The SETUP and the Chuvashova Fork

Lots of questions.

You can enter at the H1 SETUP levels if you are confident the H4 SETUP is under way as well. We have yet to talk about targets and maybe when we do that your question will be better answered. If the H1 targets are such that they will trigger a break of theH4 E line ... stay tuned and you will see what I mean. Sorry 5to be a bit vague but it will become clear in a bit after we do some more on the overall method and introduce the Fibonacci component.

P is the important point. It is the one that we can anticipate because S, E, T and U, have already formed and we can stalk P with its inevitable LTF SETUP.

We can also find an entry at P with trend line break, as U - P is the first Counter Trend in the new dominant trend established by the E line break. We also have other ways to figure out where P is that will be explained in a bit. Stay tuned on that.

E line tells us a trend is under way, a break of the E line is a great entry. An add on at U is also good. Right now, we are operating with about half of the system, as we get more into it it yo will realize how powerful the point P is.

I think it was Jesse Livermore who said that the best entry is at the first pull back. That is P.

Thanks Stevepatt.

I don't pay enough attention to round numbers but it is always wise to check them. When we get to target projections from SETUP, I hope that you keep our attention on them. Lots to go yet.

Morning dragos. I am on Mountain Standard Time in the Canadian Rockies. Not the best time zone for trading but easier to do with HTF charts that move more slowly.

Here is my USDCAD H4 chart.



You can see that I have located P at the highest point in the pullback towards T.

P cannot go above T without violating the SETUP. P is always the highest point between U and T.

This one has gone a lot closer to T that any others we have looked at.

When you look at the AO indicator, to me the jury is still out. Do we have a verified P? A break below U in this case would add confidence.

Going down to LTF, you can go all that way down to the M5 and find that locating a SETUP at P is all hinged on the same fractal at the red S on the M30 chart. M5 and M5 are exactly the same . That red S is S in all of the time frames, so we still need to complete the M30 SETUP with a verified M30 (red) P or on a lower time frame.



Again, look at the AO for a clue. It will soon tell us which direction it is going to move.

The general overall mess that has formed U - P is a concern here.

There are other factors that make me nervous too. The M30 E line (red) and the H4 E line are pretty much the same thing suggesting a lot of support there.
Any time you get too much analysis going on and it is getting very complex like this one is - be cautious.

Living in Canada I have little faith in the CAD having a strong rally. (That is my fundamental analysis.)

At this point I think it is a now a good time to get the Fibonacci component of SETUP introduced and you will see another reason why I am not liking this USDCAD H4 SETUP.

Hey Wab, nice to see another British Columbian on the forum. I currently reside in Kamloops. I agree not the best time zone for lower TFs all we get after work is the Asian session.
Enjoying the thread so far, lots to take in...I am trading fractals solely at the moment in accordance with the Pip Farming thread by Swingtrade65. Looks profitable so far. Lets keep going always happy to learn...
Chris

Wab, I think for starters we need to concentrate on 1 HTF - 4H and 1 LTF - 30 min(as an example.)

Drilling any further then 30 min may not be beneficial playing off 4H TF. Too much noise and stop losses.

For shorts as an example:

Entry = E on 30 min
SL = above highest fractal on 30 min prior to entry.
PT = at least U on 4HR

SETUP and Fibonacci.

By now I hope that you are getting the idea that a SETUP occurs at every Fractal arrow, including those ones that make up a HTF SETUP.
It is not always easy to find them and sometimes you have to go right down to a M1 chart to do so. The USDCAD chart that we have just been discussing is an example of a prolonged correction that keeps promising a point P but also keeps teasing us. That point P is proving to be hard to pin down.

Is there another way to anticipate where a P will form and at what level of frustration should we become wary and suspicious about a possible break beyond T and a failed SETUP?

We can get a lot of help from Fibonacci.

