
Just realized a lot of what I've been doing in the past few posts reflect things I've been taught in Graphic Design...
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd_daily_line.gif Size: 10 KB
Click to Enlarge Name: eurusd_daily_bar.gif Size: 14 KB
  • #533
  • Apr 30, 2008 7:22pm Apr 30, 2008 7:22pm
Here's an updated 4 hour chart for cable. What I'm looking for is a possible drop from where we are (also see posts#512 and #518 as reference). If we end up breaking the peak from the prior wave, I'll be looking for dips to buy after it drops.

I have also included an arrow and an approximate move down (distance-wise) where I would consider shorting.
Attached Image (click to enlarge)
Click to Enlarge Name: cable_4hour_wave.gif Size: 11 KB
  • #534
  • Apr 30, 2008 9:11pm Apr 30, 2008 9:11pm
Quoting zoopy
Hey Roger

I was looking at your chart. It's ok to use fibs, however I would use it on either a candlestick/bar chart to accurately represent which areas price may bounce from. Use the line chart as reference and as a tool as well to help you determine possible support/resistance areas. The line chart isn't something I would use to draw fib levels on simply because it doesn't represent/show the highs and lows but rather the closing prices.

I'll see if I can create some charts and post it here to give you an idea.

OK I think I get what you are saying. Those areas that price may bounce from are areas that you might close trades and reopen on retrace?
  • #535
  • Apr 30, 2008 9:27pm Apr 30, 2008 9:27pm
Quoting KissFan
OK I think I get what you are saying. Those areas that price may bounce from are areas that you might close trades and reopen on retrace?
Well... the way I go about doing it is...

I will mark support areas (I look for at least 2 reference points) on the daily chart. The more defined the peaks are on the line chart, the greater the chance it will serve as a support/resistance area. Once I have marked off these areas, I will do one of two things.

1. If I'm not around, I will place orders to buy at a round number near the support line (if I can, I will place it preferably below to get the best deal if possible)

2. If I'm at my computer, I will wait for price to hit the area of interest and enter based on the rhythm price does in that area. I use my round number analysis to gauge the strength of the move down and watch to see how it bounces around. Unfortunately this isn't something I can really show with a chart and something you'll only notice through watching price over time. Price has a certain movement when it hits these levels.

If you decide to use the fibs, I'd use the same approach. When it comes to closing the trade, I tend to just trail or have a fixed take profit of say 100 pips but you could use those areas to take profit as well. There are so many ways to take profit it's best I leave that up to you to decide.


Hope this helps.
  • #536
  • Apr 30, 2008 11:28pm Apr 30, 2008 11:28pm
Decided to show an updated aussie 4 hour line chart since this isn't like what has been shown yet (ie. a possible fake move or ranging period).

In a previous post I indicated a break of the recent wave to the upside. However, price started sliding back down again which indicates to me "something weird is going on". When this happens, I'd decide to take profit or to see whether this is a confirmation of the break before heading higher. If price does break through easily, the orange line (which pretty much serves the base for 3 waves) becomes an area of interest. If that base collapses, that's when I'll be switching my bias to the downside waiting for pullbacks before shorting.
Attached Image (click to enlarge)
Click to Enlarge Name: aussie_4hour_wave.gif Size: 8 KB
  • #537
  • May 1, 2008 1:05am May 1, 2008 1:05am
good work zoopy I see alot of potential in this . Now lets learn to trade it
  • #538
  • May 1, 2008 5:30am May 1, 2008 5:30am
Quoting kaunasny
good work zoopy I see alot of potential in this . Now lets learn to trade it

Thanks

It will work because it's the basics. It's learning to "listen" to what price is telling you. The reason why I decided to put this out on the table is because I have noticed throughout the forums it's all about finding "THE method" or "THE indicator". More time should instead be spent on the basics. If you're finding that you're lost with your trading, my suggestion is to scrap all the indicators and lines off your charts and to trade that way for a month or so. Mind you, you WILL find a way to trade price because you'll be forced to (disclaimer: don't try this with a real account lol).

Funny how all of this fits together. Reminds me of when I was studying design. In my one class we were asked to sketch/draw using markers and pencils for our renderings. You'd expect everyone in the class to be able to carry through with that exercise with ease yet 70% of them struggled. Many of them even said it was "stupid". But when you step back and think about it... all of us were designers, 70% of us could hardly draw LOL. That's what computers does to you and I'm finding it's doing the same to traders (me included).

btw. see post#525 and #527
  • #539
  • May 1, 2008 5:38am May 1, 2008 5:38am
Looks like we made another slight drop overnight with the euro. I did have my eyes peeled at the 1.5600 level but price looked weak there (it didn't break the wave to the upside marked by the green line).

Not much to really say here with the exception that I'll be watching 1.5400 when price approaches that area. This doesn't mean I'll necessarily buy but I will be watching the waves on the 4 hour. If they start showing strength then maybe I'll consider.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_4hour_revisited.gif Size: 10 KB
  • #540
  • Edited 6:23am May 1, 2008 5:54am | Edited 6:23am
Thought I would now update the methodology by which I trade with just so that I keep myself on track. The wave analysis in the previous posts was intended to be an exercise only because I felt it was time to go back to the basics.


REVISED METHODOLOGY

 3 BASIC TRADING TOOLS
1. trendlines
2. 50.0% fib retracement
3. support / resistance levels (determined using line chart - wave structures)

ALTERNATIVE TOOLS
1. round numbers eg. 1.4400
2. Jacko's Anti-Hedge strategy

TIMEFRAMES
1. Weekly charts are used for overall trend direction
2. Daily and 4 hour charts will be used to enter into trades

CURRENCY PAIRS
Only the eur/usd pair.


DETERMINING THE TREND
The weekly trend will be determined using trendlines.

ENTERING INTO TRADES
Mark off areas of support/resistance based on the major trend using either:
a. support lines (line chart)
b. trendlines
c. 50.0% fib retracement

Wait for waves to break to the upside or collapse (depending on the major trend) and when it's time then watch the closest round numbers for entry.

LOSING TRADES
When a loss has occurred, apply Jacko's Anti-Hedge strategy.

PROFIT TAKING
Profit taking will follow either the 50 TSL or 100 TSL depending on market conditions as this will help in making the exit decision for me.


For the old methodology outline I had posted before, see post#158
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