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  • #1,241
  • Mar 28, 2012 4:01pm Mar 28, 2012 4:01pm
and the one that failed...
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  • #1,242
  • Mar 29, 2012 4:10pm Mar 29, 2012 4:10pm
Hi Mark,

Here's a D1 chart that has my attention. Potential false breakout for another move to the upside? I've got a crazy spread on this pair so I may pass either way.

Thank in advance

Tomek
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  • #1,243
  • Mar 29, 2012 5:32pm Mar 29, 2012 5:32pm
Quoting 5.25
Hi Mark,

Here's a D1 chart that has my attention. Potential false breakout for another move to the upside? I've got a crazy spread on this pair so I may pass either way.

Thank in advance

Tomek
All looks good to me, the clear breakout as we discussed on the webinar is important - never traded this on exotics though.

The one major drawback to this trade setup is the lack of space. I'd be using a tight stop (as price really shouldn't reach those lows) and aiming for 8.900 area via a quick good momentum move.
  • #1,244
  • Edited Mar 30, 2012 3:43am Mar 29, 2012 5:39pm | Edited Mar 30, 2012 3:43am
Talking of false breakouts...

A decent one on AU today, 4HR TF:

1. Clear false breakout - this is very important - without it you can't be confident that the order-flow dynamics that you want is actually happening.

2. As well as being a false break of the previous low + S/R it was also a false break of a clear daily TL.

3. The low of the 4hr false breakout bar hit a previous area of untested supply / demand

4. It occurred at a time of day which is more reliable for retracements.

Lastly, price moved up quickly through this area - partly because of the fake breakout itself but also because the bulk of remaining supply had been consumed on the move down - much like the small EU trade that I'm in.
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  • #1,245
  • Mar 29, 2012 5:46pm Mar 29, 2012 5:46pm
The AU 1HR is an example of one that I wouldn't consider a good setup...the false break just isn't obvious enough and the bar hasn't been retraced enough to be confident that the OF dynamics that occur in false breakouts are actually occurring and b) that we are thus going to get the good momentum move up.

An example from yesterday of a good one is NCAD - very well defined range, clear breakout and the quick move up to the top of the range - price didn't even come close to testing the breakout bar lows which is exactly what should be the case in a true fake breakout.
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  • #1,246
  • Mar 30, 2012 3:19am Mar 30, 2012 3:19am
Quoting lovejoy80
Talking of false breakouts...

A decent one on AU today, 4HR TF:

1. Clear breakout - this is very important - without it you can't be confident that the order-flow dynamics that you want is actually happening.

2. As well as being a false break of the previous low + S/R it was also a false break of a clear daily TL.

3. The low of the 4hr false breakout bar hit a previous area of untested supply / demand

4. It occurred at a time of day which is more reliable for retracements.

Lastly, price moved up quickly through this area - partly...
The daily bar also formed a good setup - very clear false break of the daily S/R marked - clear sellers trap here, I'd be slightly more cautious because its the 2nd false break of the same S/R area which is suggesting to me either an explosive move up will occur soon or demand will get exhausted and the downward pressure will push it down further - but at the very least we would expect price to shoot up to the FLR marked - and the important thing to note is that price shouldn't come down much further that the daily S/R thus a tight SL could be used.

Another good setup this morning on UCHF.

1. Clear S/R @ a swing low.
2. Clear false breakout (remember we want these to be obvious false breaks with long wicks or long bar rejections).
3. It's pretty obvious there is a option barrier @ 0.9000 which is being defended.
4. The move is caused after the first hour of Europe trading - this suggests Europe reversing the sentiment from Asia
5. The move in Asia was relatively over-extended (some pairs lend themselves well to the mean-reversion theory).

Add all the confluence above together and you've got a high probability of price shooting up quickly to at least the 0.9026 resistance level - and as per the AU 4HR / daily setup price should not come back down close to test the breakout bar lows again the move up should be quick with good momentum - allowing for a tight SL - which is exactly what happened.
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  • #1,247
  • Mar 30, 2012 3:26am Mar 30, 2012 3:26am
Quoting lovejoy80
Talking of false breakouts...

A decent one on AU today, 4HR TF:

1. Clear breakout - this is very important - without it you can't be confident that the order-flow dynamics that you want is actually happening.

2. As well as being a false break of the previous low + S/R it was also a false break of a clear daily TL.

3. The low of the 4hr false breakout bar hit a previous area of untested supply / demand

4. It occurred at a time of day which is more reliable for retracements.

Lastly, price moved up quickly through this area - partly...
Closed my EU trade this morning.
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  • #1,248
  • Apr 2, 2012 11:11am Apr 2, 2012 11:11am
A quick FTB trade from today, 75% out at FLR, 25% @ BE.
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  • #1,249
  • Apr 2, 2012 11:14am Apr 2, 2012 11:14am
Quoting lovejoy80
Okay last post on 'Lesson 1'...

If you're going to remember anything from this lesson them remember the following statements...

[b]1. When price first returns to a demand area the probability it will be met with more demand is high and vice versa for a Supply area.

2. Price levels where you have the biggest imbalance between supply and demand represent the best price action trading opportunities.
perfect example today on GBPUSD.
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  • #1,250
  • Apr 2, 2012 11:34am Apr 2, 2012 11:34am
This EU setup occurred at the same time as the GU trade I took. I chose to just focus on GU over EU as GU was more of a 'fresh' S/D zone than EU.
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  • #1,251
  • Apr 2, 2012 11:39am Apr 2, 2012 11:39am
Missed getting into the expected breakout south in ECAD - was waiting for one more move up before shorting and position building. There is little point in waiting for the breakout on setups like this as all the information is contained within the price pattern as to what we expect price to do.
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  • #1,252
  • Apr 2, 2012 11:46am Apr 2, 2012 11:46am
One I passed on today.

