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Hourly Fibonacci Method (Day Trading)

  • #221
  • Aug 12, 2009 11:19am Aug 12, 2009 11:19am
Quoting rumba68
Weekly M1 Pivot level. I mostly look for weekly pivot levels.
Just an update to my earlier post. I ended up not taking this trade which ended up being a wise decision. I was long on Euro based on another system and it didn't make sense to short Aussie based on just overlapping Fibs.
  • #222
  • Aug 12, 2009 6:35pm Aug 12, 2009 6:35pm
Quoting rumba68
Just an update to my earlier post. I ended up not taking this trade which ended up being a wise decision. I was long on Euro based on another system and it didn't make sense to short Aussie based on just overlapping Fibs.
I guess that isn’t a bad decision. Intuition and experience are also necessary in trading.
  • #223
  • Aug 12, 2009 6:56pm Aug 12, 2009 6:56pm
Quoting Trendylines
I have been following this thread from the beginning. I must commend your efforts for taking time to analyse and give useful hints about the market. It is a difficult thing to do, especially the way you combine it with your own trades. However, I would like to know why you prefer entries from the H1 Time Frame, because sometimes the H4 actually provides similar or better entries. For example, I followed the GBUSD through the H4 and I was also able to get some reasonable pips. Again keep doing this wonderful job.

E ku ise o.
Trendylines, e se gan. You have a point, but as you probably know, taking trades based on H4 setups can’t really be considered as day trading. It usually takes longer period to manage and exit such trades – if you would agree with me.
Apart, from the day-trade factor, which absolutely works with individual personalities and time-availability, I personally don’t see any other reasons why one shouldn’t consider H4 setups. And, if not for the sake of simplicity and consistency, we would definitely be discussing it on the thread.
  • #224
  • Aug 13, 2009 3:11am Aug 13, 2009 3:11am
On the Daily chart (attached), we could notice a reversal candle pattern (engulfing candle) around the lower border of a rising wedge chart formation. Also, price has broken above the previous day high @ 1.4246 (which we’ve highlighted using the blue broken line). These are good signs supporting the possibility of a continuous price movement upward. The upper edge of the rising wedge is about 200 pips above the current price level; hence, another complementary sign that price has a good chance of moving further upward.

On the H4 chart (attached), price has broken the most recent swing high @ 1.4246 (which we’ve highlighted using the blue broken line) upward. This automatically shifts our bias in favor of an upward price move. The green horizontal line @ 1.4121 highlights the most recent swing low, and as long as price stays above it – in the absence of any new and higher swing low – our bullish or upward bias remains intact.

However, we still need our Hourly charts – using Fibonacci retracement levels and important support levels – to seek promising areas to take our Long positions. Price pattern on the Hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today’s up-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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  • #225
  • Aug 13, 2009 10:12am Aug 13, 2009 10:12am
Based on our earlier analysis today, the EURUSD presented a Long trade opportunity about a couple of hours ago. I’m currently not in the trade as I was targeting the fib. 78.6% ret. @ 1.4260. If you set your Limit Order around fib 61.8% ret. @ 1.4274, you would, at the moment, be in the profit.
Please manage your trade properly.
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  • #226
  • Edited 3:55am Aug 14, 2009 3:43am | Edited 3:55am
On the Daily chart (attached), the reversal candle pattern (engulfing candle), observed yesterday around the lower border of a rising wedge chart formation, is still doing a good job of holding our bias in favor of an upward price move. However, price is currently below the previous day high @ 1.4326 (that we’ve highlighted using the blue broken line), which, if we look closely toward the left side of the chart, happens to be around a previous swing high – not an observation we should ignore. These conflicting signs are only warning us to be very careful until the coast is clear.

