My other question is, when you zoom in to the one hour, do you use the same parameters? (20 / SD 1.5 and 2)?
I have changed my SD settings to 1.0 and 1.5. I would still leave the SD settings the same but that is my preference. Needs to be something you feel comfortable with.
Also, by retracement, do you mean a retracement back into the SD 1.5 and SD 2.0 region?
YES – it sometimes moves into inner channel & back to outer BB again. Really depends on how strong the retracement is and if you move SL with the last high (for short) & low(for long) the retracements mostly will not hit the Stop Loss if it is in a good trend. The retracements would be a useful place to enter trade if you missed the first one.
Just in case you are asking what a retracement is - basically after a move up (or down) it will pull back before continuing up again. It depends on your method as to where you might get in after a retracement has occured. Retracements are great places to add more trades.
Lastly, do you take profit strictly once price hits the middle of the band range (orange line)?
That’s a good question. There may be resistance at the centre line and is it determined that the overall monthly is in a down trend or has it reversed? If I had gone short at or near the top then I might risk it and have a stop loss at least at break even. This way there will be no loss if it does go up. If it doesn’t you stand to make huge profits.
Here’s another point of interest. Put a horizontal line against the body of the lowest candlestick at the last lowest Low of the monthly chart. Then scroll back and see what has happened in the past. My chart goes back to 1990 and there is a total of 3 touches. A resistance level?
Zoom out your chart and you can see it there. If it follows the previous cycle it will continue down some more yet but notice the last top was higher than the previous high. Does that mean the bottom of this last move down will not be as low as the previous?
If my memory serves me well the last two monthly candlesticks indicate a reversal has happened going by James 16 method – it is called a double bar high with a lower close. I think the two matching tops must be within 2 pips of each other otherwise the signal is not valid. I am not sure if that relates to ‘monthly charts’ .
james16 Chart Thread - Page 2 @ Forex Factory
If you click on the chart from the link above it will enlarge and you can see the information there – with bands but I think they are keltner bands. The very top chart on that page and the very top hilighted bars are similar to what we are presently seeing with the GU Monthly chart.
His information is like ‘gold’. Start from page one if you really want to learn about what the candlesticks are telling us. I need a refresher myself.
Nothing is fully predictable in forex but it will be interesting to find out!