Straight away this should be deemed a lower risk setup, why because of the risk of this area now being washed out considering the number of times it's acted as a price pivot (including some nice FTB's along the way).

But the deciding factor was the break of the TL so close to the S/R with the TL thus likely to act as an FLR on any bounce which was far too close for my liking.

I also preferred the USDJPY setup which occurred at the same time and thus opted to put all my risk in this setup rather than splitting between the two.
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  • #1,253
  • Apr 3, 2012 6:59am Apr 3, 2012 6:59am
Missed an ECAD short by few pips earlier today.

Reason for the trade was the HTF Breakout and FTB. You can see from the three charts below the level very clearly and on the 5min you can see where the decision was made to have the breakout yesterday. Price met supply just below this level which in essence tells us the S/D imbalance is strong - which is confirmed in the strength of the reaction so far.
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  • #1,254
  • Apr 3, 2012 7:46am Apr 3, 2012 7:46am
Quoting lovejoy80
perfect example today on GBPUSD.
Remember this trade from yesterday - the FTB into the 5min S/D zone, we had the second time back to this same zone earlier and look what happened.

We had some consolidation as remaining demand and and supply battled it out before supply consumed all the remaining demand in that zone and price fell to the lower S/R level.

This is why, without any other forms of confluence, the FTB will nearly always represent the best trade opportunity - because remaining demand at a zone like this will get weaker and weaker on each bounce as demand is consumed - which is why S/R levels get weaker and weaker the more touches they have to an extent when a level is washed out and becomes a good candidate for a pure breakout opportunity.
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  • #1,255
  • Apr 3, 2012 8:31am Apr 3, 2012 8:31am
Quoting lovejoy80
Remember this trade from yesterday - the FTB into the 5min S/D zone, we had the second time back to this same zone earlier and look what happened.

We had some consolidation as remaining demand and and supply battled it out before supply consumed all the remaining demand in that zone and price fell to the lower S/R level.

This is why, without any other forms of confluence, the FTB will nearly always represent the best trade opportunity - because remaining demand at a zone like this will get weaker and weaker on each bounce as demand is consumed...
Hey LJ!

Well put!
I am doing some research on second tests of very well defined areas. I've noticed some time ago that playing PA bars @ the first test is almost always paying up and markets often hit FTA on first test and reverse. Pinbars and other popular bar patterns work a lot better on the second test only if price is taking out the stops below/above the level. Its nothing new for you i guess but i see that with some practice one can make really good profits and hell of R:R just by putting sell/buy limit orders above/below those levels. Works like a charm sometimes

All the best!
gh
  • #1,256
  • Apr 3, 2012 1:45pm Apr 3, 2012 1:45pm
Quoting Greenhaze
Hey LJ!

Well put!
I am doing some research on second tests of very well defined areas. I've noticed some time ago that playing PA bars @ the first test is almost always paying up and markets often hit FTA on first test and reverse. Pinbars and other popular bar patterns work a lot better on the second test only if price is taking out the stops below/above the level. Its nothing new for you i guess but i see that with some practice one can make really good profits and hell of R:R just by putting sell/buy limit orders above/below those levels....
That's the way to do it GH and why I did the webinar, to give people the knowledge as to why the first retrace works amongst other things so they could then go away and do their own research and understand what characteristics make for a good trading strategy...you learn a lot more this way and gain more confidence than being spoon fed a set strategy.

The first retrace, given a set of characteristics present very high probability setups with good %R - something which is missing if you needlessly wait for Candlestick bars like pin bars etc. For the 2nd, 3rd retrace etc some form of confluence makes for a higher probability trade than just trading the pure retrace.

Here is a before and after from today on an EU1min chart, yes 1min...TF is not as important as a lot of people make out.
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  • #1,257
  • Apr 3, 2012 1:49pm Apr 3, 2012 1:49pm
Some fundamental based trades to finish the day.
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  • #1,258
  • Apr 3, 2012 2:09pm Apr 3, 2012 2:09pm
Quoting lovejoy80
Some fundamental based trades to finish the day.
Thanks to some of the things we've discussed in the trading room in the past I decided to take some small positions

Taken some profit off and closed the equities trade.

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  • #1,259
  • Apr 3, 2012 2:49pm Apr 3, 2012 2:49pm
Quoting lovejoy80
Missed an ECAD short by few pips earlier today.

Reason for the trade was the HTF Breakout and FTB. You can see from the three charts below the level very clearly and on the 5min you can see where the decision was made to have the breakout yesterday. Price met supply just below this level which in essence tells us the S/D imbalance is strong - which is confirmed in the strength of the reaction so far.
Pity this one was missed ..... would have been a very nice end to the day with the FOMC minutes.
  • #1,260
  • Apr 3, 2012 3:26pm Apr 3, 2012 3:26pm
Quoting MinceMeat
Thanks to some of the things we've discussed in the trading room in the past I decided to take some small positions

Taken some profit off and closed the equities trade.


Attachment
Very good - Equities are always tough cos you've got the battle between USD strength and positive risk sentiment at work.

I took profit on both of my trades at areas where it was feasible to expect a bounce with price back at S/D zones / support together with USDx confluence.
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