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Trade What You See - Almost Naked Trading

  • #17,061
  • Jul 27, 2011 6:52am Jul 27, 2011 6:52am
Quoting degournay
LG and Co
Please have a look at this chart and tell me if I have the right idea. Only enter when the tap candle or any candles thereafter CLOSE in the colour of the intended entry and the 3 RSIs are all in the same direction. Are there any other conditions to look for such as candle shapes or formations?
Once a H4 3T is spotted, I check if the RSI's are in agreement.
It certainly helps if the tap candle has the right colour, else wait for the next candle.
Depending upon the price action, I do not wait for the close of the next H4 candle.
Because waiting another 4 hours can mean that you will be missing a large part of the move.
When entering a trade I normally switch to a lower timeframe (H1/M30/M15), so I can have a closer look at the price action.

In this specific example with NZDUSD, I would probably enter the trade at the moment the line is tapped and the price bounces back.
Because the uptrend is very strong, I do not wait for the next candle or a break out for confirmation.
I just assume that a BO will follow and a continuation of the trend will follow after the tap.
Observe the Heiken Ashi candles at the time of the tap, just before the breakout.
The candle turns into the wrong colour and drops to the lower part of the channel.
Hunting for stops and limits and trying to shake out the longs before the rally begins.
I call this the katapult, the perfect entry for a long trade
Attached Images
  • #17,062
  • Jul 27, 2011 7:05am Jul 27, 2011 7:05am
AUDUSD shows an example of a perfect katapult.
On the M30 candlesticks chart the katapult is clearly visible.
On the H1 Heiken Ashi it drops to the other side of the channel for a shake out before the rally takes off.
It usually happens in nervous fast moving markets (news events etc..).
I consider this one a perfect katapult
Attached Images
  • #17,063
  • Jul 27, 2011 9:43am Jul 27, 2011 9:43am
Quoting Nijn
AUDUSD shows an example of a perfect katapult.
On the M30 candlesticks chart the katapult is clearly visible.
On the H1 Heiken Ashi it drops to the other side of the channel for a shake out before the rally takes off.
It usually happens in nervous fast moving markets (news events etc..).
I consider this one a perfect katapult
Excellent explanations, Nijn. I am learning alot from you.
  • #17,064
  • Jul 27, 2011 10:08am Jul 27, 2011 10:08am
Following my "assigned" pair...we were finally given an short entry. Actually there were 3 possible entries, I took the last one, the most conservative one.
Attached Image
  • #17,065
  • Jul 27, 2011 10:26am Jul 27, 2011 10:26am
Quoting lawgirl21
It's almost as if the market has come to a total stand still.
EUR-AUD, now that's a breakout
Attached Image (click to enlarge)
Click to Enlarge Name: 27-07-2011 5-51-12 PM.jpg Size: 31 KB
It takes a lot for me to IGNORE you, but you can try.
  • #17,066
  • Jul 27, 2011 10:30am Jul 27, 2011 10:30am
Quoting Erebus
EUR-AUD, now that's a breakout
It certainly was. There were several very nice ones during London.
  • #17,067
  • Jul 27, 2011 11:24am Jul 27, 2011 11:24am
hey lawgirl, two questions if you don't mind.

1) The arrows that I'm looking at are the H4,D1, and W1. From what I've seen, the rule is that they all have to be pointing in the same, or similar, direction, is that correct?

2) As for drawing a TL, am I trying to match up three consecutive candles/wicks, or do I draw a line from the last candle and wait for three taps to occur?

I apologize if this has been already covered, as of this writing I've been up since 3AM and my brain is a bit wonky. Again, thanks for your work on this topic! Cheers.
  • #17,068
  • Jul 27, 2011 1:14pm Jul 27, 2011 1:14pm
Quoting TradingNoob
hey lawgirl, two questions if you don't mind.

1) The arrows that I'm looking at are the H4,D1, and W1. From what I've seen, the rule is that they all have to be pointing in the same, or similar, direction, is that correct?

2) As for drawing a TL, am I trying to match up three consecutive candles/wicks, or do I draw a line from the last candle and wait for three taps to occur?

I apologize if this has been already covered, as of this writing I've been up since 3AM and my brain is a bit wonky. Again, thanks for your work on this topic! Cheers.
1) Yes, that is correct.
They have to point in the same direction for confirmation of the trend.

2) Yes, that is correct.
According to the purists you need at least 3 points to draw a valid trendline.
I am not sure what you mean by the second part of the question.
You want to draw a line with the last candle as starting point ?
Anyway, lots of examples can be found here in this thread.
Don't let your brains get wonky.
Enjoy
  • #17,069
  • Jul 27, 2011 1:23pm Jul 27, 2011 1:23pm
Aussie was clearly the winner for me today.
Still long AUDUSD, waiting to see how high it can go.
Still long AUDJPY, waiting for a BO out of this narrow 20-pip range.
Still short EURAUD, waiting for a 1.30 print.
All three pairs had nice setups that worked very well.
Attached Images
  • #17,070
  • Jul 27, 2011 2:03pm Jul 27, 2011 2:03pm
Hey Nijn, thanks for the reply. As for the trendline question, what I meant was that I can look at a chart and draw a trendline that gets tapped three times, such as in this pic, but that just means that I made the line (the line at the top) do what I want it to do. Of course that doesn't mean that the pair is going to short just because I connected the dots. What am I missing (apart from a billion dollar bank account and a jet powered porsche)? Also, I know that the arrows @ H1,H4 and D1 should all point down, for example, but I just wanted to ask about the line.

