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4 Hour Strategy (MACD)

  • #15,961
  • Jul 7, 2008 5:32pm Jul 7, 2008 5:32pm
Written copy of Phillip's mp3. For chart and recording, go to page 1063, post 15931. --Tony
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  • #15,962
  • Jul 7, 2008 9:41pm Jul 7, 2008 9:41pm
Watching a ZB on EU, and wonder how close should MACD get to zero to be classified a zero bounce? It's a little away but pretty close. Almost entered a short, but saw the ZB hasn't been confirmed as the candle hasn't closed (always make that mistake), plus read Philips response to Yorik and see the price is again trapped between 89 and 21. On holiday still but finally got connected. Keep it going Yorik. I too need to study the rhythm more.
  • #15,963
  • Jul 8, 2008 1:52am Jul 8, 2008 1:52am
Quoting Baggles
Watching a ZB on EU, and wonder how close should MACD get to zero to be classified a zero bounce? It's a little away but pretty close. Almost entered a short, but saw the ZB hasn't been confirmed as the candle hasn't closed (always make that mistake), plus read Philips response to Yorik and see the price is again trapped between 89 and 21. On holiday still but finally got connected. Keep it going Yorik. I too need to study the rhythm more.
i am in with short term shorts with a 30 pip target on Eu (the 89 SMA) and a similiar sort of trade on Gu...
I believe . . .
  • #15,964
  • Jul 8, 2008 3:05am Jul 8, 2008 3:05am
Quoting ghous
i am in with short term shorts with a 30 pip target on Eu (the 89 SMA) and a similiar sort of trade on Gu...

got stopped out at breakeven on both trades...uncertain times for this system...
I believe . . .
  • #15,965
  • Jul 8, 2008 4:08am Jul 8, 2008 4:08am
Quoting Yorik
Could anybody explain, why this setup may be worse than a similar TC on EU on last Fri? Or it was "just one of those bad"?
1. At the end of the trend where divegency has formed already, the last TC is a wrong signal, this has happened on each pairs many times before, you should do more becktesting.

2. See the 89sma and 200sam. They are down there as the support, also, 89sma of daily chart is also down there, so the bullish trend must be on the card.

3. Swithc to 1h, you can see the exaust of bearish trend, so opening a short postiong is not a smart way
Plan your trades and trade your plans
  • #15,966
  • Jul 8, 2008 4:46am Jul 8, 2008 4:46am
Quoting Yorik
Open price: 1.5627
SL Price: 1.5666, SL: 39 pips
TP price: 0.5/1.5606, 0.3/1.5571, 0.2/1.5543, TP: 44 (21, 56, 84) pips
SINGLE OPENING.
R:R-ratio: 1.13.
Conclusion: trade is OK.
Cons: SMA200 is close; white bar with long lower tail - buying pressure from about 1.5610;
Pros: a TC from EMA8; bearish engulfing candle; some space to SMA200 to move to BE

Could anybody explain, why this setup may be worse than a similar TC on EU on last Fri? Or it was "just one of those bad"?
Hello Yorik,
I know this is after the fact but I saw your post today, and what I want to say it may help in the future too.
You said that your candle pattern was an engulfing bearish pattern and I think you were wrong because there are two conditions required:
1) the market should be in a clearly uptrend (rally);
2) the second real body must engulf the prior real body (it needs not engulf the shadows).
The first condition was not met because to me the market was in a downtrend (decline). The most important thing for a candle pattern is the location and since the engulfing bearish pattern is a reversal sign you have to look for it after a rally, so mostly you will trade against the latest move. And another thing I noticed on the chart that there was a morning doji star which is also a reversal sign and it has to be in a decline (which was the case). The morning doji star wasn't very strong because the green body was quite small. But still I think it was a warning sign. The price level 1.5630 was resistance, then support and again was tested as a support - waiting for the support to break is more safe.

