Magic lines testing EA

My system is based on drawing some magic lines in a chart and some price action analysis. My EA only is a line testing robot, when I decide that a pivot point is likely to form on one of those lines I switch it on and walk away.

Spanish flamenco for Sunday week preparation



My charts with my BTFD levels:

USDCAD in on downtrend mode but very difficult for trade because it's moving along uptrending channel lines, we could go all the way to 1.35 or fall directly to 1.325



USDJPY is in strong downtrend, but I think that it's a no brainer long scalp at 111 for monday.



GBPUSD is in the middle of a range, I think we could have a consolidation period around 1.243 this week, so scalping from extremes of the ranges between 1.252 and 1.236 is a good plan for next week.



AUDUSD I think a good scalp could be made at 0.76 next week, looks like a promissing pivot point, maybe I will play this one as a position trade.



GOLD is overbought, but when not? It could be a buy and forget at these levels or it could go to 1213 for atracting new buyers. Looking at recent PA we can see that it has recovered very quick of the last 600 pips pullback, so I think it's not very likely to see it fall bellow 1238 this week.



EURUSD looks a little bit exausted, so I am looking for scalps at points where a pivot could form, a retest of last touched trendline is a good point, we could go 1.067 from there.



That's all, I could be lucky this week, who nows.

A little bit more of flamenco. Good by.

Opening GAP changed my plan, but the map is still intact, now let's have a little bit of patience until something juicy appears.

Shorted GBPUSD at the wrong spot, just see how the level I shorted acted as support. I had not a single positive pip while inside the trade. To hold or not to hold that is the question. Should I have clossed the trade on the resistance level test?



The good level to short is a little bit higher 1.260x. Look how all those highs verified the trendline:



Instead of that, I have played a less probability level...



Both of them are possible pivot points, but the higher the level, less probability of being under water for a long time. That is why you need a 20 pips stop loss, this pivot
points are not far away, you can play with both of them and while they are not violated you are in the trade.

If we look how at the waves behaviour we can observe that the last downtrend started just at that level and ended just at the median line from witch the actual leg started:



Finally: that level was the good one:

Week wrap up:

I end the week here. So many things to study about. This week has been mixed, good decissions and bad decissions. I've picked 3 or 4 tops by 1-3 pips, I've breakeven by less than a pip in 100 pips moves, that have conducted me to revenge trading and impulsive trading. Most of the losses have come from this attitude, if I can get rid of those bad habits, I can increase my win % more than a 25%.

The good thing is that I'm in synch with a few markets and I can read their moves as an open book. Hope this next week I've better results. Later I'll post some good and bad trades postmortem.

The bad things:

I had 3 consecutive loosing trades on Euro because instead of following my system I followed my emotions. This trades had a very negative influence in the week result and also made me suffer much more than I should have. The drawdown of just these 3 trades is higher than the total profit of the week, and it has been a good week.

First trade 1, it was before London open, on those first volatile minutes of the morning, Euro was aproaching the top of the range where it had been for the last 16 hours. My bias was long, I don't understand now why because the breakout of the upward channel and support level was clear. I decided that this momentum was the real one and it was gonna be a 200 pips trade and so on.

The very same moment I opened the trade it started trending the other way, instead of accept a small lost, I hoped and pryed for a rebound, at least I had the courage to take the 20 pip loss that I have set as my max drawdown.

Second trade 2: After that price ranged around the lows and the extended lows for the rest of the morning and on the US session it broke down. I was still convinced that it was going to go up, there was no confluence or reason for taking a long there but I did, I have to forget about bias and focus on market structure and taking the right trades at the right spot. This was an overconfidence trade, it was a meditated trade that I took only because "I had to be right".

Third trade 3: After the loss I waited for the next magic line and went long without any confirmation, no confluence and no reason related to my strategy. This was a pure revenge trade, I thought market has to rebound here and give me back my money. No structure and no high probability point anywhere close.



Fourth trade 4: The last big lose this week was in USDJPY pair. The pair bottomed and I went short at the wrong moment. Price action was very clear, an engulfing bar completing a double bottom in H4, this was a crazy trade. Also this was a very weak spot for shorting as there was a lot of noise in the channel. I should have wait to a clearer spot for shorting.



Those 4 trades where the big losses, big winners come from high probability turning points that worked as expected. There was many breakeven trades and some early entries that ended in small losses or small scalps. I had also some popcorn trades that went all the way to profit and came back to stop me at be, I have to trail better this trades but also there where some trades that where just a 1 bar stop hunting bars impossible to handle properly.

For next week.

Map for EURUSD, strong rebund from this levels?

