X-Man's Super Simple System

Im also in.

I have not picked because the candle 1h did not fenced and prices are above ema 10 50 200 ...

Newbie trying to learn and could do with some comments on this

I went short on the EUR/USD this morning (Image 1) based on the following analysis

For:
Pullback candle - Blue candle closed significantly lower than the open
TDI crossed below the 68
TDI cross angle at 4 o'clock
TDI also crossing down over the yellow line
Price pulling back from 1.3098 which had been tested 3X in the last 24 hrs


Against
Counter trend
Price still above the 5EMA

I set a TP at 20 pips
I set a SL at -15 pips just above recent swing high

I got stopped out (Image 2). The current candle has fluctuated by some 24 pips and has now pulled back again to the price I entered at

Can anyone advise on where my analysis was wrong.
Should I not have entered this short
Should I have allowed a bigger SL ?
Did I miss something ?

Thanks

Short looking quite good.
A good chance that momentum will break the asian low and continue to the demand level. There one needs to do some adjustement to SL or bank some pips.

Basicly you've set a to small SL. The logic spot is above BRN 1.310 and it should be at least a few pips + spread above the last swing high.

Smart money often drives price up against their desired direction, to trigger SL and catch breakout traders.
The reason for triggering SL is that they can put more orders in at the desired price. By triggering SL of short positions they get buy orders (SL of sell is buy) which are needed to put in more sells at the desired price.
The reason for catching breakout traders is that their SL's give strenght to the downmove. Breakout traders buy and have a sell for a SL. When those get hit it moves price lower.
At least thats how I understand things.

Going against a trend is not always bad. In this situation, we have a strong resistance level, as you can see on the chart below. This level is clear and many people take notice of it.
In such a case, the double top on H1 and divergence was a good sign for a decent downmove from here.

Asian low holding, so I've put the BE+1 in.

trade

Hi Quezoy

Thank you for taking the time to explain this so clearly. Much appreciated.
Reviewing my analysis and reading your comments helps me to see that I wasn't far off the mark but yes, my SL was too tight and it would have made much more sense to set it above the 1.3100.

As a newbie, I'm obviously still nervous about giving my trades enough room to breathe and am paying the price for that. I should have spotted the negative divergence and had more confidence in my analysis. I guess that aspect just takes a little time to build.

Thanks again for the feedback. That's the great thing here that so many folk are willing to help the newcomers. Hopefully I will one day be able to do the same in return.

The first red candle was "not" a clear rejection candle it did not close lower than the previous candle. A look at the 15 min chart gives you a clearer view. There was a recent minor S&R level just below. An entry below this would have been safer. However you were on the right track just a little premature, in my view. Your stop should have been just above the BRN as this was the strongest area of resistance not the swing high. However, you have to be prepared for price spikes, the open is notorious for it. Used to be called the LONDON Breakout, now I call it the London Fakeout. It is the big guys trying to sucker in the little guys like us. Hope it helps.

Just to add.

If you had gone short 2 pips below (on the 1 hr) the 2 green candle back, you would have completed what I call a 3 bar reversal which is normally a safe entry which would have been the same entry point as the minor S&R in this instance

hello Dee

you did not trade for now ?

No, other wise engaged. I have an Olive farm to run and we are just coming up to harvest time, so much has to be organised. By the way, nice analysis and response for stephen77 the more perspectives we can present here the quicker every one will learn. Thanks for your input.

dee, I' went over the attachements and found some nice pdf's, mainly from your side.
tnx for sharing.

Brilliant - thanks Dee50. So helpful to get feedback like this as it helps to understand what pieces of the jigsaw I had missed. Good to know I was at least on the right track.
Looking back I can see that there was resistance at the 1.3084 level back on the 5th and 6th December. Like you say, it would have been better to wait till this had been broken.
I'm also trying to fine tune my understanding of pullback candles. I had thought that closing well below the open and in the opposite direction of the previous candles was all I needed to look for. But now I can see that waiting for a break beyond the low of the previous candle would have been more sensible. Thanks for that.
I understand what you mean about the London Fakeout and will try to take this into account with my analysis now.
As always, your comments are appreciated. Thanks.

Ok Dee , I 'hope that the harvest will be good :-)

I think I have mentioned 3 bar reversals before but never clarified what they are, so here are 3 graphics.

