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4 Hour Strategy (MACD)

  • #161
  • Feb 4, 2007 11:34am Feb 4, 2007 11:34am
Quoting Phillip Nel
I studied the movements and interaction between the price movement and moving averages over a period of 2 years. I found that Fibonacci numbers gave the best results as to barriers that makes the price to stay there for a while. I have also found that there is a correlation between the MA's and the reactions of people regarding to their interpretation of news and where they are willing to take the price. It was more something I obsurved than what I worked out. You can look at history on any timeframe using that MA's and come and tell us what you have seen. You will be amazed to see it works on any timeframe. The 200SMA is not a Fib number but are a wellknown one amongst traders.

I like analyses and I am a draughtsman and I think that is where it comes from.

I have missed your first question on SMAs and EMAs and cant find it or is it the one in this post you were talking about. If not can you please put it again and I promise that I will respond.

Phillip
I was asking what is the significance of using some SMAs and some other EMAs.
Thanks.
-Chandra
  • #162
  • Feb 4, 2007 11:40am Feb 4, 2007 11:40am
Phillip,
This is about "Moving Through Zero and Turn Back" signal. I am a bit confused here. Please clarify.

1. MACD moves through zero (from +ve to -ve) and turns back to +ve: Go long.
2. MACD moves through zero (from -ve to +ve) and turns back to -ve: Go short.
Am I right?
Thanks.
-Chandra
  • #163
  • Feb 4, 2007 11:57am Feb 4, 2007 11:57am
Hi Phillip,
I think I am dumping a lot of questions on you. I hope it is ok with you. You can answer all of them in one attempt, though.

Here is one more!
How do you distinguish between Dbl to and lower high? Is it the magnitude of the bars or the distance between the bars. in your chart of 17 Oct. in page 8, the third trade (short) with 'Double Top' signal also looks like a 'lower high' signal for me. Please clarify. Thanks.
-Chandra
  • #164
  • Feb 4, 2007 12:16pm Feb 4, 2007 12:16pm
Hello,
just looking at current EURUSD chart, it looks something (hopefully) is about to happen with this pair, as all MAs are within 100 pips range..
I guess it's not easy to trade in such conditions.. right ?
Endy
  • #165
  • Feb 4, 2007 12:22pm Feb 4, 2007 12:22pm
Hi,
In page 9, Aug 2006 chart, two bars after the 4th trade (Trend continue) it seems u have missed a 'double bottom' trade. Am I right?
Thanks.
-Chandra
  • #166
  • Feb 4, 2007 1:51pm Feb 4, 2007 1:51pm
Quoting Chandra
Phillip,
In page 8, in the 17 Oct. chart, in the first trade, it looks you went long for 'just moved through zero and turned back ' signal and made 60 pips..

In page 9, in the August 2006 chart, the second signal ( 'just moved through zero and turned back ') it seems you took a short position and made 31 pips.
These two signals seems to be similar but positions were taken in the opposite direction.
Am I missing something here?
Thanks.
-Chandra
That trade was also a long signal given. I only showed it in red down to show that it was a loss trade. It was a loss of 31 pips. All the red lines are losses.
Good luck
  • #167
  • Feb 4, 2007 2:04pm Feb 4, 2007 2:04pm
Quoting Chandra
Hi Phillip,

Here is somethig I feel you missed a trade:
Page 8 of your PDF document, Trade from 17 Oct. to 10 November:
After your 4th trade ("Traded around zero,Trend continious") and the 5th trade ("Lower High"), there is a trade you missed. (it is either a "Double Top" or a "Lower High" trade). It could be a tiny trade, but you would not know it at the time it was forming! Please check and comment.
Thanks.
-Chandra
Very wel done. You are absolutely correct to spot it. But if you look at the price chart you will see that I was still in the previous deal and would have skipped that one. But if you weren't in any deals that was indeed a small double top and or lower high and could see a few pips gain.
Wel done
  • #168
  • Feb 4, 2007 2:21pm Feb 4, 2007 2:21pm
Quoting Chandra
I was asking what is the significance of using some SMAs and some other EMAs.
Thanks.
-Chandra
The EMA is giving more weight to the resent price movement then the SMA while the SMA is a flatter. Draw a 100EMA and a 100SMA on the same graph and see what happens. I just found that the 21EMA fit the most resent price movement better. The 89SMA is where if the price is above it the sentiment is bullish and visa versa is bearish. The 200SMA is according to me the overall reflector of the average interpretation of the news and the longterm trend. The 365EMA is long term but it gives more weight to resent data but I must admit it does not play a very prominent and active role. There are certain times when the price will test it away from all the other MA's. I use it then.
  • #169
  • Feb 4, 2007 2:23pm Feb 4, 2007 2:23pm
Hi Endy,

I was looking at that too. The close ma's mean there may be a break out possibly, correct? The MACD is still on a continuous downtrend after the nfp on friday, but the candles are smaller (again it was friday though). The one thing I see as a possible sign is that the RSI is well below 20 (set at period of 3). So, if there is one reversal candle (uptrend) that closes, I may go long, especially since there is a very small stop loss required to do this at this point. Even though the ma's are close, it looks as if a 30 pip take may be possible.