+134.6%

A lot overtrading today... very weak and sweaty hands. Closing the day here as is not my day at all.

If you feel lost, take a step back, redraw your charts and see the light.

EURUSD: Last week I was really anoyed, I was not able to see where this pair was going. Now it's clear. This pair is completing what I call a lesbian setup. An upward pitchfork breaks and price falls until it mets a downward sloping pitchfork that started more or less at the same time the upward pitchfork began. Any of those red lines will serve as support or ressistance next week. Here is the map, you can navigate with a map, go ahead and use it for your advantage.



GBPUSD: We are in a upward pitchfork, but a downtrend pitchfork is forming, from the TA I see I doubt that price will reach the ML from this PF, my instinct tells me that the low of the week could form on the first hours of this week.



USDJPY: coulda woulda shoulda, I don't have a clue where is going, but here is the map. The friday rise on the dollar was something to take into account, don't forget it this week, dollar is expected to keep pushing. We are very close to the range top in DXY, a breakout could mean a crazy leg up.



USDCAD: map, we have a small pretty pitchfork, an early entry could be taken on week open.


AUDUSD: we are near the bottom of the range.



This is everything for this week, we have enought for making some good trades. Don't fire your gun without reason, be patient and get paid.

Review: let's see if the levels worked as expected.

GBPUSD, I said that from current levels the low of the week would be made on the first few hours of the trading week [CHECK]

AUDUSD, I said we were at the low end of the range, as expected buyers appeared monday.

EURUSD didn't worked as expected, I think those lines weren't well aligned. I have a better map for next week... and USDCAD broke the upward pitchfork very early, and a very clear counter setup and very tradable appeared (the breakout of the pitchfork, an entry could be taken on the close of the broken bar with SL above it and trail it with a fast MA), the roll at the end of the week points to a rally up to 1.36x. I have removed USDJPY from my desk as in this risk environment is getting very hard to trade the way I do, I think at this time a more simpler aproach based on pure price action and horizontal support and resistances would be better.

I'm investigating a possible setup. I have heard stories about a setup called the megaphone... It's a very powerfull and rare trend change setup. I think I have spoted one in EURUSD M5.

If right, it should go today bellow yesterday low (1.117). Now we are at 1.225, perfect entry would be at setup breakout (1.2343).


Setup explanation, price forms a possible downward pitchfork that fails, after the breakout of that pitchfork price can't rally more because can't break highs. The result is the formation of this megaphone structure.



Todays setup in EURUSD looks like this...



If I'm right and it's a trend change signal, we shouldn't break the top of the megaphone and price should trade lower.

Trying to technicaly analyze bitcoin, I am not in but I'm courious...

First in H4, going back to 24 March, a clear pitchfork forms, it guides price but finds resistance in the last high and has a flash crash from 1200 to 900 and recovers in just 4H, thats a perfect pivot to draw a second pitchfork with a slower pennant, this pitchfork is the guide, when this pitchfork breaks the trend will be over and also the day bitcoin decides to have a good retracement, that median line will be a nice spot for entry.

After that, price breaks up the guide pitchfork and returns to the first one, a test of the high upper line was a great spot for entry. Also we can draw a more acelerated pitchfork, this is an unsustainable trend, but price breaks also above this pitchfork, amazing, I havn't see nothing like this ever. Price retraces to the last pitchfork median line and looks like is going to keep grinding. I have draw the next pitchfork, this is exponential grow at its finest, remembers me at those hand draw charts of the tulips bubble.

Looks like the setup worked but I didn't trade it well... how should I have traded it?

Well, my first idea was a close bellow the higher median line of the pitchfork to signal the trade. But I didn't realized that it was just extending the lows. In other setups I'm aware of not being caught with this behabiour but this time was a new one.

In the image I show how to trade this setup correctly. A much better risk reward. I use trendmagic indicator (that redblue line), while price doesn't close 3 times above it and breaks the last highs the trend is not over and you can be good. I have all this coded in an EA.



Also you can see that after Take profit 1, price rallied to the red line and a perfect second entry could be done, with the same SL and the same TP, but this time we would have being stopped after trailing the position because price failed to trade bellow the median line. This level has being very important also today.

I am looking at one possible setup for this afternoon.

In GU, a possible break of this pitchfork could be good for a +40 pip drop.



Not much to see, price has rebounded from paralell line.



In UJ, not much to see also, we are trading right at the center of the pitchfork.



EU, looks like a sell, but I don't want to sell at this level... would like to do it around 1.12 or if it breaks 1.115

I think I have spoted a new megaphone in USDCAD, I'm going to trade it with the new rules if there is a breakout. 46 pips to 1st target.