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Ratios & Harmonics: a Different Way to Trade

  • #14,421
  • Edited 12:55am Sep 29, 2015 12:31am | Edited 12:55am
Quoting honestknave
Short EURUSD The setup was a nest of AB=CD patterns occuring at the 50 fib, with a definite slowing in the bullish momentum. This trade is counter-trend so carries all the associated risks {image} I'm also short GU - chart to follow
Price has surpassed the initial TP, but I've held the trade open.
The bearish strength running into the RN tempted me to see the retest.
Price should keep going...
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Quoting honestknave
{quote} Price has surpassed the initial TP, but I've held the trade open. The bearish strength running into the RN tempted me to see the retest. Price should keep going... {image}
Closed out at +25 pips. Not enough follow through for my likings... the original target!
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  • #14,422
  • Sep 29, 2015 12:57am Sep 29, 2015 12:57am
Quoting honestknave
{quote} This trade doesn't have quite so much confluence, but it is more in line with the longer term orderflow. 50 fib, AB=CD pattern, prior structure and monthly support. {image}
Yeah, this one really didn't work out too well

This morning GU and EU are at odds with one another. 5 pip loss, I considered another entry short from higher up (golden zone) but I don't like the nest of pivots.

Will sit that one out I think
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  • #14,423
  • Sep 29, 2015 2:15am Sep 29, 2015 2:15am
EU Long
Bearish AB=CD completed with the bears showing weakness (red arrows)
Initial target is the 50fib / 1.1250 round number

Concerns: could have jumped the gun. Bears may still want to test the pivots / 127 overexpansion / 50 fib (the other way)

If they don't test those areas, the bears have become very weak In which case, targets may be revised
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  • #14,424
  • Edited Sep 30, 2015 12:11am Sep 29, 2015 4:53am | Edited Sep 30, 2015 12:11am
Quoting honestknave
EU Long Bearish AB=CD completed with the bears showing weakness (red arrows) Initial target is the 50fib / 1.1250 round number Concerns: could have jumped the gun. Bears may still want to test the pivots / 127 overexpansion / 50 fib (the other way) If they don't test those areas, the bears have become very weak In which case, targets may be revised {image}


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  • #14,425
  • Sep 29, 2015 6:14am Sep 29, 2015 6:14am
Top of the morning to ya!

This is what my chart looks like this morning. Currently in a short on the GBPUSD. There's a lot of strength in the bears this morning but i do see some bull participation. as soon as the bears weaken, I think the Bulls will take over for a bit.

I'm not sure which pattern I will go with. maybe the first one, maybe the second one, maybe both. Both look good to me. The problem with the first one (ABCD) is that if it completes totally it would have made a NSL and if it closes below that's a strong indication price wants to go lower so....... Market looks slightly bearish/rangey so these would be counter to the trend which i'm not particularly enthusiastic about but previous L/T bull swings have produced a 50-61.8 pull back (medium strength)

1.5130 previously showed strong rejection but price approached with strength and is currently being tested. The rule is, "if structure is approached with strenght my expectation is for structure to fail" but with previous strong rejection, I'm not so sure....



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  • #14,426
  • Sep 29, 2015 7:53am Sep 29, 2015 7:53am
Exited my short at +2 Pips. hahaha! The rich get richer, I guess.

Well Price seems trapped between 5165 and 51400. It has to break out sometime. I might try to hit a scalp on the breakout , breakout failure or breakout pullback depending on strength and weakness. Only if R:R is good tho.

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  • #14,427
  • Sep 29, 2015 8:18am Sep 29, 2015 8:18am
Quoting honestknave
{quote} Great question Wolves77! I must confess, I am probably guilty of causing confusion through phraseology Personally, I don't use fib extensions at all... I use retracements and expansions. However, I use the term overextended in its natural sense (i.e. something has gone beyond what it should) whereas I guess I should use the phrase overexpanded to be in keeping with MT4 terminology. So when I say that an AB=CD pattern is overextended , I mean that the CD leg is longer than the AB leg. Typically, I'm interested in 127.2 and 161.8...
Hey honest, thanks for the explanation, had to read it twice but think i got it lol. Its been a long time since i used mt4 (never really liked it) so didn't know it had a fib expansion tool, ive been using the fib ext for so long now, i just thought the terms were interchangeable. So, if i'm correct your using the expansion tool to quickly measure whether or not a 1:1 move is overextended or not and by how far.
(edit, i meant overexpanded lol)
  • #14,428
  • Sep 29, 2015 8:27am Sep 29, 2015 8:27am
Good luck on playing that breakout Mack, i just missed mine because i chickened out at the last minute As much as i like trading on a 2 minute chart, the problem is if i hesitate for just a few seconds at the close of the candle i dont click to make the trade as per my general rules.

