Plan the Trade

Do not make the mistake of trying to capture all of the points, all of the time. It is impossible and you must get used to watching strong candles being printed without being on board. Block out frustration, it will only cloud the mind and never chase a trade. R:R will skew very quickly against you.

Set a small daily (or weekly) target at first. Learn to walk before you run. 20pips a day doesn't sound like a lot, but if your provider will fill $10/$20/$30/$50 pp positions without partial fills, then it actually equals a serious amount of money. Of course, everyone has different values, but i think most people would be happy to accrue those kinds of amounts at $20pp...

With experience, those daily targets can be increased.

Perhaps to further answer your question, Svyelun, an Irregular B wave is almost impossible to avoid. Nothing within the markets is 100%, we will have losses along the way, it is part and parcel of it all, but i maintain that with the discipline to ignore everything other than what i have highlighted, will bring you a high probability outcome, which is really what trading is all about.

By coming down to the tick by tick chart, i am also eliminating the boredom factor. It should be possible to find at least one good set-up (sometimes several) within a trading session.

Hello CB

Thanks for your reply and suggestion, it very useful for me.

This is today's CL chart.

I try to use your method, and Win 1, Lose 1. Is there anything I should notice or avoid in Enter 2?

Thanks.

BR.

Right, lets try to answer this.

I have in the past labeled or drawn a C&H as a reversal, whereas they were in fact H&S patterns.
The C&H is a continuation pattern. For me, a H&S reversal needs a nice set of shoulders to make it obvious;

(yesterdays Dax H&S)



Notice that the fresh LL is in one channel (cycle) for wave A.

In your chart, trend was down. You have a fresh HH, but the pullback is not deep enough to be a bonafide HL, it is merely a pullback within a cycle. Thus we do not really have trend change to long.

The HH needs to be formed of one 5w cycle, but if you look, you have a large pullback from the low, which is likely waves A&B, thus it became an ABC corrective move. There is nothing to stop a corrective move making a fresh HH (or LL if short), thus we need a decent pullback (min 38.2%) for the handle.



(needs to be inverted!)

That isn't to say pullbacks can be less than this. Indeed if PA is trending strongly, pullbacks can be little more than a quick sideways move, before continuing onwards. The point is that we can not read this. We only trade what we can read easily.

It is very difficult to put it into words and your query made me realise this. There is perhaps more EW involved than i thought and that is something that requires a lot of experience to understand.

My chart in post 174 also probably confuses the issue as it was also not a decent abc pullback for the shoulder/handle, but if i remember correctly, the FTSE was also simultaneously printing a bearish pattern. I chose to trade the Dax instead and was lucky that it went in my favour. Otherwise it was not a great pattern.

This may help to explain the above; your chart with added ABC labeling;

This mornings Dax chart & trade;



Don't forget to use Fib's. Here a 5w cycle is corrected by exactly 61.8%, then a tradeable 123 off of that level, with smaller one for subwave 1&2.

By the way, here is a nice pic of my missus;

Dax update to above;

Hi Cableguy, just wondering if you can enlighten me a bit on your entries, your methodology is quiet interesting and looks like very promising. can i use this strategy into smaller time frames like hourly or 15minutes?

cheers mate!

Hi tradeur & welcome!

The system is generally based on 123 trading. Entry is a break of point 2 by a full pip. I have posted a mixture of EW based charts and variations of the H&S (reversal) and C&H (continuation) throughout the thread. I would suggest reading through, because i have tried to highlight firstly, when to expect a 123 and secondly, when they will most likely have success.

It is entirely scaleable, but because it is quite concise, i prefer the smallest possible timescale, so as to produce more set-ups in a trading session.

regards

CG

Hello CB

Thanks for your reply.

I understand what is the different between C&H and H&S now.
C&H is one of continuation pattern, what I draw in post#183 maybe a down trend wave 5(III-1-5) + ABC correct wave(III-2).

but I cant decide EW at that moment, maybe III-1 is a full 5 wave for me at that time.
Of course, after new LL appear after III-1, I can conform the down trend is not end, maybe I can enter a short trade when 123 is formed.

Another question:

How to determine the LAST SWING?
In the figure, I show 2 neckline for H&S pattern, which one is the correct/better neckline ?
yes, both two can win the trade.



BR

Hi SV,

Seems you are grasping it well, i like your EW labeling and without spending time running fibs around to confirm, i can not argue with the count. Nice one!

To answer your question, both lines are valid, but on different scales. The blue line is the first one that i would consider a HH, but i would want a pullback, immediately after the HH was printed and be wary that if a simple abc at that stage, that the yellow line might not be breached, (thus the larger downtrend would remain intact.

If EW and fibs can confirm that your count was correct, you would even be able to treat your blue HH/HL combo as a larger 123 off of the low, but i have warned against using EW to do so, as you only need to be a sub count out and you will lose. Better to stick to PA (HH/HL's or LL/LH's etc).

Unfortunately in your chart, we do not get a breach of (your label) wave iv and a pullback thereafter either (your blue HH peak does not breach this point).

For me, by far the better set-up that could be taken with confidence, is the yellow set-up. I have replicated it in red below, just to highlight again, what it is we are looking for... this is exactly it!

By now, you should see that i am aiming to uncover set-ups which trigger us straight into the powerful wave 3 of a 5w (sub)cycle.

Determine trend, with HH/HL or LL/LH combo's.
Wait for pullback.
If wave 1 (or 'i') of next cycle prints a slight HH (or LL short) and retraces immediately (38.2%/50%), it is likely wave 2 (or 'ii'). This is the Cup (pullback and wave 1) & Handle (wave 2), now a fresh high will likely be in powerful wave 3.

The other variation will be that wave 1/'i' creates a shallow flagline instead = same result.

Hello CB

Today's CL. EW is hard to tell, I am wondering how you mark EW today.

Thanks!

Hi SV,

Apologies for late reply, i've been travelling the last two days.
To be honest, i will probably refrain from attempting to label EW counts. I'm working on tick by tick charts, thus i can concentrate on looking purely for my favourite set-ups.

Looking at your chart, i can see one of them right at the top! A H&S pattern on a small scale, (difficult to see if we had Neg Div as the clue), just after your 'c' top.
Looks like a perfect set-up to me!

Hey SV, how's CL looking? Would you agree with this count?

Dow 1hr;

Hi CB

This is 05/10 CL chart, it looks like your DJ chart. and I agree your count.


Unfortunately, it's not a correction wave, today CL makes new HH than yesterday.

How do you think about this? strong bear driving wave + strong bull driving wave without correction wave?

This is today's CL chart, still keep HH >> HL >> HH >> HL bull trend.

I will try to show the simplicity of this method;

Here is the Dow chart, this afternoon (or morning if across the pond!);

tick x tick, range candles (2.5);



What i am attempting to show is that when a C&H trade appears, we want the new low to be in one channel or wave (of a 5w set), thus when it triggers upon the next low, we should, in theory, be in subwave 3/C of a 5w cycle. This should usually give minimum (but not always) 1:1 R:R, (and of course, high probability).

Here we get a pullback immediately after trigger, which could mean already wave 4/D occured, but we should still expect at least one more low.

Match the target with the size of the set-up that you are trading. Here there was a simple 15 pips, followed by a flag, thus another continuation set-up...

Another set up, with the fresh low being the confidence builder, i prefer to wait just a handful of pips for this, if the breakout of a flag is very shallow as is the case below;



We already had a short bias from an earlier (hourly) chart;



current;

Reaction again at 61.8% retrace level for end wave B (of overall C as an ending diag)???