First of all I have to make the claim that MT4 has its Fibonacci Retracement tool completely wrong for my purposes. I want to to see a retrace back to a maximum of 100% with all the important Fib levels between 0 and 100 and all the important expansion levels above zero. That requires changing the default settings in your Fib Retracement tool like this:



Go ahead and do that when you get a chance. We all need to be on the same wavelength in this respect.

Hi guys , what do u think about this EURUSD pair setup on 4Hrs ?

there we can aslo see P point from lower TF30 at the same point ..

Now I will go back on the USDCAD chart to find a SETUP that we can work with.

I located an H1 SETUP that serves the purpose nicely. You can find these on any chart, some being better than others but the same idea will apply to all of them. We were working on the USDCAD chart so that is where I looked for an example.



So we have a nice H1 Bullish SETUP and even a nice M15 Bullish SETUP at H1 P. Don't you wish you had seen this one when it formed?

(You will see many like it in future charts. With practice they will leap off the screen at you.)

Now, in this particular SETUP we see another long torturous U - P. We might despair that P will ever confirm itself. (Must be a USDCAD thing.) How can we get some help with that?

The answer is in the Fibonacci Retracement tool.

If we think of T - U as the first impulse wave of an Elliott Wave sequence, namely wave one, wave two follows and retraces a portion of wave one. Elliott tells us that wave two generally bottoms out at the area between 61.8% and 78.6% of the length of wave one. The average of 61.8 and 78.6 is 70.2. The Sweet Spot is 70.2.

So let's put our customized Fibonacci Retracement Tool on SETUP, drawing it with zero on T and 100 on U.



Now we see an extremely powerful facet of SETUP revealing itself to us.

First of all P often occurs around, or even exactly on the Sweet Spot, or at or close to one of the other Fibonacci Retrace levels. Try this on dozens of SETUP patterns. Go ahead. It works and works and works.

Now, if P has not formed and the pullback is getting closer and closer to T. I would be cautious about a trade. A Fibs level of 78.6 is pretty deep in the pullback zone and it also means the break past T (zero on the Fib tool) will likely not have a lot of strength. (There are always exceptions.)

Now , take a look at the Fib levels above our zero at point T.

Not only have we found levels at which we might look for the P pullback to form with the Fibonacci Tool but we have also projected targets.

Any one notice that 161.8 projection? How about the counter trend to 61.8. If SETUP gives you the keys to the highway, SETUP with Fibonacci tells you where the speed traps are.

With SETUP you are trading Elliott Wave better than most people who (claim to) trade Elliott wave. You are locating wave One with T, U, P and trading wave three with its wide open Alligator as we break past E.

Check ahead a bit at the point where we had a 61.8 correction. Any SETUP in there? Can we trade that too? We like CT opportunities.



Note how the Fib target levels start to align when we have two Fibs on the chart.

How about Three Fibs?



Now am I just showing off by adding the H4 SETUP? Note how the P on H4 and the P on the second H1 SETUP are pretty much the same level and their Fibonacci Ratios come together? Also how the Fib targets from H4 and H1 cluster together and how the 161.8 target for H4 hasn't been reached yet.

Hmm ... that original question about what will the H4 USDCAD might do next has jut been given some more food for thought. I don't like that USDCAD bearish H4 because it has pulled up towards T so far. This H4 Bullish SETUP hasn't reached its 161.8 target yet, so can I see the Canadian Dollar at 0.72 US? ($1.40162 at 1.618 on the chart.) The answer is I just don't like that bearish H4 USDCAD SETUP. It is weak. P has pulled back too far. We must watch it cautiously.


Okay this is an awful lot to study and practice. I just taught you Elliott Wave in a way that takes most of the nonsense out of it. You are dialing in and out of various wave degrees like experts. I am sure your heads are hurting.

( No need to panic if I mention Elliott Wave. The topic has been taught so badly it has suffered terribly from people who don't know what they are doing. There is so much crap about it it isn't doable anymore. I couldn't make sense of it until I read Trading Chaos by Bill Williams. If you can use SETUP and Fibonacci in conjunction with the Alligator you are way ahead of 99% of the so-called Elliott Experts and nearly as good as the ones who really understand Elliott Wave. End of rant.)

