Short question, back to basics 
Is this HH HL LH LL count correct? What about the SETUP count?
Is this HH HL LH LL count correct? What about the SETUP count?
Short question, back to basics
Hi Dragos. That is a good chart for a lot of things.
On the left note the blue T E line that goes form the bottom up through each potential E fractal and extends. Eventual it forms what I have called a C Hook or C Fork (Blue fork line) and that is also the Chuvashova Fork in this case (sometimes they are different from each other but not need to worry about that too much.)
Price breaks the blue C Fork and that warns us that it will likely break the E fractal later on.
Price rises to form a fractal to the left of My C Fork labels but that is not a LH or HH as E has not been broken yet. We need price to break the potential E Line for a SETUP.
What we do get is a head and shoulders pattern with the blue C Fork forming its neck line. A very useful pattern. Price breaks the neck line pulls back to and it goes down. Classical H and S pattern.
Finally price breaks the E line and heads down to a fractal at U, our first LL fractal. (U is always a fractal.) It pulls back to P our first LH fractal.
Sometimes P is not a fractal.
I start the new down-sloped T E line an extend it, adjusting at each LH.
Fib. I did the fib on the H & S and it has already hit 161.8. You might want to redraw it on T U.
If you cannot figure the HH HL LL LH go up a time frame it often sorts it out for you.
I suggest that you remember to zoom out often as it helps you avoid getting locked into an incorrect count. Always keep the big picture and HTF in mind.
Now go to H1 and check the area around 161.8 where reversals can happen.
With practice you can see the SETUPS in a LTF even while in the HTF and then go in and confirm them.
H & S patterns often show up with a C Fork. This is a good chart to illustrate that. Keep an eye out for them.
{quote} Wab, on the chart I marked, Is it a valid SETUP? If it was valid, kindly please educate me why we don't need to take that trade? Thanks! {image}
Look at the H4 up fractal, right below E, where I have printed the E line label. That fractal is the HH of the Counter trend at 144.40.
Now here is the trick, to get back in phase: look for a LTF bearish SETUP to end that CT at that HH fractal. (Also look a the next fractal the down fractal to the left. That fractal would trigger an entry if price drops below it because it is the Bill Williams fractal level, below the Red Alligator line.)
Anyhow, let's look for a Bearish SETUP inside that HL, up fractal at 144.40 since we are not really doing Bill Williams stuff here and I mention it in passing as one more tool to use.
GBPJPY M15 lets us find a bearish SETUP at that H4 HH.
The M15 diagonal blue T E line from the previous T, through each potential E in turn, shows the break and then we get the first E Line break and then the U fractal and P. (I didn't add the Fib from T to U to keep the chart uncluttered.) Once we get P , pending orders at E and U are used.
You can see where bearish red the T E Line and a atop at each new LH keeps yu in the trade until the next reversal where price breaks above the next bullish E line. ( I didn't draw that in because it would need a LTF view to be seen easily.)
Also note the behavior of the Alligator, wide open in the trend that the M15 bearish SETUP found for you. A trend of about 240 pips.
To do this well you have to be able to read the HTF trend and know when a CT is happening. A HTF trend will run from a HTF E until it reverses at an opposing HTF E. In between there will be smaller trends and counter trends. LTF SETUPS occur at every fractal an we use those to enter in the direction of the HTF trend as shown above.
It is a lot to digest but if you persevere you will be able to see rather than just look. Keep at it.
- Joined Jan 2013 | Status: Member | 1,410 Posts
Even though I walk through the darkest valley, I will fear no evil
Here is an example of an H1 SETUP inside of an H4 SETUP.
As you gain experience you can often see a LTF SETUP inside a HTF chart.
This one ,may be a very good trade if the Alligator opens up again like it did on the bulls run to the left.
Three pending buys at the H1 E and H4 E and H4 U. Live trades in waiting.
(Please note, I am not recommending anyone act on this information. I am just showing what I do. Any decisions that you make are your own responsibility. I do not always get this correct.)
That comment should make you think about how to react when a SETUP is not correct.
As you gain experience you can often see a LTF SETUP inside a HTF chart.
This one ,may be a very good trade if the Alligator opens up again like it did on the bulls run to the left.
Three pending buys at the H1 E and H4 E and H4 U. Live trades in waiting.
(Please note, I am not recommending anyone act on this information. I am just showing what I do. Any decisions that you make are your own responsibility. I do not always get this correct.)
That comment should make you think about how to react when a SETUP is not correct.
H4 SETUP shown in H1. That way you can see inside the H4 SETUP.
If you look you can see the H1 SETUP at T as well.
There is also a M5 SETUP at P and that is where I took my entry, trying to get in as the CT ended.
I will trail fractal stops on H1 with this trade.
Alligator is opening up so it could be good.
If you look you can see the H1 SETUP at T as well.
There is also a M5 SETUP at P and that is where I took my entry, trying to get in as the CT ended.
I will trail fractal stops on H1 with this trade.
Alligator is opening up so it could be good.
Ouch. When I make a mistake I go back and try and see why I made it.
I didn't look at the big picture on the USDCAD H4 and ended up missing the H4 SETUP that was in control.
So I ended up trading towards the actual H4 P instead of away from it. My stop saved me on one trade but the U line trade I took incorrectly cost me some losses.
Now to recoup. I will place a pending order above the E line that I should have been watching and since U is so close I will place it just above H4 U.
(The joy of live trading and ego colliding.)
I didn't look at the big picture on the USDCAD H4 and ended up missing the H4 SETUP that was in control.
So I ended up trading towards the actual H4 P instead of away from it. My stop saved me on one trade but the U line trade I took incorrectly cost me some losses.
Now to recoup. I will place a pending order above the E line that I should have been watching and since U is so close I will place it just above H4 U.
(The joy of live trading and ego colliding.)
Ouch. When I make a mistake I go back and try and see why I made it. I didn't look at the big picture on the USDCAD H4 and ended up missing the H4 SETUP that was in control. {image} So I ended up trading towards the actual H4 P instead of away from it. My stop saved me on one trade but the U line trade I took incorrectly cost me some losses. Now to recoup. I will place a pending order above the E line that I should have been watching and since U is so close I will place it just above H4 U. (The joy of live trading and ego colliding.)
Mistakes are good, sometimes
Best regards,
Dragos
