The main ingredient in this method is patience - [B]patience for price to setup[/B]. Now would be a good time to recap what the setup looks like while waiting for it.
On my charts I have [B]key support & resistance levels [/B] plotted on the Monthly down to the intraday timeframes. I also have the daily [B]pivot levels[/B] plotted using the midnight to midnight EST zone for their calculation. Finally I have the [B]previous day’s Hi, Lo & Open[/B] plotted. I also throw a couple of fibs on swings of the higher timeframes and use those levels too.
As for indicators, I am using a 2 period CCI histogram indicator with the period settings of 9 & 26…kinda like the MaCD. This indicator has 2 purposes…one for Overbought/Sold conditions, and also for Divergences between price & momentum. The other indicator I’m using is EURUSD price. The GPBUSD & EURUSD are highley correlated, so I’m looking for Divergences in their correlation. I could use an indictor and keep them in 1 chart, but I have them in their own charts stacked together for comparison.
Other indicators I use are informational like when news reports are scheduled to be released, the range price has traveled so far, the average daily range, and a pattern recognition indicator.
So that’s my chart setup. What I am looking for now is for price to setup. At 9:00pm PST zone (or midnight EST) my new pivot levels are calculated and then I wait for price to be at or near the previous days’ hi or lo to [B]trade false breakouts (bounces)[/B]. I create an alert to let me know when it gets there. Then when it gets there, I start looking a little deeper and add some filters.
What I’ll be looking for is at least a triple confluence of events that gives reason for price to react (bounce) here. The events are r[B]etests of price levels [/B]that also converge with chart patterns, divergences of price/oscillator, divergence of the EURUSD correlation, key S&R levels, convergences of fib levels, and pivot levels of the S1,S2,R1,R2 or their mid points. I also need to note what the directional bias is, whether price is in an oversold or bought condition, and whether price is in a trending or consolidation period…phewww! 
That’s it for now. Hopefully the late Asian session tonight will provide something to work with and I’ll explain my entry, stop & target placement strategy then. If I’ve misunderstood or missed anything for this stage, then please comment. 
[B]** 15-JUL-11 REVISED **[/B]
I have removed the CCI Histogram, pivots, and the pattern recognition indicator. I have added MT4’s Volume indicator. I still have the previous days high & low, and other key multi-timeframe S&R levels mapped out, but now I have an indicator that automatically draws them for me. I still have the daily range, news releases & market flow dashboard informational indicators. I did add the 3 Ducks SMAs on my market flow dashboard just for fun and to see how much of an extra edge it gives me when they’re all lined up with my directional bias. I added a candlestick pattern alert too, which will sound when a pinbar or engufling candle pattern forms on the 6 pairs I monitor. Saves me from having to monitor so much and from missing any especially on the 5 min charts.
For directional bias starters, I check the [B]DAILY[/B] timeframe for specific candle patterns (pinbars & engulfing). The last one to form remains in effect until an opposing one forms, meaning if a bullish pin bar formed a couple of days ago, bias will remain bullish until a bearish pinbar or engulfing forms.
Once I determine my bias, I move down to the [B]HOURLY[/B] and wait for 1 of 2 setups in harmony with the bias:
- price retraces/pullsback into the previous daily range (PDR) between the 38-2% fib zone and forms a bias candle pattern (pinbars & engulfing) that’s suggests the retrace has ended, or
- price continues the bias with a breakout and hold of the PDR.
Once either of the above happens, then upon the close of the hourly candle I move down to the [B]5 MIN [/B]and wait for either of the 2 setups to happen again. once either of those happen, entry it on the close of the 5 min candle.
The volume indicator is to help determine the strength of the candle patterns…a low volume pinbar or engulfing candle may indicate a fakeout…learning a little VSA helps. For breakouts, higher volume seems to indicate higher probability of a false breakout, where lower volume means there is not much to stop the move from continuing.
The stop goes at the end of the retrace, or the pattern candle…whichever risk is more acceptable. Take profit can either be left open, or set to the next S or R level accordingly.
I have a couple of scripts to open orders…a buy script and sell script…that sets the magic number of the order. After that, an EA will manage orders by taking partial profits and moving the stop to b/e after reaching adjustable targets.
This can be repeated throughout the day as long as the current daily range hasn’t been exhausted, or it’s too close to a news report release time, or too close to an opposing S or R zone.
You can skip ahead to my trade examples with the revised method
