4 Hour Strategy (MACD)

I completely agree, the plan should be to let all this data wash out & see where the market takes us. There was a nice CT on the EUR i took yesterday which netted 180 / 200 pips I post that next

Not many people use the 5min as this can sometimes draw you too much into price action. If you are just starting out - start off with 4H entries only. As you feel more confident about holding positions use the 1H. Personally I would stay away from the 5min entries - only over big news I will use this chart.

Cheers Welsh.
Also no need to tinker with a winning formula

Pip:

There is so much movement of a 2min or 5min candle within a 1hr or 4hr candle that you could complete your entire trading day within just one of those longer term candles. If you are using a shorter timeframe entry to get in a longer term trend, look for something ( an indicator setting ) that 'most of the time' causes the trend to change on that 2 or 5 min timeframe that goes in the direction of the 1hr and 4hr. Don't trade with that 2 or 5 min timeframe within that 1hr or 4hr candle, trade that 2 or 5 min timeframe looking for the breakout with the longer term direction...

eu/us breakout i I will think weekly this go up 200sma

I had a very nice compliment from Pipmaniac sent to me in a PM asking a few things so in the event someone else might have the same question about how I manage my time during the day:


My setup for trading is rather simple. I have a laptop at work that has a wireless broadband modem that works fine for the live data feed since I can't use a work computer to trade with. I've had the wireless modem with laptop next to my desktop at home with cable internet and the time (even seconds) are exactly the same. The majority of my time is spent with the 4hr and 1hr timeframes. Every once in a while I watch the 5min timeframe but that can be very hard to manage when you can get interrupted at the drop of the hat. Either way, I mostly just let the 4hr dictate what I am going to do. Since there are only 6 four hour bars in a day it's not too difficult to catch the close of all of these. If the 4 hr chart is not flowing well with the moving averages (the 8/21/89 are all within a few pips of each other or the chart is just too volatile) and the rhythm is not there, I basically wait it out to let the flow get started again. This can take a few days or sometimes a few weeks. I may add a few more pairs to follow this year and just look for strong rhythm if 'my' pair the EURUSD just looks crappy. This is year #2 with this method and it's now very easy for me to see a chart and decide if I want to pay attention to it or forget about it at this point. The next step is to be able to immediately identify a 1hour high probability entry area. So, if there is no rhythm I forget about the chart until it clears itself up. If the rhythm is strong then it's time to look for pullbacks on the 4hr and then go to the 1hr to look for an entry. If I see a pullback happening on the 4hr and I don't have a trade open, then it's time to watch the close of the 1hr chart during this 4 hour bar or bars. This can be tricky because we all have to sleep at some point or another so there is really no way to watch all of the 1hr closes. If an entry is missed during this time then that's simply the way it goes.

If the 4hr 'looks' like it is trying to clean up and it's sleep time, then I will set MT4 to play an audible alarm a few minutes before that 4hr bar closes so that will go off two times during the night. This means that I'll lose a little sleep those nights and might have to skip the gym for the day. This doesn't happen too often though because I like my sleep even though I think it's over rated.


Take a look at the following 4hr EURUSD chart:

The price action between the white vertical lines is where I would not do a thing excpet wait for this area to break out and let the moving averages start moving. This was a 6 or 7 day span where nothing happened. Finally price breaks out and the rhythm finds itself; between the green vertical lines.

The pullbacks: Now it's time to look for a pullback. See how the price is riding the 8 during this trend and has a hard time closing below it. These two or three week trends happpen over and over throughout the year. It's a matter of patience and letting the trend (rhythm) develop. The green arrows are where price has pulled away ( forms a gap) from the 8EMA and then price either comes back down to the 8 or price slows down and the 8 catches up to the price. This will always happen. The end of the run, the red down arrow. This is the first time where price closed below the 8 for the first time in a very long time and should raise a flag that the trend might be slowing down here.

