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Attachments: The SETUP and the Chuvashova Fork
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The SETUP and the Chuvashova Fork

  • #21
  • May 13, 2017 4:29am May 13, 2017 4:29am
Quoting Wab
How the E line got its name: I needed and easy way to describe tops and bottoms to help identify them. I came up with the acronym SETUP. For a Top: On the left we have a Shoulder and Elbow followed by a Tip. When price breaks Under the Elbow we have identified a reversal. It then pulls back, usually above the Elbow but not always, to a Pull Back. (If price continues and goes above the Tip it is not a Top.) For a Bottom: On the left we have a Shoulder and Elbow followed by a Tip. When price breaks Under the Elbow we have identified a reversal. It...
Attached Image (click to enlarge)
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  • #22
  • May 13, 2017 6:24am May 13, 2017 6:24am
Quoting thomi
{quote} {image}
(If price continues and goes above the Tip it is not a Top.)
me: (If price continues and goes under the Tip it is not a bottom.)
  • #23
  • May 13, 2017 10:00am May 13, 2017 10:00am
Quoting arya.aryaee
{quote} (If price continues and goes above the Tip it is not a Top.) me: (If price continues and goes under the Tip it is not a bottom.)
Thanks for noting that arya.

I may not always mention that a Bearish SETUP is different to a Bullish Setup in that sort of respect.
Anytime price goes beyond a tip, T, it shows the pattern was not a SETUP. When we get to the indicators and how they behave in a SETUP, I will try to be conscientious and remember to mention both bullish and bearish scenarios for comparison.
  • #24
  • May 13, 2017 10:16am May 13, 2017 10:16am
Quoting sevan62
Fellow traders, please don't waste your time on Chuvashov's systems. The matter is that I understand Russian language and know Russian trading society. Chuvashov was not and is not a trader at all. He did not made even a cent from trading, he is making money from teaching others and selling his lessons, courses ... And Chuvashov fork is a system which was previously invented and described by a great trader Tom DeMark and copied by Chuvashov with mistakes that is why it is a BullShit not worse your attention.
Thanks for dropping in Sevan62.

As I mentioned earlier I was hoping a Russian speaking trader would join us and shed some light on Chuvashov. I have no idea how he uses his fork and I certainly can see the similarity between it and DeMark lines. (Mouteki also claimed DeMark lines.)

I came across a CF indicator that had me intrigued and I thought it had some potential. I may use the CF differently to anyone else, but since I was using it I wanted to give credit where I thought it was due, as with Bill Williams indicators. I try to cite the source if I can.

Tom Demark's ideas are really good and I have referred to his work in my Animal Farm board, again, giving credit where it is due.

If SETUP is someone else's idea, I hope to hear from them before I further invent it.
  • #25
  • May 13, 2017 11:15am May 13, 2017 11:15am
Quoting Wab
{quote} Thanks for dropping in Sevan62. As I mentioned earlier I was hoping a Russian speaking trader would join us and shed some light on Chuvashov. I have no idea how he uses his fork and I certainly can see the similarity between it and DeMark lines. (Mouteki also claimed DeMark lines.) I came across a CF indicator that had me intrigued and I thought it had some potential. I may use the CF differently to anyone else, but since I was using it I wanted to give credit where I thought it was due, as with Bill Williams indicators. I try to cite the...
Wab, stop listening to haters and continue with your thread.

This technique is a simple variation on technique of entry on pullbacks during trend, except here you are trying to enter in the beginning of trend reversal...

It is a better mouse trap....so just continue with your story
  • #26
  • May 13, 2017 11:55am May 13, 2017 11:55am
Thanks Driven. Let's carry on then.

I asked a question about where the first counter trend occurs after a trend reversal.

cfudge suggested that teh fist CT is on the M1 chart and that is correct as long as you are considering two things. First that would be on an M1 chart. Second, if we are using an H4 chart then the first counter trend is the U P line of the H4 SETUP.