Go play with the charts. The more SETUP patterns you find the easier it gets to spot them. Add the Fibs look how those work. Try it on any time frame. Train your eyes to see - not just look. The structure is always there on any time frame.

Referring back a minute Wab to the USDCAD 4hr and 1 hr. In a previous post you mention after the U has formed we look for P on a LTF. So we look for a pullback to the green alligator line on a 4hr mine is highlighted in cyan and then look for an HH and an eline break. The red line on my chart on h1 for me. As at that point in time the 1 hr fractal high is the highest point before touching the Eline for an entry........ The following hh hadn't formed yet so if I am not mistaken we would have been stopped out if entering on a 1hr....... Please correct me if i am missing something?

Hello cikurakum. Here is my take on the EURUSD H4 and H1.



I have shown both H4 and earlier H1 SETUP, As we look for the H4 P the H1 E line seems to be a likely target along with the 61.8 Fib retrace. However, the AO is red and if that last H1 up fractal is not broken then I would feel pretty safe about saying it is H4 P.

The M5 level allows us to look at the extreme right edge of the chart for a SETUP that might define P.



At this point there are about 7 pips from the fractal high and a potential E line on the M5 scale. That means we will soon know about H4 P.

If that E line is broken then price should head back to the H4 E line making LL LH M5 fractals on the way.

Considering that you are trying for an H4 trade, that would provide a really small risk. This is one of those times that you have really dialed in the market and can spend the time watching M1 and M5 for a trade that will run on H4 time.

Important Point:

One thing that I have not really stressed is that an initial break of the E line signals a trend reversal. The second time it breaks the E line after a pullback above it to P is the safest of entries on the time frame that the SETUP occurs. You can get in earlier by stalking P on a LTF SETUP. But if you are trading an H1 chart for example, the second pass through the H1 E line is very nice H1 entry. If you enter on the first break through an E line you have the draw down as it moves back to P to worry about. Wait for the second brake of the E line or enter at P on a LTF SETUP, or ... do both.

Hello ajs.

I hope I have answered that as I have since covered the USDCAD In detail. Look at the H1 SETUP on the way to H4 P and you will see that the H1 SETUP has also not found H1 P yet. I placed a ?? there on my chart to point that out.

Remember, our E line orders are pending orders and you should try to get an entry on the a second pass through the E line. Those entries are very reliable.

Hope that helps.

Okay folks. A bit of a marathon for me. I am going to mow the lawn and take a break. I will back in a few hours.

Sunday open should give you some answers on the pairs you are watching. Especially on LTF SETUP patterns.

Next, we need to look at pairs that are already trending, pairs where we have missed the SETUP bus but where we can still make some pips on the counter trend entry.

Have fun. Back in a while.

A teachable moment:

On the USDJPY we had a nice Counter Trend show up on the M30 chart.



We don't see the fractal until two bars later but it is above the Green Alligator Line and a it has a wick so let's investigate it and see if we can get a Counter Trend entry. We mark the level of the Green Alligator line and go to the LTF charts and hunt for a SETUP above the Green Alligator Line.




There you go a sneaky little SETUP in M1. Your stop above T would be about 4 pips. Not much risk for an M30 entry, a really small risk to also get in on the H4 bus ride.

I added the HH HL LL labels to help out those of you having trouble finding the SETUP. The Heavy black line is the CT line on the M30 and the Green line shows where the M30 Alligator was.

As I said, you may miss the big SETUP on a chart like teh USDJPY H4 but it tells you the direction of the trend (also check the Alligator and AO.) You can add the Fibs on the HTF SETUP and then go into the CT trades and get entries like this. They will make you very happy.

A 4 pip risk? Ridiculous. Not any more.

Another Teachable moment: (Live.)

Remember the EURUSD we watching for confirmation of P?

Here is the entry off the M1 E line with a 3.5 pip SL. It occurred around the 50% Fib retrace from the H4 SETUP.

