4 Hour Strategy (MACD)

bump against , support , must wait for 1-2 candle , if through can get down before sell again or type it will run to go up seek that ema8 ema21 , before get down again and macd be tc again sell

Dean:

Concerning your kiwi trade:

I'm guessing that you entered on the MACD signal (after the white vertical) or during that bar. I'm not exactly sure about the time of your entry and you may or may not have at least locked in a 20 pip trade. If you entered on the MACD 'color change' to red, that's where you may want to re-consider just making trades on the MACD signal. I'm not saying you base all your entries on the MACD here. I just like the price action to be flowing really well and have price hit the 21, then start looking for an entry. Look at the current USDCHF chart...money. Phillip has stressed many times not to trade soley based on the MACD for an entry. You did use some other tools to make the short decision which, I believe were all correct, leading to you short bias. To be honest with you, and everyone else for that matter, I haven't made a trade on the MACD formations in a very long time. I started out with the MACD formations and later put the majority of the weight to the moving averages for set-ups. I keep an eye on what the MACD is doing but, for me it's a LOT about the 8/21/89, trendlines, channels, s/r,...then MACD. I would have waited until (of course we never know this is going to happen) until price comes back to the 21, first red vert line and if I was weighted to the MACD, enter on the close of the following bar with the red MACD. But again, I would have been eyeing the 1hr for an earlier entry but even there the price action has to 'let me in'. There are times whent the MACD does give good entry signals. If you look back and see when price is 'riding the 8', meaning when price is having a hard time closing above/below the 8 during a strong trend, then the MACD will give up some good TC signals. See the second kiwi. Better yet, look over some historical charts where price was on the 8 and look what the MACD did during this time. I bet you'll find more than a few areas where the MACD gave up some TC's where the pip run was pretty healthy. Again, you (we) don't know this is going to happen...until the trend (the rhythm) gets going. Again, look at the swissie chart and how price is riding the 8 and the subseqent MACD back to green signals, along with the dips to the 21. This is the chart (market) that we want to be in for this method. It may take a week or two...maybe three for things to get moving but this is where the patiece pays off. But, always a but...the rhythm can stall (the market can change direction) at the drop of a hat. Recognizing the flow of things early = letting the market trend establish itself = letting the moving averages set-up will give us the entries along the way. When price closes on the other side of the 21 = RED FLAG = probable weakness = more patience to let things get going....

Oh yeah, the circle around the MACD bottom. Not the prettiest rounded bottom but when price pulls away from the 8 (fast market) there seems to be a hard pullback back to the 8. A 'gap' forms (in this case between the high of the price bar and the 8) and price comes back to the 8 and possibly reverses. Go back over some charts and look for these 'gaps' and then the pullbacks. A lot of these turn out to be reversal patterns where price closes on the other side of the 21 for a RED FLAG. This shows up during established trends, not during times when the moving averages are consolidating when we shouldn't be in the market.....

You're welcome....Need to start proofing my posts though. Too many spelling errers.

Thank you palmer,

thank you for your observations, sometimes a fresh pair of eyes sees things another might not. Also I completely agree with you about your suggestions, also I know the MACD signal was not a very strong one. My main reason and I agree with you is when i put on trades, is mostly on price action and the rhythm of the market. A trending one as well..... and I have been following the swiss and I agree that is a perfect example of a trending market where you don't even need the macd signal to enter but just price action to pull the trigger when price moves back to the 21. On particularly took that nzd/usd trade solely on the possibility of breakout. on the daily, 4h, and 1h chart, price action had been nicely to the downside, with all moving averages pointing down and few candles had retested the botton trend line which I drew and had formed a triangle. Thus just like th eur/usd, a possibility of a breakout was possible. Also in such pairs the volatility is much lower than the more liquid ones as the eur and gbp and thus the S/L was very reasonable to catch that breakout. I did however lock in a 25 pip on half of my position and moved the rest to -20 and did get stopped out when that huge reversal came out after the news. which turned out to be a false one and settled back by the trendline which now it has broken. I entered the trade on the 1H chart on november 18.2008 at 00:00gmt on the chart I have attached.

Also Palmer, you mentioned when price closes on the other side of the 21, it's a "red flag" and on the swiss 4H chart, even the 1H, even though a beautiful trend, few times price does close on the other side of 21. And what do you look for when it does and does raise a red flag to be confirmed that its a trend continuation and not a reversal.