On the H4 chart (attached), price broke a recent (not the most recent) swing high @ 1.4246 (which we’ve highlighted using the lower blue broken line) a while ago. However, a new swing high – coincidentally the previous day high @ 1.4326 (which we’ve highlighted using the upper blue broken line) has formed, and price is yet to break above it. While price break above the 1.4246 level strengthens our bias in favor of a continuous upward price move, the new swing high (and previous day high) @ 1.4326 is a major resistance level that we would like to see price break upward. The green horizontal line @ 1.4121 highlights the most recent swing low, and as long as price stays above it – in the absence of any new and higher swing low – our bullish or upward bias remains intact.
In all, we are cautiously in favor of an upward price movement today

However, we still need our Hourly charts – using Fibonacci retracement levels and important support levels – to seek promising areas to take our Long positions. Price pattern on the Hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today’s up-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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  • #227
  • Aug 15, 2009 9:59am Aug 15, 2009 9:59am
Guys, just to wish you all a restful weekend; and a successful week ahead.
  • #228
  • Aug 17, 2009 4:30am Aug 17, 2009 4:30am
Pls NOTE: On the Weekly chart (please refer to Monday, Aug. 10 analysis), the reversal candle that formed around a strong resistance level the penultimate week is still doing a very good job of sustaining our bias for a downward price move.

On the Daily chart (attached), continuing from where we stopped our analyses early last week; after price broke below the upward trend-line, and MACD crossed below its Signal Line to validate the –ve MACD divergence (that we’ve identified using the red dashed lines on the upper and lower windows of the trading platform), price seems ready to continue its journey southward – as envisaged. The current major price actions confirming the continuation of this downward bias are: First, we would notice price retracement upward was halted around the upward trend-line, which now acts as a resistance area. Second, price has broken the most recent Daily swing low @ 1.6389 (which we’ve highlighted using the lower blue broken line) downward. These signs are simply too strong to ignore: we now have a strong bias to seek Short trade set-ups on the Hourly chart – with the H4 chart support. Except we really know what we’re doing, from a day-trade perspective, it’s very risky to be taking a counter trend trade in an environment as this.

On the H4 chart (attached), price has broken the most recent swing low @ 1.6483 (which we’ve highlighted using the blue broken line) downward. That automatically signaled the resumption of our bias in favor of a major downward price move. The white horizontal line @ 1.6607 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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  • #229
  • Aug 17, 2009 8:14am Aug 17, 2009 8:14am
Earlier today, we concluded today’s bias is to go Short.

The Hourly chart (attached) is currently forming a tradable pattern. Price seems to have bottomed temporarily @ 1.6274. Hence, we expect price to retrace to the area between 1.6409 and 1.6545 (which is the area between the 50% and 100% fib. retracement levels – drawn from the most recent Hourly swing high to the current price-bottom). Let’s seek to sell around this area. If price exceeds the 1.6545 level upward, our bearish bias is no more valid and we enter a no-trading zone. Our primary profit target is @ 1.6201 (the 127% fib. ext.).

Also, if price breaks below 1.6274 (current price-bottom) before retracing to the sell-area, we’ll have to redraw our Fibonacci tools using a new bottom & the most recent Hourly swing high to determine new potential areas to sell.

The 15min. chart (attached) gives us a clearer view of the Hourly price action and the potential areas to sell (please note it’s advisable to set a Limit order ahead of time as price could move up to these levels and reverse sharply in our favor).
This chart is rather cluttered but if we look closely, there are a number of potential reversal levels available. You choose your preferred level based on your personality.

fib 50% ret. @ 1.6409;
fib 61.8% ret. @ 1.6441;
fib 78.6% ret. @ 1.6486.

Initial Stop Loss @ 1.6547; primary Profit target @ 1.6201 (Please remember to factor in your broker’s pip-spread).

Please note that all these Fibonacci (fib.) levels have other pivots, overlapping fibs or previous highs/lows supporting them (they are the cause of this cluttered chart). As such, price could reverse at any of the points. The issue here is that the higher the fib level you choose to sell from, the smaller the pips you’ll risk and the more your pip-profit; BUT, also the more the likelihood of you missing the trade as price might not retrace that high before moving back downward.
You need your own discretion here.

Please keep your risk low. Don’t risk more than 2% of your capital. Personally, I risk about 0.5% per trade; and each trade has a potential profit target of 1% or more – based on my exit levels.
We MUST NEVER assume we KNOW where price is going next!

