BMI - MacD Magic Monster

I have a few other useful Indicators, (One of which I did not look at before placing my GY trade.) If I had looked at it, I would have gone short on EurCad. The Eur individual strength is at 11%, while the Cad is at 88%

In the last 10 hours, EurCad has dropped a steady 2012 pips after dropping below gramps and granny MA's.

Aud is at 69%, while Usd has been rising steadily while I am typing from 44% up to 60%

So EurAud dropped 1100pips after crossover, and EurUsd an unimpressive 600 pips after crossdown.

Unfortunately EurCad is risky to enter so low in it's drop. Will watch and post what I see.

Hi Djebel.

I don't use Stop Loss and Take Profit much. I might put a Stop Loss in a trade if I am in a greedy mood and it seems risky to let it run. In that case I put a SL to lock in the profit.

I don't suggest you follow my example, because it took me trashing 4 accounts before I started to actually get my methods working. (I am one of those jump in the deep end types of person)

Usually (unless I rush into a trade, which NO-ONE should ever do) I have a clear idea of where I feel the price is headed. So I have my own internal stoploss and tp set, which changes as the market progresses.

Remember this (all traders figure this one out in the end) NO-ONE can predict the market. For example, in my earlier post, I drew a sketch of where I felt the trend was going in GY. But I didn't realise (or check) prior to my entering the trade to see how the GbpUsd and UsdJpy were looking on the charts. Since they form the price of GbpJpy, I should have looked, but did not. So now GbpUsd is dropping, while UsdJpy is climbing, which results in GbpJpy crabwalking sideways.

It appears that UsdJpy will turn and drop very soon though (she is now testing to break through the Granny and Gramps MA's, but is losing the battle)

Once both GbpUsd and UsdJpy drop at the same time, if they drop 1000 pips each (and their long term ranges are very similar) then GbpJpy will drop 1600 pips.

As far as Stop Loss and Take Profit settings go, that is up to the individual, and 'The Dance' will give you a clear and usable setup on how to enter and what to set your stop losses for when bouncing off Support and Resistance levels (which is what we are doing here) The Dance also gives clear instructions on when to exit.

It is very useful info there, not only for newbies, but for all traders. Give it a look.

http://www.forexfactory.com/showthre...&goto=lastpage

BMI

Looking now at the EurUsd, it is ranging around the 1.2770 mark. It will 'break above the channel, and people will go long. Not wise to do.
It is merely completing the scallop formation.

It is possible to use the countertrend strike here, but go long now, while it is at it's trough. It will spike up to about halfway to firebrick, then start a slow shallow scallop. It seems to me (wrong I may well be) that EU is going to range for quite a while now. Flicking between short up trends and short down trends. But it is extremely difficult to be clear on this one. H1 shape and pattern do not confirm ranging at all.

On H1 you see the scallop in an up trend. The last high bounced off purple, and PA has dropped below firebrick, but looks like it is again turning up.

At this stage I would not trade eu at all since I am in a state of doubt. It is never good to trade if in doubt. Rather wait till you see something that looks clear and dive in head first.

BMI

Hi BlueMental,
Thanks for your astute input. I agree that EUR looks a bit uncertain at the moment. Price is around a support zone, coupled with a usually "lazy" Asian session one may do well to stand aside at present. There is certainly a distinct possibility for a bottom side test of the (47) Firebrick.

As for myself, in situations like this I prefer to wait for the market to reveal it's intentions before participating. If it happens, a nice breakout of support with a pullback and continuation would suit me just fine ... no hurry, I've found more than once that Patience is one of the best trading indicators around.

BlueMental, I was looking at the property boxes on your indicators and noticed that you have a built in on/off toggle for EMA lines and a Steepmeter. Just curious what those are about? Thanks.

Gosh I lied, it's actually the "not so lazy Asian session". Nice breakaway trade from under the 1.2800 and into the 1.2750 round number as well as the countertrend trendline after a lower high at the Firebrick. Whew that's a mouthful .... Just couldn't resist grabbing a couple . Remains to be seen if the underside of 1.2750 will act as a "roof".

So far it still remains a scalp trade for me (haven't put on my swing trader's hat yet) and in that it has fullfilled it's role, Profit stop at +10. Is this one of these famous "scallops" in the making as price wants a kiss from Firebrick (47 ema)? Vascilation around the 1.2750 RN (round number) and the trendline remains to be resolved.

