So what you are saying with regard to these levels is that the more time they are visited the more participation you get from the players.This could be for a variety of reasons, stops being triggered, new orders being filled, options etc. Some players in the market will see these levels as opportunities to take profit, minimize losses or just as good value.Am I on the right track here?
Yes you are on the right track. Prices move in either direction because the forces of supply & demand dictate they do.
A level such as this 160.50 on the EURJPY or your 2.0450-60 on the British Pound has obviously attracted more demand than supply at their respective levels, therefore the only way is up.
The reasons why they attracted a biased demand are probably too numerous to mention, because differing strategy models are constantly at work up & down the price grids.
But whatever the combined reasons from the different market players, price action on & around these levels will always alert you to the possible directional flow. It then comes down to whether one of your triggers sets up at a specific level. If so, then you’re mobile.
Once price breaks away, if the move is genuine, as opposed to a fake out or a stop run, it will attract more support as it moves towards next level s&r.
And the same thing then unfolds at the next key level. Of course, prices will rarely shoot aggressively up or down in one fell swoop. Instead, they’ll slow, drop back (to test the attraction & shake out weak hands) & again, if the move is genuine, it’ll continue onward.
This price action activity will reveal itself via peak & trough behaviour on your smaller timeframes (1, 5 & 15m charts).
These smaller swing (peak-trough) oscillations can then be plotted either visually or married alongside a moving average to assist in managing your entry.
You then revert to your designated money management tools to direct your trade accordingly. Either trailing a full stake stop behind the move, or maybe scaling out partial stake & trailing the remainder until your mov avg or swing (peak-trough) levels take your stake out completely.
If you had set your profit take properly instead of getting off the bus early like me then it doesnt get clearer than this. If you ever had any doubt about the importance of previous supply areas this should help
I’ve referred, in a previous post,to the 60sma on the 5min chart as being a good indicator of the trend when trading the ib/ob system off the 15min chart.I have further refined that to looking for price to cross the 60sma, on the 5min chart. If you look at the charts for G/U,G/Y and E/Y, in the last hour and a half the price has come from below the 60sma, on the 5 min chart, and gone to the upside. Look at the time of the cross and then go to the 15min chart and look for an entry, all 3 prs gave an entry as per the system and they are all in +ve territory as I write this. I didn’t take these trade as I’ve been out at my real job and give them only as an example of what I look for.You don’t succeed with every trade but the good thing about this approach is that you get into the trade ,in the right direction, sooner than just relying on the MA.The MA,even on the 5min chart, is still a lagging indicator so looking for the cross just tightens things up a little.
Yes, the concept of fractals is useful here. In this case it means that the same patterns occur on the different timeframes. As you say Mustang the 5 mins could have been used in a number of ways to action a long trade this morning (like you I am also doing my real job!). This IB, divergence, triple bottom set up is classic although it will be interesting to see what now develops. This has overhead resistance although GU and EY have both got through theirs and sit on support. Time as always will tell!
We are approaching an interesting area this afternoon on GY. I was tempted to take the earlier break low but stayed out. There are a number of possibilities here that may develop over the next few hours. Signs of the support area holding allowing us in long, a retracement back to the trendline and a short position which would allow us to be in a trade for the next probing of this lower support, or a break of the support and a retest from underneath allowing us in short for the ride down to the next level. I was working this morning so missed the best opportunity which was the earlier retracement back to the trendline and rejection at that level which would now have me sitting pretty. I think this is what Tess meant when she talked about being in position ahead of a major fulcrum area as we have coming up
Looks like a very interesting week looming on GY. 222.60 is a critical level to hold if the recent downtrend is to be halted. Looks to me like a retracement into the areas marked on the 4H and 15M might present an opportunity to get short ready for a further assault downwards. At the moment the obvious low risk play is to stay with the immediate trend. With stochs overbought on the 15M that opportunity may come early tomorrow.