Still, had one winner today, but again wussed out early and left half on the table. but never mind, i'm always happy if i'm up for the day, prob cause its such a rare occurrence lol.

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  • #14,429
  • Sep 29, 2015 2:58pm Sep 29, 2015 2:58pm
Quoting Wolves77
Good luck on playing that breakout Mack, i just missed mine because i chickened out at the last minute As much as i like trading on a 2 minute chart, the problem is if i hesitate for just a few seconds at the close of the candle i dont click to make the trade as per my general rules. Still, had one winner today, but again wussed out early and left half on the table. but never mind, i'm always happy if i'm up for the day, prob cause its such a rare occurrence lol. {image}

aghhhh. it didn't work out quit as expected. was corrected in the direction/set up but again my trade management prevented me from getting a pay out on this one. I entered long based on the ABCD I identified earlier plus the breakout failure strategy. I got slipped a few pips on entry so when price recoiled back I got stopped out before hitting my 1st target.

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  • #14,430
  • Sep 30, 2015 1:59am Sep 30, 2015 1:59am
Quoting Wolves77
{quote} Hey honest, thanks for the explanation, had to read it twice but think i got it lol. Its been a long time since i used mt4 (never really liked it) so didn't know it had a fib expansion tool, ive been using the fib ext for so long now, i just thought the terms were interchangeable. So, if i'm correct your using the expansion tool to quickly measure whether or not a 1:1 move is overextended or not and by how far. (edit, i meant overexpanded lol)
Yep, spot on It's only a personal thing, but I like to intermesh the harmonics with the fibs. If you work only on extensions, it is easy to forget the harmonics.
  • #14,431
  • Sep 30, 2015 6:23am Sep 30, 2015 6:23am
Good morning traders...

looking at a gartley on the EURUSD. Its not perfect and my turning point is wide. There's no real confluence of ratios either so I think this gartley might have some kind of retardation. Personally I'm in a short to completion. I'll be looking to enter on the AB=CD completion if I get a signal of Bull strength and Bear weakness. I would like to see some Price deceleration or a change in S/T order Flow.

There seems to be a lot of bearish pressure this morning, but there are bulls present. Especially in the current sharp zig zag Bear swing that seems to be accelerating but I'm thinking exhaustion will happen soon.

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Also Looking at this on the GBPUSD. Haven't entered yet tho. GBPUSD has been ranging lately so I'm not convinced in price to establish a NSH, I'm expecting the RN to hold as a back up.
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Update: 0630 entered short GBPUSD. I'm thinking I pulled the trigger to early tho. Not enough Bull weakness. But I'm in now
  • #14,432
  • Sep 30, 2015 6:34am Sep 30, 2015 6:34am
Quoting Mack2013
Good morning traders... looking at a gartley on the EURUSD.
Mixing it up with a classic Gartley - nice spot!
I had a play with EU short this morning (+22 pips), bailed out just before the news. The trade was rather underwhelming, given how nice the set up was:
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Quoting Mack2013
Update: 0630 entered short GBPUSD. I'm thinking I pulled the trigger to early tho. Not enough Bull weakness. But I'm in now
I'm right in there with you too:
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  • #14,433
  • Edited 7:06am Sep 30, 2015 6:47am | Edited 7:06am
Quoting honestknave
{quote} Mixing it up with a classic Gartley - nice spot! I had a play with EU short this morning (+22 pips), bailed out just before the news. The trade was rather underwhelming, given how nice the set up was: {image} {quote} I'm right in there with you too: {image}
Thanks. Price moved on without me on the Gartley but GBPUSD is looking nice. Good play. I'm looking for a 1 to 1 Price Target minus some. around 1.5140 but 1.515 looks like it might be a difficult barrier.

I see you'll be taking profits at 78.6 on the bullish gartley there as well

Good luck friend

Edited: I don't trade the patterns to often. i usually just highlight them. I tried to use them earlier in my career but I could never get them to work for me. Take the losers, miss the winners, auto limit orders on completion... you know the deal. just didn't like it. I especially hated it when I either never entered or exited by 0.1pip. I swear some days I could of punched a hole thru my computer. hahahaha!

Not saying its a losing strategy either. for some its very profitable.

The only ones I spot are the Gartley, Bat, Butterfly, and Cypher. No time for the rest. Do u use em?
  • #14,434
  • Sep 30, 2015 7:04am Sep 30, 2015 7:04am
Quoting Mack2013
{quote} Thanks. Price moved on without me on the Gartley but GBPUSD is looking nice. Good play. I'm looking for a 1 to 1 Price Target minus some. around 1.5140 but 1.515 looks like it might be a difficult barrier. Good luck friend
Good calls Mack, I'd say I agree.