P.S.:
Similar Short trade and Long trade set-ups are forming on the EURUSD and USDCHF pairs respectively.
Also, always keep in mind any major news releases. Be wary of possible price volatility during these periods.
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  • #230
  • Aug 17, 2009 3:55pm Aug 17, 2009 3:55pm
Quoting biz0101
i think you have might missed on your short entry. i would take a small position here just in case the price won't retrace, and if it does, just add to the short.
Hi Biz, actually, if your entries are based on certain defined parameters, you would always miss quite a number of trades; but you won’t see the missing trades as lost opportunities, since, within the context of your edge, they were not opportunities in the first place.
I’m sure your trading parameters identified an entry opportunity when you took your small position; however, mine didn’t. I wish us all a profitable week.
  • #231
  • Aug 18, 2009 3:24am Aug 18, 2009 3:24am
Quoting Tunji
Hi Biz, actually, if your entries are based on certain defined parameters, you would always miss quite a number of trades; but you won’t see the missing trades as lost opportunities, since, within the context of your edge, they were not opportunities in the first place.
I’m sure your trading parameters identified an entry opportunity when you took your small position; however, mine didn’t. I wish us all a profitable week.

Quite right Tunji, In order to keep the thread focused on its original system, i stopped posting my trades since the criteria i use is a bit different from yours. Perhaps others too should keep their postings here in line with the stated criteria so we wont get others (especially newbies) confused.

Wish you all a pipful week.
God's Love For You Is Sure Never You Doubt It
  • #232
  • Aug 18, 2009 3:28am Aug 18, 2009 3:28am
On the Daily chart (attached), as we observed yesterday, a couple of more recent price actions – in addition to previous ones that we’ve been discussing for over a week – are sustaining our bias in favor a continuing downward price movement: price retracement upward that was halted around the upward trend-line, which acted as a resistance area; and price-break below a former support level – the most recent Daily swing low @ 1.6389 (which we’ve highlighted using the lower blue broken line). Note that this previous support @ 1.6389 is currently acting as a resistance level. These signs are still good enough to sustain our bias for a downward price move – from a day-trade perspective.

On the H4 chart (attached), yesterday, price broke the most recent swing low @ 1.6483 (which we’ve highlighted using the blue broken line) downward. That price action shifted – and has sustained – our bias in favor of a downward price move. The white horizontal line @ 1.6607 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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  • #233
  • Aug 18, 2009 4:03am Aug 18, 2009 4:03am
Quoting D liberators
Quite right Tunji, In order to keep the thread focused on its original system, i stopped posting my trades since the criteria i use is a bit different from yours. Perhaps others too should keep their postings here in line with the stated criteria so we wont get others (especially newbies) confused.

Wish you all a pipful week.
Thanks a lot for your support D liberators. I really believe consistency matters. With that, we know exactly the number of strategies we have in our individual trading toolkits, and probably trade them on separate accounts to keep accurate tab on each method’s performance.
  • #234
  • Aug 19, 2009 4:04am Aug 19, 2009 4:04am
On the Daily chart (attached), we would observe the USDJPY pair has been in a steep downtrend for more than a week. Recent Daily swing low has been broken southward. However, the current price formation isn’t too clear – from my perspective: price seems to be in a tight downward channel, and with yesterday’s candle formation giving us a weak sign that the bears are still somewhat in charge, our bias is still in favor of a continuous downward price movement. To buttress our bearish bias, price has broken the previous day low @ 94.19 (which we’ve highlighted using the blue broken line) downward. Let’s expect price to move further downward toward the lower edge of the downward channel. The only “but” today is simply based on the not-too-clear current price formation.

On the H4 chart (attached), price broke the most recent swing low – also the previous day low @ 94.19 (which we’ve highlighted using the blue broken line) downward. That automatically sustained our bias in favor of a downward price move. The white horizontal line @ 95.28 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.