Palmer thank you once again for your observations. I have learned to believe that as much as one might know, there is still room for to perfect or refine them. Price action truely is what drives the market and I think and even in my own trading, price action is the most important signal i look at in a trending market. And the past few days, i have seen triangles form in more than a few currencies and a price breakout was imminent and looking for a macd signal would just confirm that, but I have noticed that sometimes to wait for the macd signal on the 4H, might miss out on the breakout, thus I looked into the 1H or even the 30 for a breakout and pullback formation.. but in this case, i entered because of the previous few candles having tested the bottom trendline of the triangle and the triangle had narrowed and the S/L was very within money management rules.

thank you once again

uj has creacked the triangle line to south just like yesterday, at 1h I found the retrace to the line, and find good enter opptunity at 5min chart.

Because there is no 4h MACD signal to support, I only enter with half lots, 40pips sl and 100pips TP.

I haven't posted for a time, and find many people complain about the big signal candle at 4h chart, this is funny. Just study Palmer's blog's 1h ADX enter and 5min rules, you would find there are lots of opportunites at each pairs while price retrace to important MAs or trend lines, just use half lots with 40pips sl, it is very easy to obtain profit.

welldone,nice mixture of two systems ,i like this method

Dean:

If price closes below the 21, it's more or less of a head's up because one of the rules of the method sates that price can reverse here. If prices comes back up to the 21 and resumes the original direction then I just wait for rhythm to get rolling again. If there are multiple closes below the 21, bigger warning. Look at the circled areas on the Swissie chart. Again, it's more of a 'pay attention here' sign for me.

saka: Nice job with the trade. You really can zero in on an entry with a shorter timeframe if you alread know which way you should be going on the longer timeframe.

Seems like the EURUSD and the USDCHF don't exactly 'mirror' each other much any more...

Palmer: why I cant log on your web site ? The browser reports that it cant find the server.

Works for me.

mr. philip can u guide me entry and exit signal.

Hmmmm, I just clicked on the link and it loads. There is widget ad in there that might be causing the error. That'll be gone this weekend. Are you still having trouble??

choontianz2:

The EU is very congested right now, I've got a triangle within a triangle here. I'd like to see price exit this entire area before entering. I've got a short bias as well but would rather see price move out of this range...

Palmer,

Today I want to do some back testing on the 4H charts to see how breakouts play the best on the majors (especially the EURUSD). When the 8 and 21 lay flat and then are touching and intertwining each other. Then the 89 gets involved in the mix.

How do you normally play these areas...

#1) A but above the area, a sell below the area, if it breaks you try to take some quick pips.

#2) You wait for a clean break, then play in that direction.

#3) You wait for a clean break, then wait for a pull back into the consolidation, and then wait for a move away in the direction of the clean break.

#4) Wait for a complete break, and wait for the trend to continue (flag) or start new (against a flag).

Thanks for your help!

T.J.

20:30 USDhttp://www.forexfactory.com/images/m...mpact_high.gifUnemployment Claims
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there is a triangle in the EU for 4H. what will be next? is the EU in the market rhytm?? it seem like just around sma89. any advice? entry and exit signal. thank for the philip posted for the UJ . i gain some from there.

#2...and wait for the moving averages to clean themselves up and start flowing again. There are times when the 'box' is forming and you can attempt #1. A good way to improve the odds on the breaks 'for a few pips' is if you have the time to look at a 1min/5min chart and look for entries on the smaller timeframes. The moves will always start on the lower timeframes and if you have a reliable entry method there it can be a good way to get in early and let price break the s/r area and already be 'in'. There are numerous false breakouts in any market where price retraces. This is why I just like to wait things out and let the price action find the flow again...

Watch for breakout. 2 Spinners off the 21ema and the bottom trendline. I anticipate a breakout down. Lets hope we can get a chance to get in. Either by a MACD TC after breakout or on a pullback to breakout level.

ADD: It can still do what it wants and break to the top.

Hello Phillip,

I have a question regarding counter trend trades, as per the rules counter trend trades can be taken once a channel is established and trades should be taken on the top and bottom of the channel, given a MACD signal is given. Am I correct.

I have provided a chart which just happen to have a channel line and the MACD has not given a signal yet, but my question is lets say in the next candle or two there is a Aggressive turnaround MACD signal and price action is at the bottom of the channel line, would that constitute a PROPER counter trend trade as per the rules.

Any clarification would be helpful

thank you

Hello Phillip and Palmer

here is another example, the swiss clearly has a beautiful rising up trend. Today it rose to resistence of trend line, 4h and daily that I have drawn up on the chart, the blue is the 4H trend line, the brown is the Daily. Also close to those trend lines, there were 2 spinners with nice long tails which might state that people are pushing it down.

Now As per the rules, would that be a high probability counter trend trade back to the 21 since it is in a upward channel and also the two tails. I took the trade with TP to the 21 but I did get stopped out.

I like to have your opinion of whether that due to the evidence, was this a counter trend trade as per the rules that just got stopped out, or was there something that I didn't pay attention to.

Thank you