The whole thing of using the time frame that you are trading becomes important here. I like to start with a higher time frame because a HTF SETUP reveals market structure that is going to be important for a longer time. During one H4 bar you may find a lot of M1 SETUPS. They can be traded but it is a lot of work and you have to be on the screen to do it. Besides it is quite difficult to get inside the M1 fractal and look for a smaller SETUP if you want to see further into the M1 structure. (It can be done but it is necessary to delve into a LTF than M1 or a proxy for that. Let's leave that one for later.)

Much better, in my opinion, is to trade a trend that lasts a longer time and moves a larger amount.

I can hear people saying that is fine but that requires larger stops.

Now we are getting to the point where going into a lower time frame and hunting smaller SETUP entries starts to become very important. I am going to go out on a limb and say that you can enter a HTF trade and only have the risks of an M1 or a M5 size stop.

To start to illustrate this we can look at the chart and a trade that is currently evolving live. (Glad it is the weekend and I will be able to explain this while the chart is not moving.)
  • #27
  • May 13, 2017 12:47pm May 13, 2017 12:47pm
Here is the H4 chart of the USDJPY that I have been using as a teaching tool. While I was getting this discussion going it was getting ready for a bearish trade.
I entered a trade with a pending order at the E line and a second pending order at the U line. Both orders have been filled and are currently in the money. I didn't do anything fancy withe stops, I set both to 50 pips.

Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYH4 Bearish SETUP.jpg Size: 217 KB


There are lot of things about using a SETUP but this much alone, just using the E line and U entries on any time frame, will serve you well. You can stop here and go off and use this and be happy because it works.

However we can make it work a lot better.

Remember when I made my claim that each set of opposing fractals is bounded by the tips of two opposing SETUP patterns?

How can be use that information?

S E T and U are all points that we can identify as they happen. The pullback to P is one that we can now anticipate. The E line break tells us the SETUP is under way and once we are on the way to that pullback at P we can look for a fractal forming at P. (Note that a fractal arrow at P may not always occur in the time frame that you are in. IN this H4 chart it didn't form a P fractal and that is actually perfect for my purposes here.)

We know there is going to be a bearish SETUP at P as the SETUP pattern completes and heads back down to an entry below the E line and then another below the U fractal.

In this chart, I had to go down to H1 to confirm a fractal at P. Let's have a look.

Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYH1 Bearish SETUP.jpg Size: 241 KB


And, there it is the U P line is bounded on each end with a fractal. It is like using a microscope to reveal internal details. We need to dial up our magnification because we want to find the SETUP at P and the H1 chart is not giving us enough detail to do that yet.

By the time we get to the M15 view of our H4, U P line, we can see enough details to reveal an M15 SETUP.

Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYM15 H4 M15 E lines.jpg Size: 264 KB


The M15 SETUP is at the H4 P and it gives us an even earlier M15 E line to trade from. 16.9 pips earlier in this example.

You could even go inside the M15 U P and try for an even earlier entry down in the M5 or M1 SETUP.

(This particular M1 U- P gives you a bit more on an M1 scale, about 2 pips earlier. I will let you look into that if you want. Sometimes it is really worthwhile, going all the way down to M1.)

At the M15 scale, you can see that it is about three bars before the price breaks back below the M15 E line and takes us in on a pending order. You can opt to add on at the H4 E line. It is another six hours or so before that pending entry happens. Hardly requires you to be on the screen at all.

I hope this is clear enough to follow, it is a lot to digest at one sitting.

Where do we put our stops? We will follow up on that next.
  • #28
  • May 13, 2017 2:09pm May 13, 2017 2:09pm
Quoting Wab
Here is the H4 chart of the USDJPY that I have been using as a teaching tool. While I was getting this discussion going it was getting ready for a bearish trade. I entered a trade with a pending order at the E line and a second pending order at the U line. Both orders have been filled and are currently in the money. I didn't do anything fancy withe stops, I set both to 50 pips. {image} There are lot of things about using a SETUP but this much alone, just using the E line and U entries on any time frame, will serve you well. You can stop here and...
If we are working with at least 3 pairs, for the purpose of consistency and better loss/reward ratio, I think we should be working with two time frames H4 for identifying E line and M15(or M30) for entries.