I posted a few days ago about these gaps and how significant they are. I took notice of this several months (maybe even almost a year ago) but only recently it struck me about how important this gap is with the rhythm. This gap is telling me NOT to trade in this area and to wait until that gap is closing, then make a trade. This is where the one hour comes into play to try to get in a little sooner. Still polishing that up but it's getting there. But again, if you use the 1hr to get in with you still should use a stop according to the 4hr chart since that is the main trend you are following.

If you look back over the 4hr charts where the rhythm is flowing like this, look for these gaps and then the proceeding price action along with the 8ema. The key is the patience to let the bar close on both timeframes.

Just got the account info form FXDD and my guess is that it will be early next week before I'm 'live' again. I think it's good (healthy) to take a break every once in a while anyway....

Hope some of this helps.

mr. krai

That just might be the case here. I think it's 'safe' (at least at this point) to use that low as the new low for a Fib # along with the high from around 12/18/2008. Again, see how price filled the gap and came back down to the 8ema and before that how it would be difficult to find an entry. Time will show the way....

Nice description on the 1hr entries Palmer.
Have been away for a while but getting back into the swing of things again - good to see Phillips method is still here and keeping alive

These are all you need for 5min entry. It is such a high risk trade using this time frame method, but yeah...still can get get pips using it. NO MACD involve here. Just master the MARKET RHYTHM based on the price's slope.

Goodluck

Hello all...

Chinese New Year has brought some good sentiment to EU at this moment.

Price currently testing the previous trend line and maybe on its way revisit the 61.8% fib level.

If it is a TC upside, 200sma and 50% fib level waiting there. Otherwise, two strong trend lines as support level are waiting between 61.8% and 100% fib level.

Only time can tell.

HAVE A LOOK AND MAKE YOUR OWN THOUGHT

Maybe we should pay more attention to PA itself when using h1 entry. Here are some good/bad entry based on the price emotion, MACD and MAs.

GOOD Entry
X : Evening Star
Y : Morning Star

BAD Entry
Z : Morning Star

HAVE A LOOK AND MAKE YOUR OWN THOUGHT

Hi Palmer,

Great post on the price action and I totally agree. Every month I am adjusting and refining my entry and exit rules and every month I am reducing my losses and the number of losses. The main thing I believe is truly patience and following the plan. As you said, there are times that you wait for weeks before there is a clear direction and it is hard for many to sit on the sidelines and not be able to pull the trigger. I myself was one and what I have done to rid this problem is to have a demo account as well. I always have my demo account for times I want to experiment something new or a new idea and it also comes in handy for those moments when there are no trades according to my rules and I have an itch to trade. I then enter my trades on my demo account and not only I do not risk real money, I actually learn from those trades placed on the demo account.

There is also an observation I want to share with you and all the fellow readers. Please share you thoughts with me if you agree or not.

I have noticed that the 365ema does not hold much merit in situations where it is bunched up close to the 89. I have noticed that it has more of a power when all the moving averages are in ascending or descending order as it acts as the last line of defense sort of speak.

For example, on the chart, you can see the 365ema (dotted blue line) is in between the 89 and 200sma and I believe if price does keep going higher, the 365 would not have as much merit and will not act as a big resistance to make price retrace and bounce off of it. Now if the 365 was above the 200sma( red line) then if price made it past the 200, then the 365ema would have a big impact as far as resistance.

The major force in my opinion is surrounding the 3 main moving averages (8, 21, and 89)

Also in your diagram, that showed a nice trend which you would have traded, you can see as price reached the 365ema around Dec. 11, it did not act as a big resistance at all and just pushed passed it without a fight. I see many times that the 200sma acts more of a important level to watch than the 365ema.

What are your thoughts?

As far as the Eur/Usd goes:

The moving averages are too bunched up right now to dictate a nice strong trend. This could be a retracement from the high achieved on dec. 18 and the low achieved on january 23. As you can see from the chart, I have drawn fibonacci from those two points and we may have a retracement to the 38.2 and 50.0 mark.

You can see on the Daily chart that the 365ema has more of a merit as price has acted as more of a major obstacle on the daily than on the 4H around the 365.