P.S.:
As I’m about posting this analysis, a Short USDJPY trade set-up seems to be forming on the Hourly chart with initial Stop Loss @ 94.71; and Primary Profit Target @ 93.96. If you’re able to identify a strong confluence of resistance, please consider taking the trade.
However, please remember to keep your risk per trade low: We MUST NEVER assume we KNOW where price is going next!
Also, always keep in mind any major news releases. Be wary of possible price volatility during these periods.
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  • #235
  • Aug 19, 2009 10:55am Aug 19, 2009 10:55am
Pls NOTE: Based on earlier analysis of the USDJPY pair today, a couple of Short trade set-ups occurred. If you used the fib 50% ret. levels both times, you would have closed the first in profit, and the second would comfortably be in your favor by now: The first set-up had its 50% level @ 94.40 with primary profit target @ 93.95; the second set-up (with the fib drawn from the same Hourly swing high, but with different price-bottoms) had its 50% level @ 94.21 with primary profit target @ 93.47. As you’re probably aware, personally, I go for 61.8% ret. – and preferably, 78.6% ret. because of my love for high reward:risk trade. So, I missed both trades.

If you were able to identify the USDCHF Short trade set-up and took the trade, that’s great.

On the Hourly chart (attached), we could notice the sharp upward retracement from where price initially bottomed @ 1.0721 to the exact level of fib. 61.8% ret. @ 1.0757. If your Limit Order wasn’t placed around the fib. 50% ret. level @ 1.0750, or a few pips below 61.8% level, you would have missed the trade. I missed it by a whisker. It could be very frustrating – especially when I also consider the missed USDJPY trades.
As we could see, as price sharply retraced upward, with almost the same momentum, it reversed downward all the way to hit the primary profit target @ 1.0706 (the fib. 127% ext.); then continued its “mad” rush further downward to hit the secondary target @ 1.0686 (the fib. 161.8% ext.).

The 15min chart (attached),gives us a much clearer view of the Hourly price action.

P.S.:
This trade was fully supported by the H4 chart price action.
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  • #236
  • Edited 12:33pm Aug 19, 2009 12:13pm | Edited 12:33pm
In light of what is currently happening with the majors, we would know that virtually any “buy-dollar” trade set-up, from a day-trade perspective, is doomed.

I took a Short GBPUSD trade, but was fortunate to manage the trade well enough to close at break-even (2pip profit). Maybe explaining what I did might offer a few insights.

On the Hourly chart above, I identified a nice confluence of resistance levels around fib. 61.8% ret. @ 1.6489. I also noticed a very distinct most recent Hourly swing low @ 1.6509, which was closer to the fib. 78.6% @ 1.6520 (I apologize for not highlighting it with a horizontal line). I decided to place my Limit Order around the most recent Hourly swing low @ 1.6509 – mainly to enjoy a high reward:risk while trying as much as possible not to miss out of any potential beautiful trade.

On the 15min chart above, as you would observe, price moved upward and met resistance almost at the same level of the most recent Hourly swing low @ 1.6509. Automatically, my Limit Order was filled. As priced instantly reversed downward, I saw an opportunity to quickly turn the trade to a no-loss trade.

In the absence of a well formed reversal candle formation on the 15min chart, I waited for the close of the second bearish 15min candle, and concluded that if there would be any major downward price move, the two 15min bearish candles (that formed around major resistance levels) were strong enough to initiate the downward move. Hence, with a two-lot position, I closed half of my position @ 22pip profit; then moved my Stop Loss to 20 pips above my entry level, which was 15pips above the 15min candles (that included my broker’s spread). That automatically made the trade a no-loss trade with a “windfall” profit potential of 186pips.

Alas, today wasn’t my lucky day.
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  • #237
  • Aug 20, 2009 4:04am Aug 20, 2009 4:04am
On the Daily chart (attached), as a result of the drastic loss dollar experienced on all the major pairs yesterday, on the USDCHF Daily chart, we would observe that price has broken the most recent Daily swing low @ 1.0668 (which we’ve highlighted using the upper blue broken line) downward. Also we would notice than price is currently in a lower high, lower low formation. These are good signs supporting a bias for downward price movement. However, there is a very major support area around the 1.0600 level, this support area has remained a critical level since May 2008 (please refer to your Weekly and Monthly charts); hence, we should be very careful as the bears might be contending with some fierce bulls around this level.

