Similarity Trading - The ZZBB Method

I had also considered shorting from the 5M yesterday but thought that was ridiculous.
Had I taken the profit and shorted - perhaps, but that just didn't enter the mind.

As soon as I woke up today and saw where it had hit though, it was an instant Long bias. How many would have thought it was a definite crash hence short scenario?

Dunno... this is in the top 5 most difficult ZZBB plays I've come across.
On a normal Fib analysis, this is just a retrace on a short......

Here's something else more interesting which probably explains the current move. The 1H is finally closing in on the DS Zone from a little while back.
The 4H DS Zone starts at 1.3337 which was my initial target, but I will have to go for the top of the 1H DS Zone as TP1. My current TP is above that but I may play conservative today.... NFP or not.

EDIT
It also tells me that 1.3164 has become a Black Hole target price and that has convinced me of shorts from higher (if we ever get there). Target is 1.3230ish for a short. If I don't get wiped out before hand. But I am still puzzled.... this feels like bullish momentum but is that just Dollar weakness?

1.3200 broken so we should see higher action.
I don't care. Just get me to TP

LOL

I gave up on my TP.
All out. Check the trade explorer but phew!
That was just not worth the risk....

Lucky lucky boy
Currently FLAT. I won't tempt fate with NFP.... we'll see.

Just checking the threads and a few people have still got their eyes set to 1.3230-50ish.
Looking at the 1H, the DS would have to be absolutely be cleared for me to enter into a small long to target those areas.
The top of the zone is 1.3216 which is where price is currently failing... just under the 5M DS Zone that proved to be resistance yesterday.

EDIT:
This is the wider view of the 1H that I am playing for, hence my longs. It's the "One Last Kiss" play of the 300EMA

NFP finally cleared the 1H DS Zone. Big Bull bar.
Hmmm... I'm cautious but I'll be watching for short opportunities if it gets to 3230 or 50ish.

Just watching the 5M develop and the big volume spike confirms the mad rush in... but the tail that is developing is telling me these are Sellers coming in.
Will continue watching.... after lunch!

Wow!
Glad I took the money! If 3164 holds, I think it's bullish. By printing a ZZT and then performing a vertical drop to almost outside the bollinger band, it's setting itself up for a ZZB... which would form a triple bottom really. OR... It could break it in which case I will short it!

Back from lunch. Short at 52/53ish. My connection to the VPS is very slow... must be due to the NFP news.#

EDIT: Added another at 3165 as it was a nice benchmark line in the sand.

Stoch was not yet at Zero Extreme so I knew that wasn't the bottom yet. Taking the shorts at 3164 was mandatory as that was major support.

All out. That's it done for the day.

I'm Back In Black Baby!

The Bear is now confirmed on the 1H. I personally would have liked a further move up towards the 300EMA but this is a strong dive down.

Just reflecting on the directional move that the last 2 weeks have amounted to. Here's a wide angle lens view of the 1H. The 3164 was significant for me as can be seen in the chart. The break of this key support now opens up 1.27XX as a few other traders are calling in some of the other threads. There are 2 unresolved DS Zones down there worth looking for. Bring on the shorts!

Well done mate, keep it up...

P.s Good to hear you thinking bout SL...

Good luck

Cheers Josh, appreciate it.
Yes, time to set this baby up like a proper live system now.

How to trade with this system?
Still not 100% clear as in what to look out for and what to apply.

Hi Hennessy,

Good point. I've not had the time to properly write this all out.
Alot of what I do has already been posted in Similarity System, Similarity A Practical Approach threads but I've been meaning to compile this into a method.

In fact, as I mentioned before this "system" is more of a method not a mechanical system. It's highly discretionary.
But I will start to post some small points to get this going.... just not had the time to properly sit down and do this.

I'm trying something today (on a small scale) just to test a few things.

Short on UJ and short on EU but I should have longed on EU really... ATM it's hedging itself for a small $100ish loss.
Basically I'm going to try and incorporate more crosses into this method as it seems weird to me not to include other currencies that have a clear effect on EU.

Closed UJ, opened another on EU.
I'm using 0.25 lots for these trades. The 1 lot short on EU was a mistake, forgot to change it but it's staying put.

EU
NFP formed a ZZT with tail. Decreasing volume shows that there isn't any steam in the up move so looking for it to exhaust soon. Next swing should be a ZZB so shorts are in favour. This pair is related to AU which I've taken a short on as well.

UJ
Related to EU inversly, so long on the reaction. UJ is still on an uptrend with several attempts to clear 100. I think this will be done this year.
Nothing on EJ and honestly, since EURUSD is paired with the dollar - I'd rather play the cross directly with USDYEN as any sign of YEN strength or weakness will impact EU via the Dollar.

EDIT
Just managed to take a long at the bottom of that move that cleared the DS. Took about 20 clicks to get filled with price going higher. Aaargh!
These DS zones have now opened up to me as viable trade targets. I didn't understand them that well in Attempt #1 but they are starting to become valuable in Attempt #2

Closed all. I was wrong on the Yen. Mistimed EU and did not figure on Fib 50 support... Not to worry.
If I get sometime I'll try and compile something about the method.

Recap

Daily
On the Daily, we can see something quite interesting. During 2013, we've had a triple bottom all occurring at prices below 300EMA (green line). In each case, price did reach or pierce the Bollinger Band and the Stoch also closed outside the Bollinger Band as shown in the green boxes. Note that each Swing Bottom or Zig Zag Bottom coincides with the Stoch closing outside Bollinger Band and Below the 50 Line (Light Blue horizontal line on 2nd window).

The current ZZBot is this Friday's bounce. Will it therefore go higher and retest the recent highs? Or will retrace to the mid-high 3200s then test 3000 or all the way to 2700? In any case, the next Daily Swing is a ZZTOP which means we should have a Long bias on the daily timeframe. If the first days next week continue to close above the 300EMA, then I shall hold a Bullish view.

4H
This chart now has a Fibonacci retracements grid. The 50% is right on the 300EMA. That equals support or at least a significant line. The 38,50,62 will thus form a range that could create a Head and Shoulders pattern. The chart also shows a ZZBot which is in line with the Daily. So we should expect Long setups and higher prices for at least 31 x 4H bars.

1H
Also showing a ZZB, but a ZigZag line has printed but only to a minor *2* semafor which will definitely repaint. Expect prices to retrace down slightly to form the bottom *2* and then price should break 1.3230. The interesting thing about the action on this timeframe is that the DS Zones' top and bottom prices form significant S/R lines.

So we can agree from these higher timeframes that the bounce off the 300EMA Daily is significant support but the down move could complete within a 4H Fibonacci price range, and we will be looking for any sign of an inverted Head/Shoulders formation marking higher prices. Because these are longer term plays, short term trading needs to be carefully managed. We should at least take DS Zone prices and set them as price targets:

1.3337 (my ultimate target to place a short)
1.3287
1.3277
1.3243
1.3229
1.3217
1.3205
1.3184
1.3103
1.3020


In addition, if this presents a bullish outlook on EU, then we should expect bearish moves on USDYEN.
Let's see what happens on Sunday open.



.
.

Hi Vlady, this is where you have got to!. Great to find you are still testing this. I will be back to see how you are getting on. Love the yellow arrows. Its quite a thing to even be able to do that. Good luck mate!