Bias for now is to the upside as stated in my opinion but I will still wait until a little bit more refined trend is established.

Hard to say what price is going to do as the moving averages are very bunched up. We have a double top just below the 365ema around the 1.3335 price point as seen on the chart. That price level has played a few roles as a resistance and support in the past month.

If I were to anticipate, we might be price start a minor trend to the downside and my anticipation is based on that double top and price closing below 89sma for the past few candles. I for one am going to let it develop a little bit more before any entries or I might just close out the month of january with 200+ pips for the month and wait for new pips in february.

I have reduced the number of currencies I look at and it has been such a great learning lesson because it really allows you to zero down to the price movements and what I have found is that the price action around the 8, 21, 89 is shared with most currencies I have looked at. I have been only looking at Eur/Usd, Gbp/Usd and Usd/Jpy and when one makes takes this price action to heart, I believe he/she can look through many currencies and filter the ones in a trend and trade this method until the trend is over and by then I am sure another trend is taking off in another currency.

But by only looking at one or two currencies at the start, it really sets in the foundation needed to look through others when you have the method by heart.

Thanks for everyone on their contributions. keep it up

I agree with you 100%. I myself would pay more attention to 8, 21 and 89 MAs from time to time. That's why I have these 3 lines (from h4) in my h1 chart as well.

There is no doubt about why the creater of this thread had all these MAs (from 8 to 365) lines in his 2 years research. Even though I do not have any idea how he found it, I think there are strong reasons behind it.

My next venture using this thread's method would be cross yen pairs (Eur,Aud and Nzd). Anyone else with me?

Here is a gap that had formed on the usd/jpy as Palmer has stated and explained on his previous posts. Price had a gap and price retraced back to the 8ema which happens to also be around the 89sma. Also a trend line is in place so we have 3 events happening at the same time which can act as a very strong support. Now Price can do 2 things in my opinion:

1. Price will go higher and a new trend will be in the making. Making higher highs and higher lows and either riding the 8 or coming back in between the 8 and 21 and then continuing with a TC or Zero bounce

2. The 200sma which is the red line on the chart can act as a resistance level and price will try to break through to form that trend but may fail and price may turn around and make a new trend to the downside.

A few more days or maybe a week is needed to see a clear picture of what will happen.

Orange,

I am with you there, I am also very interested to get my feet wet with the cross yen pairs and in the coming months I might experiment with them on my demo account and learn their price action and see how it behaves with this method. I am very confident that when there is a clear trend, even those currencies act the same way as the eur/usd does around the 8,21,89 but maybe with just more volatility, which then means our stop losses needs to be further than what we usually do and that is ok as well because the gains also would be more rewarding as well. So we'll see, keep us up to date if you start venturing into the cross yen pairs and what you notice about them..

sorry for all the posts guys,

just one more thing to add, I know orange uses the 4H lines on the 1H and I myself recently downloaded the file where you can put the 4H lines on the 1H and let me tell you how helpful it has been for me. I have the daily, 4H and the regular 1H on my currency as well plus the 1H with the 4H lines and I have been placing my entries mostly on that page as it give me the whole picture without flipping through the 4H and 1H. It has made the entry easier to see.

After USD rates and the crude oil inventory released earlier, EU has retreated when it found strong resistance made by 2 trend lines and 2 MAs. I see the price make a sort of Double Top (shadowed area) , plus the everyone favourite's Evening Doji Star pattern (with long sting-tails) as in dash-orange box emerged within the shadowed area.

The MACD reacted significantly to the price emotion, and crossed below Zero line.

Honestly, a week ago I did imagine the price will test the 89 and 365 then continue its path downside, and it did now. Those trend lines is one of the reason which make me thought so.

If the downside continues, the price should clear 1.2700 level before it makes FIB 100.0% retracement from high of Dec 18 2008.

HAVE A LOOK AND MAKE YOUR OWN THOUGHT

Hi time1300. Where did you download the MT4 file for displaying the 4H MA's on the 1H?

Cheers

Edit: I found it. http://www.forexfactory.com/showthre...4630&page=1201