Stop Loss at the top of M15(or M30) fractal, after entering short(as an example)
  • #29
  • Edited 3:10pm May 13, 2017 2:43pm | Edited 3:10pm
Hello Wab,

Very structured and well thought approach you have there. really like it!
For learning purposes I tried to apply it on EJ.

H4 SETU (P is missing on H4; the P fractal appears on H1)
https://www.mql5.com/en/charts/70489...ral-markets-as

M15 SETUP
https://www.mql5.com/en/charts/70489...ral-markets-as

However you can see that after price falls down around U area (from H4) it starts to climb up (see the last candles):
https://www.mql5.com/en/charts/70489...ral-markets-as
I am aware that this is Fridays end of day data, so the price climbing up may not be relevant.

Could you please say if I identified the setup correctly, and if yes could comment on the validity of this specific SETUP?

Thank you,
Dragos
  • #30
  • May 13, 2017 3:25pm May 13, 2017 3:25pm
Yes, the stop loss goes above the T of the setup. However, if we find a better entry at P on a lower time frame, then that stop loss can be above the T of the LTF.

Risk gets smaller and smaller as we dial into the structure between U and P on each successively lower time frame.

It is possible at times to have a stop based on a M1 structure that allows you to trade a much bigger time frame.
On the example we are following we have an M15 SL just above the M15 T that is about 24 pips, versus the H4 E line SL
above H4 T, that is about 75 pips.

The M1 E line, which I did not show yet, gives you a stop loss above M1 T at about 14 pips.

Anytime you can trade in M4 with a 14 pip stop you have reduced risk considerably.

The down side is you end up having to watch the M1 chart to catch this. In this example, form M1 U to the E line entry only took fifteen minutes, but you have to be there during those fifteen minutes to catch it. My H4 Bearish SETUP entry occurred over a 16 hour window, If I wanted to find the M1 E line that is a lot of hours to be watching our for that M1 window of opportunity.

On the H1 chart the H1 U to P trip took four hours, so we can narrow down the time it takes to be alert for the M1 entry by dropping into a LTF. The M15 U to P took about an hour and a half. Looking for a fifteen minute M1 E line formation ion an hour and a half window is doable. It requires checking the chart at more and more frequent intervals as the SETUP pattern repeats within each successive U P LTF. AS I said it is doable, I know, because I have done it.

Of course, you can start with an M15 SETUP chart and work your way down to an M1 SETUP. We will do some of that when we talk about Counter Trends.


I did not show the M1 SETUP until I had dealt with the HTF structures but I might as well go for broke now, so here it is.

Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYM1 Bearish SETUP.jpg Size: 288 KB


Here is the same view, zoomed out a bit so that you can see the overall M15 M1 SETUP at points P15 and P1 picture.

Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYM15 M1 SETUPs.jpg Size: 262 KB


Summary:

Start with a HTF chart.
Identify S E T and U of a SETUP.
Dial in the potential Setup at P by going to lower time frames and looking for a another LTF SETUP between HTF U and P .
Repeat the dial in when you find a LTF SETUP focusing on U P of the current time frame SETUP.
Use pending orders to take you into a trade on the E line break.
Place your stop above T of the SETUP, of the same time frame E line that you are using to enter, with a pending order.
  • #31
  • May 13, 2017 3:54pm May 13, 2017 3:54pm
Quoting dragos_
Hello Wab, Very structured and well thought approach you have there. really like it! For learning purposes I tried to apply it on EJ. H4 SETU (P is missing on H4; the P fractal appears on H1) https://www.mql5.com/en/charts/70489...ral-markets-as M15 SETUP https://www.mql5.com/en/charts/70489...ral-markets-as However you can see that after price falls down around U area (from H4) it starts to climb up (see the last candles): https://www.mql5.com/en/charts/70489...ral-markets-as...
Hi Dragos. Thanks for your questions. They provide a teachable moment.