The structure that has formed at the daily pivot ~1.5162 will take some of the wind out of the bears sails. However, if they can hit the round number with enough force there is a chance they can crack it.

If they do, there shouldn't really be anything to stop price reaching the 1:1 at ~ 1.5132. This will tie up nicely with some prior structure and be in the region of yesterday's low ~1.5128

However, the longer the bears hang around at this structure at the daily pivot the less likely that is all to happen

Good hunting Mack!
  • #14,435
  • Sep 30, 2015 7:13am Sep 30, 2015 7:13am
Quoting Mack2013
Edited: I don't trade the patterns to often. i usually just highlight them. I tried to use them earlier in my career but I could never get them to work for me. Take the losers, miss the winners, auto limit orders on completion... you know the deal. just didn't like it. I especially hated it when I either never entered or exited by 0.1pip. I swear some days I could of punched a hole thru my computer. hahahaha! Not saying its a losing strategy either. for some its very profitable. The only ones I spot are the Gartley, Bat, Butterfly, and Cypher. No...
No I don't, a very similar story.

I started off with them, reading Carney's work. I suppose I got caught up in the appeal of these patterns but I couldn't get anywhere with them in the long term. I saw too many "perfect" patterns fail, while the questionable ones left untraded would have turned a profit

It finally dawned on me that every 5 point pattern is made up of various AB=CD patterns (I know, obvious huh?!) so I simplified things and reverted to 4 point patterns only. It is around that time that I started getting more into strength and weakness.

I suppose I should try returning to 5 point patterns, looking at them with a critique of strength and weakness (which I never did before) but to be frank I like to keep things as simple as possible!
  • #14,436
  • Sep 30, 2015 7:22am Sep 30, 2015 7:22am
Quoting honestknave
{quote} Good calls Mack, I'd say I agree. The structure that has formed at the daily pivot ~1.5162 will take some of the wind out of the bears sails. However, if they can hit the round number with enough force there is a chance they can crack it. If they do, there shouldn't really be anything to stop price reaching the 1:1 at ~ 1.5132. This will tie up nicely with some prior structure and be in the region of yesterday's low ~1.5128 However, the longer the bears hang around at this structure at the daily pivot the less likely that is all to happen...
Well, price is through the pivot and now wedged between it and the 61.8AB=CD completion.

If the bears are maintaining control, the pivot should act as resistance and allow the bearish pressure to continue.

A failure to even test the round number at this stage would be a very bad sign.

As an additional factor, some medium impact news on the USD is scheduled for 10 mins time. That might inject some movement...
  • #14,437
  • Sep 30, 2015 7:22am Sep 30, 2015 7:22am
Quoting honestknave
{quote} No I don't, a very similar story. I started off with them, reading Carney's work. I suppose I got caught up in the appeal of these patterns but I couldn't get anywhere with them in the long term. I saw too many "perfect" patterns fail, while the questionable ones left untraded would have turned a profit It finally dawned on me that every 5 point pattern is made up of various AB=CD patterns (I know, obvious huh?!) so I simplified things and reverted to 4 point patterns only. It is around that time that I started getting more into...
HAHAHA. No doubt. simple is way better.

The only other pattern I like is the head n shoulders. Just because how similar it is with my view on order flow. It provides a good reason to enter when aligned with structure.
  • #14,438
  • Sep 30, 2015 7:38am Sep 30, 2015 7:38am
Quoting honestknave
{quote} Well, price is through the pivot and now wedged between it and the 61.8AB=CD completion. If the bears are maintaining control, the pivot should act as resistance and allow the bearish pressure to continue. A failure to even test the round number at this stage would be a very bad sign. As an additional factor, some medium impact news on the USD is scheduled for 10 mins time. That might inject some movement...
well. i got scared out at the 78.6 for +37.5 pips. i agree with your assessment and didn't like the indecision.
  • #14,439
  • Sep 30, 2015 7:44am Sep 30, 2015 7:44am
Quoting Mack2013
{quote} well. i got scared out at the 78.6 for +37.5 pips. i agree with your assessment and didn't like the indecision.
Wish me luck - I'm holding the trade for a little longer
  • #14,440
  • Edited 8:18am Sep 30, 2015 7:48am | Edited 8:18am
Quoting honestknave
{quote} Wish me luck - I'm holding the trade for a little longer
I don't think you'll need it but good luck. Looks like I exited a bit too early. dang! seemed like the right choice at the time. Maybe I should of just tightened stops instead.... hmm

I wont be able to take the 1 to 1 back up either (if its a go). Got a home inspection in an hour.

Just curious on your thought process at the 1.5150 level. I thought the indecision was a negative to my position especially when PA looked like it wanted to hang around. I'm guessing you were looking at it as bull weakness.

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