http://i.imgur.com/FJbmH.png
  • #17,071
  • Jul 27, 2011 3:35pm Jul 27, 2011 3:35pm
Quoting TradingNoob
Hey Nijn, thanks for the reply. As for the trendline question, what I meant was that I can look at a chart and draw a trendline that gets tapped three times, such as in this pic, but that just means that I made the line (the line at the top) do what I want it to do. Of course that doesn't mean that the pair is going to short just because I connected the dots. What am I missing (apart from a billion dollar bank account and a jet powered porsche)? Also, I know that the arrows @ H1,H4 and D1 should all point down, for example, but I just wanted to...
Hi TN, I hope u don't mind me pointing u in the right direction by posting this link but your trendline is incorrectly drawn. For a short it should slope down...slope up for a long.
http://www.forextrendline.com/
  • #17,072
  • Jul 27, 2011 4:18pm Jul 27, 2011 4:18pm
Fair enough, but could it not be a case where the trend seems to be moving up, hitting the bottom of that line that I drew, then moving down suddenly? But I get what you mean. Also, that link has all sorts of good stuff, so thanks for that as well.
  • #17,073
  • Jul 27, 2011 4:43pm Jul 27, 2011 4:43pm
The line you draw is on an hourly chart.
It's easier to use H4 chart when looking for H4 3T setups.

If the price moves up to the magenta line and retraces back down again, then that could be considered as another tap.
That could be a bearish H4 3T setup.
Then it's time to check if the RSI's are in agreement and observe the price action.
Attached Image (click to enlarge)
Click to Enlarge Name: usdcad_2707_2338_h4_lg.gif Size: 15 KB
  • #17,074
  • Jul 27, 2011 9:33pm Jul 27, 2011 9:33pm
Setting up for a BO. Ive moved to the M15 chart for an entry.
Attached Image
  • #17,075
  • Jul 28, 2011 2:14am Jul 28, 2011 2:14am
Quoting Nijn
Once a H4 3T is spotted, I check if the RSI's are in agreement.
It certainly helps if the tap candle has the right colour, else wait for the next candle.
Depending upon the price action, I do not wait for the close of the next H4 candle.
Because waiting another 4 hours can mean that you will be missing a large part of the move.
When entering a trade I normally switch to a lower timeframe (H1/M30/M15), so I can have a closer look at the price action.

In this specific example with NZDUSD, I would probably enter the trade at the moment the line is...
What a great explination. Thanks so much for taking the time. What a wonderful community!!!
  • #17,076
  • Jul 28, 2011 4:54am Jul 28, 2011 4:54am
Quoting lawgirl21
Setting up for a BO. Ive moved to the M15 chart for an entry.
Did you take this short trade in EURJPY ?
Nice BO both on the H4 and H1 chart, and I missed it off course (what's new).
Attached Images
  • #17,077
  • Jul 28, 2011 6:32am Jul 28, 2011 6:32am
hey ninj, I hate to sound like a broken record, but how exactly did you determine where to draw those two TL's? The top one doesnt appear to have three taps on it, even though the pair went short, and the bottom one does have 3 taps, but I was under the impression that such a trendline is for longs. I may not be making sense, but I'm still a little confused about where once puts TL's.

As I mentioned, if I want a TL to "fit" a pattern or make it hit certain candles, I can, but that doesnt mean a pair will go in one direction or another just because I connect dots, if you know what I mean.

Also, thanks to you, and others for your reply's. With a name like tradingNoob, y'all can expect some pretty silly questions!
  • #17,078
  • Jul 28, 2011 7:44am Jul 28, 2011 7:44am
How to determine where to draw trendlines is a matter of trial and error.
Drawing a line requires 2 points, starting point and ending point.
Drawing a trendline requires at least 3 points, according to the purists of technical analysis.
When drawing trendlines, I search for tops and bottoms and try to connect those points.

The magenta line in the upper part of the previous USDCAD H4 chart is drawn from a daily/weekly/monthly chart.
That's the long term trendline, and the trend is down.
The magenta line on the H4 chart connects the bottoms, the weekly lows, and also the fresh yearly lows, traded this month.

A closer look at what happened:
Last week price fell through this supportline and traded at new yearly lows again.
The price recovered and attempted to get back above this line, but with no success.
It failed to breach the line, and according to theory, former support now becomes resistance.
Right now we are seeing a similar move, another attempt to get back above the resistance line.
So far no success in breaking this line around the 0.95 level.
As long as price does not break this resistance level, the (short term) trend is not broken.

Because the long term trend is down, I am looking for a bearish setup in this one.
That's where the H4 3T comes in
I think that right now a bearish setup is in place.
Have a close look at the H4 chart and observe the price action.
Attached Images
  • #17,079
  • Jul 28, 2011 7:59am Jul 28, 2011 7:59am
Excellent Nijn !! ..Wish you many pips.


Quoting Nijn
How to determine where to draw trendlines is a matter of trial and error.
Drawing a line requires 2 points, starting point and ending point.
Drawing a trendline requires at least 3 points, according to the purists of technical analysis.
When drawing trendlines, I search for tops and bottoms and try to connect those points.

The magenta line in the upper part of the previous USDCAD H4 chart is drawn from a daily/weekly/monthly chart.
That's the long term trendline, and the trend is down.
The magenta line on the H4 chart connects the bottoms, the...
  • #17,080
  • Jul 28, 2011 8:21am Jul 28, 2011 8:21am
Ok Ninj, I think I see what you're saying. Now you'd just be looking for some red arrows to compliment the taps, I think.

And I really appreciate your taking the time to expand on my question!

Thanks mate!
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