The SETUP pattern that you placed on your chart is not correct. Look one fractal to the left of your S and you will see a higher top. That is where the potential T would be placed. T is always the very highest or lowest extreme of a trend in a time frame.

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYH4 Not A SETUP.jpg Size: 224 KB


I have labeled the potential S, E and T with a question mark. None of them are confirmed until the price breaks belwo the potential E line. AT that point we look for a U then a pullback to the P (generally, but not always above the E line.)

The indicators suggest another rally is starting and that may push us up above T? and establish a new potential S, E and T.

Your M15 SETUP analysis was good but price went above the M15 T because you were not in phase wit the H4 chart as already explained. Good job on that M15 SETUP other wise.

How about you monitor the EURJPY for us and give me a heads up if a new T potential T arrives and there is an new potential E line to be broken.
At that point we can get ready to do a live trade on it.

I appreciate the question. That is how we all learn.
  • #32
  • Edited 8:20pm May 13, 2017 4:18pm | Edited 8:20pm
Dragos if you get a chance, have a look at the USDCHF H1 and see what you find.

(Originally I said H4 but it is better in H1.)

Also look at USDCAD H4.

A very messy U P but a clear E line.

EURUSD H1 is another to check out, with a very strong surge in the T U line. Check the indicates to see if P is near to happening.

Try your SETUP analysis first then I will post mine for comparison.

Some SETUP patterns are very symmetrical, others less so.
  • #33
  • May 13, 2017 8:51pm May 13, 2017 8:51pm
Quoting Wab
Dragos if you get a chance have a look at the USDCHF H4 and see what you find.
On the USDHF4 we have S, E, T, U...now waiting for P.

During the wait for 4H P, we will go to 15 min LTF and find first SETUP with E line and enter short on 15 min E line, if opportunity presents itself.
  • #34
  • May 13, 2017 9:37pm May 13, 2017 9:37pm
Quoting driven18
{quote} On the USDHF4 we have S, E, T, U...now waiting for P. During the wait for 4H P, we will go to 15 min LTF and find first SETUP with E line and enter short on 15 min E line, if opportunity presents itself.
Excellent driven18.

Here is the H4 chart - which I have also added the nested H1 SETUP to, in black

Attached Image (click to enlarge)
Click to Enlarge Name: USDCHFH4 Bearish SETUP In Progress.jpg Size: 193 KB


Now if we go to the H1 time frame you can see a fractal at H1 U. Most likely this fractal will become an H4 fractal after one more bar.

Attached Image (click to enlarge)
Click to Enlarge Name: USDCHFH1 Nested SETUPs.jpg Size: 231 KB


The AO has a green bar now and AC has three green bars ... any time AC gets three bars against its trend or two bar an a cross of the zero line it is a reversal signal. (Bill Williams.) So we can expect the move to H4 P is under way. (Maybe up to the green Alligator line on H1.)

We would have entered at the H1 E line and the H4 E line and even H1 U if we had been checking this chart. We will still have an entry at H4 U.

The run from H4 U to H4 P may give us a further chance on the LTF if we can detect a LTF SETUP forming at H4 P. Preferably on M15 or even lower if we get a nice, visible LTF SETUP structure.

Thank you driven18.

( I am beginning to believe I can explain this. Most encouraging.)
  • #35
  • May 13, 2017 11:42pm May 13, 2017 11:42pm
Here is a video that is a bit off topic, but related as far as SL strategy goes.

This is a more traditional approach to an entry in a counter trend (no E line) but a good idea regards the placing of a stop loss and using the LTF to get into a HTF trade with minimal risk.

Inserted Video
  • #36
  • May 14, 2017 3:04am May 14, 2017 3:04am
We would have entered at the H1 E line and the H4 E line and even H1 U if we had been checking this chart. We will still have an entry at H4 U.