Not much of a risk (3.5 pips) to possibly be in on an H4 wave three.

I added the M5 SETUP and M1 Fibs. If we are correct in our analysis then each successive SETUP E Line will be broken in what I call a Cascade.



Notice that M5 P formed at the 100 Fib level of M1 and the 161.8 level is a resistance level now. There is also another M1 CT trade SETUP becoming available, in case you missed the first M1 SETUP entry. (I will make you work for that one on the M5 CT. M1 E line, probably at the last down fractal.)

If you have been monitoring the USDCAD:



Here is the M1 SETUP getting ready. Let's see where it goes.

Kinda liking that USDCAD now.



6 stop pip and up 44 pips. H1 Alligator looking good too.

Hi Wab!

Joined in a bit late but let me congratulate you on another splendid thread. I've enjoyed the Animal Farm thread and many of the things introduced there have become valuable tools in my trading arsenal.

I'm sorry for not being able to provide charts while at work, we are not allowed to upload files and such like, I'll try to provide charts later on tonight when I am home.


On to my questions

Time Frames
What do you do when you got a nice SETUP forming up on H4 and while drilling down into lower time frames, everything looks like a (ranging) mess?

Line Ratio
How close can any of the S, E,T,U and P points get to one another? I've seen long connecting lines along side very short ones in various examples given here.
The T seems like the "easiest" to spot, being the lowest LL or highest HH, at least in retrospect.
How do you decide which is which, where and how long the connecting lines should be? In the USDCAD example, the obvious E to me would have been after the T, thus, invalidating the SETUP, and not where you've drown it, which look like a weak SE line.

Trends and counter trends
Sort of another angle to the Time Frames question above, how to handle a situation in which the SETUP in HTF is opposite to the SETUP in (a) LTF? Or vice versa?

False Breakout
How to handle false breakout(s) of the E and/or U point(s)? Price forms a U point, we wait for the P, enter a trade, price reaches the U point again and reverse like SETUP was never there to begin with, I understand SL is the key here but is it the only fail safe mechanism?

Rallies
So we have our S,E and T, we're waiting patiently for the U to form and BAM! U forms a gazillion of pips away from the E, making a P that might be followed by another counter trend SETUP that would eliminate any entries in the direction of the original SETUP.
If we're using pending orders, they might get executed on the break of the E and suffer a draw down until P that might trigger the SL or join the rally but in any case and since it had happened a lot to me (DAX, for example) I'm interested in your thoughts about it.

Fibonacci
I've struggled with it in the Animal Farm and always felt like I was missing out on a great tool and now it's here again
You've said you're drawing it from T to U so T would be the "0" but on the charts it's quite the opposite so which is which or have I missed something again?

Multiple Setups
I was under the impression that SETUP occurs at the point of changing trends and here you are showing multiple SETUP entries during a trend, I'm a bit confused about where to apply the SETUP now, although it makes sense that it should also form on a continuation trade(s).

Sitting On My Fingers
So, we're using H4 for SETUP, but it takes ages to form and in the meanwhile, we're missing out on trades on lower time frames. Can SETUP be used for those of us who are impatient on lower time frames without checking with HTF? I'd rather be waiting for a good HTF SETUP than shotgunning the LTF but sometimes I just can't help making a mess of things (and yes, I'm aware of it and trying my best to work on it). But the question remains, if we have so many SETUPs on LTF, why wait for the HTF to align, as well? I mean, I can spend days waiting for SETUP on H4 to form just to have it invalidated the next candle/day.


Once I get home, I'll try to post some charts for my questions.



If some, or all, of my questions, sound offending or otherwise offensive in any way, I meant the other way when I was (lacking in) phrasing them (properly).
For me, this is a continuation of the Animal Farm and while many of its basics had sunk in, some are still vaguely searching for the right places in my mind to sink in and this could very well be that missing layer of information I was searching for.




Thanks again.

Hello Rea. Lots of good questions. I am going to look back through my materials and see if I can put together a Power Point to answer as many as I can.
Stay tuned.