A “Bullish” bar is a candle that closed higher than it opened.
A “Bearish” bar is a candle that closed lower than it opened.
An “Indecision” bar is a candle that closed at or very near its open. Normally these are called Dojis or Spinning Tops. The important bit is that they imply a moment of indecision.
A "Normal" bar is any candle who’s body length is greater than the top and bottom wicks (shadows, tails) added together. They generally are about the same total length of the surrounding bars.
A "Nasty" bar is any candle who’s top and bottom wicks (shadows, tails) added together exceed the length of the body. Examples include Hanging Man, Hammer, Inverted Hammer, and Shooting Star. There are more named candles of this type, I can’t remember them all. And imho, I don’t need to. They all “do” the same thing, they indicate an abnormal situation. They’re nasty.
A “Big Posterior Bar” (BAB) is any candle who’s total length is disproportionately larger than most of the other bars in its environment.

A quick note: Yes, I know the above definitions don’t match the official definitions. I don’t care, these are my rules. I know the following definition of a three bar reversal pattern probably doesn’t match some official definition, again, I don’t care, this is what works for me. This is the subjective part of trading. You have to find/create definitions that work for you, in the heat of battle, without having to take a lot of time to think… “Let’s see, is that a Shooting Star or a Hanging Man or a Harami….” By the time you figure it out, it’s probably too late (if you’re a scalper). It’s a nasty bar, something’s not normal, see it, act on it, and move on.

Ok, now down to business. ... I'll describe a three bar reversal pattern that would trigger an entry into a long position (just turn it upside down for a short)

Bar 1 - Must be a bearish normal bar.
Bar2 – Must be a bullish nasty (preferably) or an indecision bar (use tighter stop) with a lower low and a lower high than bar1. Perfection is that no portion of bar2’s body is contained within Bar1’s body.
Bar3 – Must be a bullish normal or bullish BAB with a higher low and a higher high than bar2. Perfection is if bar3’s high is higher than Bar1’s high and no portion of bar3’s body is contained within bar2’s body.

There are two types of triggers bars (bar4) with two types of entries each (aggressive/conservative):
1) Bar3 is a normal bar:
a. Aggressive – Enter when bar4 breaks of the close of bar3 (don’t have to wait for bar4 to close)
b. Conservative – Enter if bar4 closes higher than bar3’s high.
2) Bar3 is a BAB:
a. Aggressive – Enter anytime after bar4 breaks of the higher of bar1's or bar3's high and you realize bar4 is a BAB (don’t have to wait for bar to close, keep your stop tight and get it in quick. These things can move quickly with or against you.)
b. Conservative – Enter if bar4 closes higher than the higher of bar1’s or bar3's high (this can actually be kind of risky, I don’t recommend it)

Combine the three bar reversal pattern with as many other tools as you can. These would include (though not limited to) bumping into support or resistance, touching your over/under moving average, hitting a fib line, etc.

Three bar reversal patterns often correspond to multi-tops/bottoms, look for them.

Beware of the of the Stop Run. Market makers will often run stops (google it) to obtain a better entry price for important customers. This will look very much like the end of a retracement with a three bar reversal pattern at its apex. However, having now run the stops, the market maker will then take the instrument into the direction of the retracement, creating a true trend reversal, and trapping those that entered because of a retracement ending pattern (ouch).

Somebody else drew the graphics but they will do for this explanation.

Closed 1/2 at demand for +42.
Moved SL down.
Asia low seems to hold.

I have to go again. See you later. Good Pippin.

Hi guys

Just wanted to share my trade today for 25 pips, which I am very proud of.... :-)
Here is my thought process.
Although I saw the 1H cross of TDI + bearish divergence, I knew that there were some news about CHF at 8h30 (USD/CHF is highly correlated with EUR/USD), so I decided that I would not enter before the news event.
After seeing the news candle after the event, I realized that the impulse leg was down.
At that point I had 2 reasons to enter :
- 1H TF TDI cross with divergence
- Impulse leg on 15TF, breaking previous structure

The next step would be to enter in a retracement. Since its a Counter Trend, I prefer to enter like Dee (thanks Dee, sorry i have been sneaking in your charts to learn...) on the 15TF on a retracement to ensure that my SL is very tight.

Waited for 38.2% retracement and pulled the trigger.
Take profit was below RN, where I had confluence with HTF support, Trendline and 127% extension of impulse leg.

Actual Drawdown was Zero (only the spread!)

Cheers

Munir

Demand held and price reversed.
2nd half hit SL for +27.

All good.

I'm inclined to short again, should I see a TDI bounce green from red. Lets see how things play out.

Well done Munir ! Great trade and thanks for explaining all your reasoning so clearly.
Now I see it, it makes a lot of sense.
As a newbie I'm still struggling with trying to account for so many factors but explanations like yours certainly help.

Patience and Perseverance ...