Hi Wab, You mentioned above about entering already....This would only have been the case if your HTF was the 1 hour time frame correct? As we are still waiting for P on the 4 hour time frame.
  • #37
  • Edited 9:49am May 14, 2017 3:21am | Edited 9:49am
Quoting Wab
Dragos if you get a chance, have a look at the USDCHF H1 and see what you find. (Originally I said H4 but it is better in H1.) Also look at USDCAD H4. A very messy U P but a clear E line. EURUSD H1 is another to check out, with a very strong surge in the T U line. Check the indicates to see if P is near to happening. Try your SETUP analysis first then I will post mine for comparison. Some SETUP patterns are very symmetrical, others less so.
Hi,

I see that USDCHF question has been answered while I slept. But I did my analysis separately and this is what I came up with.
And I have a question, just to make sure: we shall go deep down into a lower TF only for P? Or we can do it for U as well?..because in this case the U was formed already on H1, which is matching the 3 AC green bars rule you have quoted from Bill Williams.
I presume the answer is that it applies only for P.. but if this is the case anyway I must confess I got a little bit confused about it
Attached Image (click to enlarge)
Click to Enlarge Name: USDCHF-ProH1 1.png Size: 58 KB
  • #38
  • May 14, 2017 3:50am May 14, 2017 3:50am
Quoting dragos_
{quote} Hi, I see that USDCHF question has been answered while I slept. But I did my analysis separately and this is what I came up with. And I have a question, just to make sure: we shall go deep down into a lower TF only for P? Or we can do it for U as well?..because in this case the U was formed already on H1, which is matching the 3 AC green bars rule you have quoted from Bill Williams. I presume the answer is that it applies only for P.. but if this is the case anyway I must confess I got a little bit confused about it .. it is not...
dragos at P on the 1hour or LTF time frame you need another SETUP to form to call it P.....Thats my thinking anyway......though i am still learning.
  • #39
  • May 14, 2017 4:17am May 14, 2017 4:17am
Quoting Wab
{quote} Excellent driven18. Here is the H4 chart - which I have also added the nested H1 SETUP to, in black {image} Now if we go to the H1 time frame you can see a fractal at H1 U. Most likely this fractal will become an H4 fractal after one more bar. {image} The AO has a green bar now and AC has three green bars ... any time AC gets three bars against its trend or two bar an a cross of the zero line it is a reversal signal. (Bill Williams.) So we can expect the move to H4 P is under way. (Maybe up to the green Alligator line on H1.) We would have...

Hi Wab,

I like your approach, very methodical.

I don't know if you pay attention to where SETUPs are occurring?

Whole and Half Numbers are used a lot by Institutions.

A lot of Market moves are initiated from these Levels.

Just an observation, good luck with your Trading.
Attached Image (click to enlarge)
Click to Enlarge Name: 14th May 17 USD:CHF H4 Observations.png Size: 135 KB
  • #40
  • Edited 5:05am May 14, 2017 4:18am | Edited 5:05am
Quoting Wab
Dragos if you get a chance, have a look at the USDCHF H1 and see what you find. (Originally I said H4 but it is better in H1.) Also look at USDCAD H4. A very messy U P but a clear E line. EURUSD H1 is another to check out, with a very strong surge in the T U line. Check the indicates to see if P is near to happening. Try your SETUP analysis first then I will post mine for comparison. Some SETUP patterns are very symmetrical, others less so.
Please find below the SETUP analysis for USDCAD H4 and EURUSD H1.
Looking forward for your analysis.

You mentioned about a heads up on EJ. I'll do that if if have the chance considering I'll be at work 9-18

Best regards,
Dragos
Attached Image(s) (click to enlarge)
Click to Enlarge Name: USDCAD-ProH4 1.png Size: 57 KB
Click to Enlarge Name: EURUSD-ProH1 1.png Size: 70 KB
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