Sometimes these reversal signs work very well after they occured, but (there is always a but) sometimes the price doesn't reverse immediatley, it may take hours, days. The most important thing about these reversal patterns is that one should always consider them as warning signs telling you something is not right.
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  • #15,967
  • Jul 8, 2008 5:04am Jul 8, 2008 5:04am
Woah GU looks like a sandwich there..
Sittin' on the sideline
  • #15,968
  • Jul 8, 2008 5:10am Jul 8, 2008 5:10am
The 4h Strategy Skype chat is still alive, and a couple of members active posting ideas and comments in a casual way.
It's quiet most of the time (which can be a good thing), but some chats develop at key development areas on the charts.
It helps me to keep more alert and some comments have me rethink aspects I might have overlooked before.
If you are interested to be added to the chat please contact (Skype IDs):
islandtrader1, MxPips, poplar62 or saka
Attached Image
  • #15,969
  • Jul 8, 2008 5:24am Jul 8, 2008 5:24am
Hi, saka!
Thank you for your analysis and advice. I should mark only that, in fact , before opening the trade I have answered to myself according the points you mentioned. But I have got different answers (another interpretation) and so sold:

Quoting saka
1. At the end of the trend where divegency has formed already, the last TC is a wrong signal, this has happened on each pairs many times before, you should do more becktesting.
If you look at the 4H chart attached, you'll see my explanation - I haven't seen divergence or end of a trend/movement. We had uptrend, and then price broke over 1.5840 but failed to keep there - on weekly we had a black bar with longer upper shadow. And on 4H price crossed EMA21 down, retested EMA8 and moved further to SMA89. So general last movement was down - I call this state "uptrend-correction". And in my morning analysis I was looking for short. When that TC formed price closed below SMA89 - one more argument for short. Another thing was that SMA200 though was 20 pips away, it showed to be too close.

Are you speaking about a divergence on 1H? If "yes", I can agree, but I use 1H as a secondary info source.

Quote
2. See the 89sma and 200sam. They are down there as the support, also, 89sma of daily chart is also down there, so the bullish trend must be on the card.

3. Swithc to 1h, you can see the exaust of bearish trend, so opening a short postiong is not a smart way
I agree with you according 1H as well as SMA89 from Daily. But, again, on daily that reversal on Thu, the 3rd of July was a signal for me for possible another move to the bottom of the channel. And on weekly it's seen even better. Another moment, as I've mentioned already, is that I look at 4H as the prior field (as got losses with early TC entries from 1H not long ago maybe).
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  • #15,970
  • Jul 8, 2008 5:37am Jul 8, 2008 5:37am
Quoting islandtrader
The 4h Strategy Skype chat is still alive, and a couple of members active posting ideas and comments in a casual way.
It's quiet most of the time (which can be a good thing), but some chats develop at key development areas on the charts.
It helps me to keep more alert and some comments have me rethink aspects I might have overlooked before.
If you are interested to be added to the chat please contact (Skype IDs):
islandtrader1, MxPips, poplar62 or saka
I sure want to join...let me download skype first...

please gusy let us make this chart idea agreat success it won't do good if we don't have enough ppl participating
I believe . . .
  • #15,971
  • Jul 8, 2008 5:41am Jul 8, 2008 5:41am
Thanks, luckytiger.

I really didn't consider this "prior rally condition" for engulfing bar combination as well as the morning star - was looking more at the general movement of price as for EMA8 and SMA89.

The funny thing (that I've already posted on the thread) is that often (lately) when I try to take into consideration different signs, I find enough reasons to pass the trade that finally appears to be profitable (last 3.5 months I was making =<1 trade/week on average on EU+GU). And when I try be more resolute (like "rhythm shows downwards, and though lower tail of signal bar is seen, I'll ignore that and sell"), I get into trouble.