Another interesting scenario would be a rejection at this lower level on the H1which might signal the halt (temporary or otherwise) of the march down and provide opportunities long off the rejection or of course short (if not already in) if this does not hold and forms a tradeable peak from underneath. As always coping with the unknown and having some ideas about what might happen gives you an improved chance of recognising whats happening in real time
For me with my trading frame of 15 mins the major trend is defined by the 1H so this is unequivocally down until the market tells me its changed. As such I am looking to use the lower timeframes in order to sell retracements and use the key levels of SR to denote profit taking opportunities depending on the price action when we get there
OK now got the short off the 5 mins. First challenge coming up on the trendline. Might often take half at this point but want to give the longer term trend down a chance to take us back to the key support area around 221.50 - 222. So have on this occasion moved stop to be and we will see. Obviously a failure of this move and break back above 224.50 would change the plan to looking for dips and buying them. However nice to have a risk free trade at the start of the week
So far so good. Not surprising though that this is a struggle as the GU is range bound and if anything looking like its going to move up. Hence the pound is showing some strength and in retrospect the EY might have been better for this trade (short at 160.91). The next hurdle is marked and is in the round number area of 223 - 223.50. My stop is still at break even although you could easily use the trendline for trade management. If the GU starts to fall I will stick with this but in the event it breaks long I will look to exit this early. Europe is now open so this will be interesting to see which way we go as will the London open in 45mins. House prices are also due out then which also needs careful monitoring. As always trades in real time are much more difficult than after the fact!
Higher prices above the trendline still being rejected but definite upward action on GU. Getting ready to exit on any concerted upward push. EY has also turned up
Exit on new high and wait to see whether 224.50 holds for another short although the divergence evident on the GU may make staying out the best option until things become clearer. Still money in the bank is never a bad thing!
Hi tonymand
You mentioned before about the H4 and H1 S/R lines.
How long do you stick with these major support lines before you
decide to redraw and start again.
The 4H are usually there for months, perhaps a little less for the 1H. Obviously the longer timeframe are more important
Hi tonymand
thank you for your thoughts on the H4 H1 S/R
I have benefitted from your clear posts
now I am after your thoughts again
After 4 months of demo trading I am thinking of dipping my toe in the water with �2000 using a 2% management of capital on the 5 min frame using a mixture of 3 ducks S/R IB and Fibs. I am using North finance platform for chart analysis but undecided on the broker ie oanda mini seems to be spoken of quite highly on forums.or go with
somebody like IG finance spread bet for tax free purposes.
Any thoughts on this first step.
I expect its fair to say that tax will not be a big issue for you initially although hopefully will become important as your profits grow! Oanda is a good platform except for their dramatic widening of spreads at news time which can catch you unawares
Hi Tony,
I know this post is old, but I just found it and am intrigued by your method.
I have a few questions, If I may:
-
Do you consider the European open as being 0700GMT standard time and 0600 Summertime?
-
You wrote:
At the europe open mark the high and low for the day
What do you mean “for the day”?
Do you mean the last 24 hour period or back to 0000GMT or back to some other time?
-
Is there a time you stop looking for the breakout?
-
Do you trade only one breakout per day, per pair?
-
I assume that you measure from price to the 60 SMA, [B]at the time of the breakout[/B], to determine the stop loss and profit target. Is that correct?
I appreciate any help you can offer.
Thank you
One last question-
Does 1 pip, below the low or above the high, constitute a breakout?
Thanks again
[QUOTE=BillB;31630]Hi Tony,
I know this post is old, but I just found it and am intrigued by your method.
I have a few questions, If I may:
- Do you consider the European open as being 0700GMT standard time and 0600 Summertime?
Yes
- You wrote:
What do you mean “for the day”?
Do you mean the last 24 hour period or back to 0000GMT or back to some other time?
Look back is to the NY close
- Is there a time you stop looking for the breakout?
Only when I go to bed which is currently about 1330 GMT
- Do you trade only one breakout per day, per pair?
No, I used to trade only 2 but now will trade 3
- I assume that you measure from price to the 60 SMA, at the time of the breakout, to determine the stop loss and profit target. Is that correct?
Correct
I regularly review the rules and have included the trading log for last month which shows a net 16 wins. This month is currently up 4 (3 from last night and 1 so far tonight