Thoughts please?



Quoting endy
Hello,
just looking at current EURUSD chart, it looks something (hopefully) is about to happen with this pair, as all MAs are within 100 pips range..
I guess it's not easy to trade in such conditions.. right ?
Endy
DireXiv Make it happen, no one else is going to do it for you...
  • #170
  • Feb 4, 2007 2:40pm Feb 4, 2007 2:40pm
Quoting Chandra
Hi Phillip,
I think I am dumping a lot of questions on you. I hope it is ok with you. You can answer all of them in one attempt, though.

Here is one more!
How do you distinguish between Dbl to and lower high? Is it the magnitude of the bars or the distance between the bars. in your chart of 17 Oct. in page 8, the third trade (short) with 'Double Top' signal also looks like a 'lower high' signal for me. Please clarify. Thanks.
-Chandra
You can treat it as a lower high no problem. I just saw it as a double top due to the "V" it formed between the two and the right top are not that far below the other but you are not wrong the way you see it. The main thing is to see it as a signal.


About the going through zero and then pulled back if the price comes from the negative to the positive and go accross to the negative again it is "short". If it happens over to many pips it then becomes anothe rsignal like a round bottom etc
Attached Image
  • #171
  • Feb 4, 2007 2:59pm Feb 4, 2007 2:59pm
Quoting DireXiv
Hi Endy,

I was looking at that too. The close ma's mean there may be a break out possibly, correct? The MACD is still on a continuous downtrend after the nfp on friday, but the candles are smaller (again it was friday though). The one thing I see as a possible sign is that the RSI is well below 20 (set at period of 3). So, if there is one reversal candle (uptrend) that closes, I may go long, especially since there is a very small stop loss required to do this at this point. Even though the ma's are close, it looks as if a 30 pip take may be possible.

Thoughts please?
The price is within two main trendlines. It found support with the last 4 hour candle on a inbetween trendline as well as the 89SMA but that candle can be a continuation one as well. I will wait for the MACD to give the signal as drawn and will never take a breakout trade should it break to the downside unless the MACD confirms. If it turns upside I will act on the two signs as given. I favour an upside.
Attached Image
  • #172
  • Feb 4, 2007 3:06pm Feb 4, 2007 3:06pm
Quoting DireXiv
Hi Endy,

I was looking at that too. The close ma's mean there may be a break out possibly, correct? The MACD is still on a continuous downtrend after the nfp on friday, but the candles are smaller (again it was friday though). The one thing I see as a possible sign is that the RSI is well below 20 (set at period of 3). So, if there is one reversal candle (uptrend) that closes, I may go long, especially since there is a very small stop loss required to do this at this point. Even though the ma's are close, it looks as if a 30 pip take may be possible.

Thoughts please?
I dare to post one more "guess" in this matter, althought I am not so sure about its "value".
I believe it's worth to look also at crosses (especially when unclear situation).
Take a look at EurYen and $Yen. Situation on EYen is similar to the one on EUR$ (also closing flag on 4H chart). Whereas $Yen broke its trendline support recently (which could now become resistance!).
MA's situation on EYen (and also GBPYen) seems to be more clear than the one in EURUSD. So Yen could weaken more and that would cause EYen to go up, dragging EURUSD with it.
Anyway, it's probably my fantasy, but at one point, one should also consider cross pairs when the situation is not that clear.
I just hope Phil doesn't mind me messing his great thread with my thoughts.
Have a great week everyone.
  • #173
  • Feb 4, 2007 3:26pm Feb 4, 2007 3:26pm
Quoting endy
I dare to post one more "guess" in this matter, althought I am not so sure about its "value".
I believe it's worth to look also at crosses (especially when unclear situation).
Take a look at EurYen and $Yen. Situation on EYen is similar to the one on EUR$ (also closing flag on 4H chart). Whereas $Yen broke its trendline support recently (which could now become resistance!).
MA's situation on EYen (and also GBPYen) seems to be more clear than the one in EURUSD. So Yen could weaken more and that would cause EYen to go up, dragging EURUSD with it.
Anyway, it's probably my fantasy, but at one point, one should also consider cross pairs when the situation is not that clear.
I just hope Phil doesn't mind me messing his great thread with my thoughts.
Have a great week everyone.
Nothing wrong in looking at other pairs as long as you understand its movement in correlation with the one you comparing it with. I might use it just to anticipate a possible direction as to get my plan in order but I will still act upon the facts in front of me and not on an other pair. The MACD still tells me when to pull the trigger.
  • #174
  • Feb 4, 2007 3:59pm Feb 4, 2007 3:59pm
That's what I was thinking too Phillip. I just started using RSI as a "pre trend" direction indicator. If RSI shows a signal then I wait until a signal from the MACD. I backtested it on EUR/USD this weekend to see if it would help sort out the quality of signals shown on the MACD as you metioned before, and looked decent when combine with the other factors. I was running into what Chandra mentioned and what I mentioned before (for example) how do you know for sure if the MACD is showing a round, or if it is just a hesititation and will then show a trend continuation (as is the beginning of a head and shoulder).