I guess it's resolved .. LOL. Price kisses Firebrick and I'm out for lunch money .... not unusual for the Asian session but nice enough for a few minutes work.

Another Asian session trade. A nice trendline break/ pullback/ continuation type of trade. Up above price we see the "old folks" (290, 500 ema's) parting ways. Let's see if 1.2700 is do able or if it will fizzle part ways. I'm still going to consider it a scalp at this point with profit stop now at +17 .
Overall a very nice stacking of the EMA's.

Price wants to kiss where it came from - the underside of 1.2750 and the Firebrick (my line in the sand). Former support, has for the moment refused to become resistance.

None the less a nice profitable scalp just riding the M5 trendfriendly waves. Last 1/3 of the position went out at +17. Did I not mention that I scale out of most of my trades (especially the scalps) on a two thirds basis leaving only the last 1/3 to be taken out by the stop. Of course, that's assuming it's a profitable trade.

P.S. Although price did not tag 1.2700 on this round we do, technically have a lower low ...... interesting.

O.K., I think I'm done for now. European session not opening till a few hours from now.

Blue
Thanks alot for your elaborate replies earlier in the thread.

Please explain regarding the scallops , Do you consider grandma and grandpa kisses as a 1 cycle scallop or also the Brick red and coral?

Getting ready for G/J break of 137.00 support

Keep up the excellent work!

fun_demental

.... Steady as she goes

I'm not sure if your scalp was long or short, but either way, it makes no difference. The way I see it is this. If you can see (not guess that there is a maybe trade, I mean actually SEE) a low risk trade, wether it be a 10 pip scalp or a 150 pip swing or a 1000 pip longterm. To me it makes no sense to NOT trade them.

In this picturem the PA is kissing FireBrick, and Firebick has started to turn up. When you see those in a downtrend (MA's in general are down) it is best to wait and see if the PA gets bounced below Firebrick. (Like you said patience is a great indicator)

BUT!! If firebrick has NOT turned up and the PA kisses, you have a 90% certain short trade. It takes quite a while before you begin to trust jumping into a short on the touch of firebrick while the PA is shooting upwards. It is at first stressfull to say the least.

It seems to contradict EVERYTHING you know. But as you do it, more and more, you begin to get the feel for when to enter on touch and when NOT to.

Try it on the M15 chart with a demo account for a while. The knack starts rough, but it gets smooth pretty fast.

BMI

I am still in my GY short from yesterday. She reached +240 pips earlier today
and is now at -97 as I am typing. Everything still looks groovy for my trade.

This one you are in looks great. Remeber to watch your PA in relation to the MA's, as well as the MA's in relation to the other MA's and also (important) Round Numbers!

If you are in the trade as a short term trade, the exit when PA rises above coral.

That horizontal yellow you have at the bottom as a target is based on what?

Target are useful if they are based on previous SR levels, or Pivot points, or some form of defineable reasoning. (even if it is a "I will exit at +x pips").

If the target is SR based, and the price goes steady past it, then it is a great reason to stay in the trade. If it hesitates and bounces, then get out.

BMI

Both scalps were shorts in keeping with the overall EURUSD sentiment.

Quote - "If firebrick has NOT turned up and the PA kisses, you have a 90% certain short trade."

That's a nice observation. I am used to trading with a 50 EMA on my charts (and a couple of others as well) so Firebrick is easily my friend. Angle or slope on any MA is usually a pretty good way to judge sentiment particularly when the MA's all line up or "stack" themselves. Makes "seeing" the trades pretty straight forward.

The more that I am watching your combination of EMA's on the charts the more I am getting to like them primarily because they describe PA so well. Nice job!

You are 100% right to trade with the trends direction. Too often (My greed gland in overdrive) I go for the counter trend scalps, and 85% of them turn sour!

Ho-Hum, if only patience would accept the bribe I offerred him to slap the greed gland every time he starts getting overactive!

BMI.

Grandma and grandpa are SR levels, so too are many other things. The monster with the 6 MA's just happen to be often repeating SR levels.

The scallops and bounces start and end touching an SR level of one kind or another, wether it be Round Numbers, The Monsters MA's, Previous Low/High points, whatever, it is not really relevant where they start and end. What is relevant is noticing the current scallop or bounce you are in, and watch its shape. If it is keeping to the shape it does 90% of the time, and the shape appears to be close to it's end, or in the case of a bounce, near it's peak (it is leveling out and appears to be short term ranging), then if it hits a recognisable SR level at that time, you have a good indication of where it is most likely to go next.

