Riding the retrace
Good question.
You need to get your head around the timeframes.
15min = 3 x 5Min.
30Min = 2 x 15Min, 6 x 5Min.
1Hr = 2 x 30Min, 4 x 15Min, 12 x 5Min.
3Hr = 3 x 1Hr, 6 x 30min, 12 x 15Min, 26 x 5mins.
4Hr = 4 x 1Hr, 8 x 30Min, 16 x 15Min, 48 x 5Min.
Daily = 6 x 4Hr, 8 x 3Hr, 96 x 15Min, 288 x 5Min.
Why did i just write all that???
Well, whatever timeframe you are looking at is obviously a culmination of the more minor timeframes below it.
The reason this obvious point is important is because when you look at the stochs & Cci, the daily maybe overbought and on the 3Hr oversold.
With the daily, you need to remeber that (Presuming you are looking at an entry on the Step to the new candle after a cross candle) there are going to be another 8 3hr candles before the end of the day, so it is entirely possible that on entry on the daily, the 3Hr may look to be in an opposite state.
Now, we know that there is usually a gain to be made after a cross candle due to the momentum, the question is, if it going to retrace...when...and how do i maximise the profits by taking advantage of price retracement?
This where the lower timeframes come in, as you correctly pointed out, on todays daily entry the 3Hr stochs were oversold, and the daily stochs were overbought.....This tells us that there is going to be a retracement...and soon!
What i derived from this was that, as soon as the daily crossed, it would go down, to a point, (this is the momentum of the cross) then the oversold 3hr candles would kick-in and it would retrace.
When these (Opposing Daily & 3Hr signals) happen it can be a good thing....because the signals between the 3Hr and the Daily are so opposite at the beginning of the day, it gives the 3Hr the whole 24hrs to get back in sync with the Daily....so you wouldn't enter the cross on the Daily as the new candle opens because, even thouigh the signals are right, the 3Hr is going to retrace.
Instead you would watch for a retracement to occur from the 3Hr price, as it hits either it's central or top Bollinger band, and then forms it's own EMA Step. At which point both the Daily AND the 3Hr charts will be showing an EMA Cross......This is where i would enter.
This kind of "retracement entry" can be used on just about all timeframes.
Now i know i am going to have my detractors here saying "Oh he's changing his system"
Not at all....what we are doing here is utalising our tools/indicators to give us the best result. All we are doing is waiting for a better entry, we've got our sell EMA Cross on the Daily so we know it's going down, but we know by the 3Hr that it's going to retrace so why enter blindly on the cross...when we can hold our horses a few hours and maximise our profits? Makes sence no?
Of course, with the Cross on the daily hapening, should you enter exactly on the open of the new candle, you will probably still be profitable, but this technique just streamlines the entry to maximise our profits.
The two last techniques i have posted maybe a little advanced for the newbies on here which is another reason i haven't posted them before, so for those new to this i would stick to entering on EMA Crosses once price has bounced off one of the extreme Bollinger band lines.
I senced that the thread was getting a bit stale in some ways so i thought i would take those who are experienced in this sytem to the next level.
It doesn't really get anymore technical than this, i have now posted just about all the techniques i use with this system, and trust me, when you get them right.....they WORK!
Good luck.
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Thanks
enjoying this thread
thank you maurizio
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