So, I'm completely with you on waiting for the MACD signal if an uptrend starts especially with the ma's all closing in together. I'm done with getting in too early. But if I had to guess (a bad thing), I would bet on an uptrend before long. Hopefully we'll see a round come into play and get a signal. We'll see! Thanks for all your input everyone.



Quoting Phillip Nel
The price is within two main trendlines. It found support with the last 4 hour candle on a inbetween trendline as well as the 89SMA but that candle can be a continuation one as well. I will wait for the MACD to give the signal as drawn and will never take a breakout trade should it break to the downside unless the MACD confirms. If it turns upside I will act on the two signs as given. I favour an upside.
DireXiv Make it happen, no one else is going to do it for you...
  • #175
  • Feb 4, 2007 7:40pm Feb 4, 2007 7:40pm
Quoting Phillip Nel
The price is within two main trendlines. It found support with the last 4 hour candle on a inbetween trendline as well as the 89SMA but that candle can be a continuation one as well. I will wait for the MACD to give the signal as drawn and will never take a breakout trade should it break to the downside unless the MACD confirms. If it turns upside I will act on the two signs as given. I favour an upside.
Hi Phillip,
Tell me please the name of the MACD signal you have drawn in this chart for short and for long. Is it
(i) "Lower High" signal for short trade you have shown.
(ii) "Round Bottom" signal for the first long trade you have shown and

(iii) "Higher Low" signal for the second long trade you have shown
Thanks.
-Chandra (... again! http://www.forexfactory.com/images/icons/icon8.gif)
  • #176
  • Edited 9:41pm Feb 4, 2007 9:15pm | Edited 9:41pm
Hi Philip,
I am doing your Exercise!
It is amazing, where and how did you find energy to develop this exercise?

In the page where you gave us all the 23 signals on a chart, (COMPLETE PICTURE"), you ended your comment by saying "Look at the Tails". You even highlighted it to emphasis its importance. Please expand a bit on the importance of 'the Tails' in a candle srtick.
Thank you.
-Chandra
  • #177
  • Edited 10:31pm Feb 4, 2007 10:03pm | Edited 10:31pm
Hello everyone,
I am placing below my two interesting observations for your scrutiny and comments:

1. A 'Higher Low' will always have a 'Trend Continue' signal (to go short) a couple of candles earlier.

2. A 'Lower High' signal will always have a 'Trend continue' signal (to go long) a couple of candles earlier.

Philip, if my observations are wrong, then I have to go back to books again.
Thanks.
-Chandra
  • #178
  • Feb 5, 2007 3:19am Feb 5, 2007 3:19am
Quoting Chandra
Hello everyone,
I am placing below my two interesting observations for your scrutiny and comments:

1. A 'Higher Low' will always have a 'Trend Continue' signal (to go short) a couple of candles earlier.

2. A 'Lower High' signal will always have a 'Trend continue' signal (to go long) a couple of candles earlier.

Philip, if my observations are wrong, then I have to go back to books again.
Thanks.
-Chandra

Hi Chandra
Yes, I would certainly agree. For Higher Low, or Lower High, you definitely
need a valley between the 2 peaks, otherwise the pattern would not be
set up. Anyway, this is all on highsight after things happen.

But, as prices unfold, we wouldn't know whether it will form a Lower High, or
Higher High. You can just take the "trend continue" signal, but filter it with
Philip's method of deciding whether the risk reward ratio is worth the trade.

But, I like the Higher Low or Lower High pattern (after they are formed), cos they usually also show divergence. So even one additional reason to trade.

Philip, would you agree to this?

Chandra, does it make sense to you? Not sure whether you understand my writing?
  • #179
  • Feb 5, 2007 7:11am Feb 5, 2007 7:11am
Quoting fjfx
Hi Chandra
Yes, I would certainly agree. For Higher Low, or Lower High, you definitely
need a valley between the 2 peaks, otherwise the pattern would not be
set up. Anyway, this is all on highsight after things happen.

But, as prices unfold, we wouldn't know whether it will form a Lower High, or
Higher High. You can just take the "trend continue" signal, but filter it with
Philip's method of deciding whether the risk reward ratio is worth the trade.

But, I like the Higher Low or Lower High pattern (after they are formed), cos they usually also show divergence. So even one additional reason to trade.

Philip, would you agree to this?

Chandra, does it make sense to you? Not sure whether you understand my writing?
Yes, I understand your points. By the way, the "Trend Continue" signal can be taken and it can use the "Higher Low" or the "Lower High" signal as exit if no other exits are available/defined earlier. (Philip, pardon me if I am trying to use your entry signals for exiting. In fact, this exit I am talking about is in addition to your well-proven exits of MAs, Trend lines and Price levels, just in case we need additional one).
Your observation of divergence is very good and the divergence is a very strong confirmation.
Thanks for this meaningful discussion.
-Chandra
  • #180
  • Feb 5, 2007 7:26am Feb 5, 2007 7:26am
Monday 8:24 AM (GMT 13:24).
Can anybody confirm CAD/USD developed 'Lower High" signal?
Thanks.
-Chandra
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