The general conclusion that I can make is that only experience can help - how much attention and to which argument to give.
  • #15,972
  • Jul 8, 2008 5:51am Jul 8, 2008 5:51am
I agree that any system, even the best ones do require some good screen time... specially to get your mind confident on it and develop a sense of trust on it, still the system should have a very good Risk Reward Ratio embeded into it, otherwise it will fail, even with screen time... cheers Walter.
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  • #15,973
  • Jul 8, 2008 7:57am Jul 8, 2008 7:57am
Quoting islandtrader
The 4h Strategy Skype chat is still alive, and a couple of members active posting ideas and comments in a casual way.
It's quiet most of the time (which can be a good thing), but some chats develop at key development areas on the charts.
It helps me to keep more alert and some comments have me rethink aspects I might have overlooked before.
If you are interested to be added to the chat please contact (Skype IDs):
islandtrader1, MxPips, poplar62 or saka
Hi

I would also like to join!!

Thx,
Till
  • #15,974
  • Edited 11:20am Jul 8, 2008 8:57am | Edited 11:20am
Open price: 1.9712
SL Price: 1.9756, SL: 44 pips
TP price: 0.5/1.9684, 0.5/1.9612, TP: 64 (28, 100) pips
SINGLE OPENING.
R:R-ratio: 1.45.
Conclusion: trade is OK.

Pros: a TC from SMA89 - it was crossed down and then retested (it may happen not once);
Cons: signal bar too big - if to open, SL has to be inside of it; on Daily or Weekly it seems that price may be making a retest of earlier broken upper border of a triangle (at about 1.9670) and may move up then; long lower shadow of prev. daily bar; price closes on or just below SMA200 - how to interpret that (?); problems with TP2 place; fast movements yesterday.

Decided to stay out.

Has anybody entered? Passed? If not why? (Think everybody can benefit from sharing)

Edit1:
as I've written, I didn't enter. Price closed just below SMA200, so one of "cons" may be out (or may not be). Bad news for the USD (Pending Home Sales m/m and Wholesale Inventories m/m) seem to have moved the price a bit up at the beginning of the hour, but it has already started to move down. Same with EU.

Edit2:
both EU and GU moved at least +20 pips, so 0.5 position could be closed already for those who entered and do so.
This time incorrect engulfing combination (as there was no so serious move prior to it) worked (GBPUSD), so did opening against SMA89 (EURUSD).
Attached Image
  • #15,975
  • Jul 8, 2008 8:59am Jul 8, 2008 8:59am
Signal bar closes against SMA89, several crosses of EMA21 before the setup - no trade.

Anybody thinking it's worth entering?
  • #15,976
  • Edited 6:30pm Jul 8, 2008 9:19am | Edited 6:30pm
I did.. Candle closed below the tail, that what convinced me to take it. Price dances like crazy atm

Edit: Closed for 35pips as price is stalling on the bull support
  • #15,977
  • Edited 11:04am Jul 8, 2008 9:23am | Edited 11:04am
i took tc in eu at 5670 my sl is at 5710
edit: fear comed to me(i saw possible H&S) and i closed it -4pips
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  • #15,978
  • Jul 8, 2008 9:23am Jul 8, 2008 9:23am
Quoting hijackxx
I did.. Candle closed below the tail, that what convinced me to take it. Price dances like crazy atm
i'll wait for this present 4H candle to give me direction if it closes below the 200 without leaving a large wick it might be a good short,all depends on this candle...but taking a trade just now might be a bit too early...
I believe . . .
  • #15,979
  • Jul 8, 2008 9:28am Jul 8, 2008 9:28am
I'm short GBP too Yorik. Got in at 1.9708. It was a nice bearish engulfing candle, with a TC. Let's make some pips.
  • #15,980
  • Jul 8, 2008 9:53am Jul 8, 2008 9:53am
I passed on the EU short TC trade because it stopped right at the 89 SMA. I would like to see a 4H bar, or even a 1H bar close below the 4H 89 SMA.

I also passed on the GU short TC trade. The reason I passed on this trade was that the last 4H bar stopped right around the 200 SMA AND I have a trend line at about the same location.

Of the two, the GU rhythem looks A LOT better, but I will not trade against the 200 SMA and the trend line.
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