The third line on this pic (below the scallop that became a bounce) points out the bounce is being resisted by the coral MA. It is trying to reverse and go above grandma & grandpa. However it fails, and the pattern again becomes a scallop. I would have entered this trade where my second line (1st being on left side) shows the PA (and scallop) touching firebrick(Mother) and Maroon(Grandma).

Again after that the pattern changes to bounce. (a clear indication of reversal or at the very least retracement. This attempt fails worse than the previous attempt. The PA can't hold above coral, let alone try to break above firebrick. Notice the widening gap between firebrick and maroon (grandma). Notice also that the firebrick(Mother) stays above coral(Daughter) from the earlier crossover above grandma.

One other thing that raises a thought regarding how long the trend would go on for is that grandma and grandpa are edging towards eaxh other, NOT away. That together with the constant changing from scallop to bounce makes it seem the trend will not be very long. It has a ring of uncertainty to it. Meaning it is cool for a short, but needs watching. The exit would be to wait until 1st test to cross firebrick (where a few bars stay above firebrick) and wait for the HL that developes after that, then exit.

OR if the PA (bars) rise above coral and a coral becomes resistance that refuses to let them drop again below.

You understand that we can not know where the cycle starts and ends. We can because of the visibility through the MA's see several start and end points in real time. This allows us the ability to jump into a trade where the normal procedure would be to wait for confirmation (which you did) that puts you in the trade 30 bars later.

The fear of losing is big in all of us, but as you do this more and more, you find it much easier.

Clay (the author of The Dance) uses a SL of 12 pips on entering a touch SL trade. That is ok for GbpUsd, but with GbpJpy it is too small. It will most likely kill your trade before it can start. If you feel the need to use SL, then on touch (all the white lines places), a SL of 20 would secure most of them to become trades.

Realise also that to lose 20 pips is not a biggie. You have the likelyhood (specially with GbpJpy) of gaining at least 5 times more than 20 (100 pips) on the M15 chart.

BMI

I find that the immediate interaction of PA with the 14 EMA and the intermediate interaction of PA with the 47 EMA are of crucial importance. Subsequently the zone between the 47 EMA and the 14 EMA is an area that I particularly like to keep an eye on. As price nears or moves into the zone I will take a "heads up" attitude. Price moving away from or out of the zone often signals a trade.

In order to add a little visual treat to the charts, I have adapted a ribbon indicator that I use with my "other MA" chart set up for use with this methodology. I place it on the chart before putting the sm MACD in place over top of it. In the properties box I set the EMA's to 14 and 47. I also set the style to dots so that I can still see the candle wicks. The colours can be set to your own preference. Enjoy.

The same indicator can be used to colour up the 2 EMA and 14 EMA zone and/or the 5 EMA - 14 EMA zone as well. Colour to your hearts content.

Wow! Better than hi definition television . Now all we need are some 3D glasses and we are set to go - look out Hollywood!

As a swing trader, I am always interested in differentiating Impulse waves from Corrective waves. Market structure is a wave within wave kind of structure. There are Greater degree Impulse waves that have Lesser degree Impulse and Lesser degree Corrective waves within them. The same is true for Greater degree Corrective waves. Think, pullbacks within trends or BlueMental's "scallops".

Since the combination of EMA's used with this methodology does a very bang up job of delineating market wave structure, we should be able to use that knowledge to delineate the Impulse and Corrective waves. As a swing trader, I for one, would find that very useful. Well, there is a way and it is very simple.

The Firebrick (47 ema) is the most useful of our wave delineaters. What we are attempting to do is to use it to create an Alert (no - not a trade signal) to "alert us " to a change in wave direction. Along with Firebrick we have a beautifull 2 EMA at our disposal to use as an alert trigger.

Attached is a basic EMA Crossover indie that I have adapted as a bolt on for our charts. For the fun of it, I call it the Golden Budhha. The Mantra that goes with it is:

"Give me the wisdom not to trade against the Golden Buddha"

Might even help BlueMental with those countertrend trades that he likes so much . LOL.

Remember, this is an alert and not an automatic trade signal. I use it for those times when I just don't want anymore "eyeballs on glass" but don't want to miss one of those sought after Impules waves as it will call pretty much every wave. The attached chart is self explanitory. So, no more excuses for missing one of those beauties, eh!