On the H4 chart (attached), price broke the most recent swing low @ 1.0725 (which we’ve highlighted using the blue broken line) downward. This automatically shifts our bias in favor of a downward price move. The white horizontal line @ 1.0779 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact. Please, as you seek opportunities to go Short, bear in mind the critical support area around the 1.0600 level. As a conservative trader, you may want to wait for a clean break.

However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
Attached Images
  • #238
  • Aug 21, 2009 6:46am Aug 21, 2009 6:46am
If you were able to identify the USDJPY Short trade set-up and took the trade, that’s great. I took it, and, currently, I’m still in it. I’ll give analysis of today’s bias based on higher time frame charts, and then explain the steps I’ve taken so far in managing the Short trade.

On the Daily chart (attached), similar to what we observed on Wednesday, the USDJPY pair has been in a steep downtrend for more than a week. Previous days’ lows have been broken southward. Also, if we take a closer look at the Daily chart – precisely the previous two days’ candles – we would observe that the whole of yesterday’s price action occurred within Wednesday’s candle (price range), which resulted in an “inside-candle” formation. Price-break below the inside-candle earlier today signified the possibility of further movement of price downward. In addition, studying the narrow downward channel, price seems to have room to move further downward – toward the lower edge of the channel. These price actions are good signs supporting a bias for downward price movement.

On the H4 chart (attached), price broke the most recent swing low – also the previous day low @ 93.84 (which we’ve highlighted using the blue broken line) downward. That automatically sustained our bias in favor of a downward price move. The white horizontal line @ 94.54 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.
Pls NOTE: The H4 chart also gives us a clearer view of price action within the downward channel discussed on the Daily chart.

On the Hourly chart (attached), price pattern was forming lower highs and lower lows; hence, I drew the Fibonacci tool using the most recent Hourly swing high @ 94.28, and the temporary price-bottom @ 93.46, and then identified an area around the fib. 61.8% ret. level as a potential price reversal area to place my Limit Order (Pls NOTE the 61.8% ret. level was supported by pivots, other fibs., and previous lows).
Initial Stop Loss was placed 2pips above the most recent Hourly swing high @ 94.33 (broker’s spread included). Primary profit target @ 93.24 (two pips above the fib. 127% ext.).

On The 15min chart (attached),after the Limit Order was triggered @ 94.01 (exactly on a Daily pivot level), price reversed downward almost immediately. Hence, I had a good opportunity to quickly turn the trade to a no-loss trade. With a 3-lot position, I took profit on one lot @ 19-pip profit, then, adjusted the Stop Loss for the remaining position to 9 pips above my Entry level, which was 5 pips above the most recent 15min swing high. That automatically made the trade a no-loss trade with a profit potential of 75 pips.
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  • #239
  • Aug 21, 2009 7:25am Aug 21, 2009 7:25am
Good job Tunji!
  • #240
  • Aug 21, 2009 7:26am Aug 21, 2009 7:26am
After I exited the first lot @ 19-pip profit, price moved further downward. With that, I took the next step to identify an appropriate level where I could take profit on the second lot, as price has the tendency to turn upward as it moves further downward toward the price-bottom @ 93.46. Besides, there was already a waving +ve MACD Divergence on the Hourly chart: a possibility of a major price move upward (a major move from a day-trade perspective) that might trigger the Stop Loss.

Consequently, on the 15min chart (attached), I drew a new Fibonacci tool in the opposite direction to determine a support level that might prevent further movement downward. I identified the fib. 61.8% ret. level @ 93.69, which was supported by Daily and Weekly pivots. Afterward, I waited to observe price reaction around the level. With a “doji” candle and a bullish candle, I concluded it was ok to exit my second lot @ 24-pip profit. With two lots taken, the trade automatically turned to a profitable trade – regardless of price movement.
My exit for the last lot is @ 93.24 (the primary profit target @ fib. 127% ext. level). Further Stop Loss adjustments would be based on new Hourly swing highs.

P.S.:
I lost a GBPUSD Short trade. Fortunately, I had the opportunity to cut my loss; however, with better trade-management, it would’ve been a no loss trade.
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