David Jefferson aka: Rave55 (Technical Analysis Trading Method)

Trading Systems Free Forex Trading Systems
165

Hi joffie,

The EURO is no doubt undergoing low volume trade just now, it’s pretty much been dead since 18:00 (UK Time). Price is vulnerable to drift about within a narrow range because of this, so to be perfectly honest its a tricky one to call that as without any volume price can just bob up and down pretty much like a dead duck in the water.

If you want to keep your trade open over night, then just kill your risk by moving to entry or above entry… or leave your stop in play and remove a portion of the trade that will cause it to break even should it stop out over night… your other scenario is just close it.

Personally I don’t leave trades open over night very much… occasionally… but hardly ever.

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Sounds about right… 1993?

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I don’t know what they called it back then but you’ll see the same classic pattern in old stuff written years ago by WD. Gann and Charles Dow. :44:

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By the way… what ever happened to your USD/CAD trade, did you stay with it or what?

169

Everyone keeps asking me how to construct the BBZone…

First of all let me explain exactly what the BBZone is (BULL/BEAR Zone), its really just the area on a chart that if held, keeps the current bias in place, but if broke and held, then the bias shifts.

Its similar to a correction zone… a correction zone in my view and how I was trained from other city traders was the 38-50% fib levels. This was the standard correction zone.

The difference between a BBZone and a correction zone is minor… the BBZone does not have to include the 38 nor the 50% fib levels. The BBZone can use the 23% or the 61% or the 38 and 50%.

The BBZone is just a confluence area, that tends to combine fibs, support/resistance, MA’s, neck lines of chart patterns, or previous break points. It does not have to include everything that I have just mentioned!

What you are looking to do… is define the current direction using the 100-200 SMA’s… who is currently in control of the market?

Once you have established this, you are then looking for an area that you deem will attract the pro money, heres a clue… Buy low, Sell high.

When the BBZone or correction zone is tested…ie: hit, or price trades within the zone, then you are looking for it to hold and send price back on it holidays in the original direction.
But if the zone fails to produce the hold, and price breaks below and holds below, then you can anticipate the bias change, and therefore take the trade in the other direction.

So what do I look for when constructing the BBZone each day?

Well personally I tend to look for any of the fib levels that are trading close to or at one or 2 of the MA’s and I’m also looking to see if this area is located within a technical support/resistance area, or previous break point, or maybe its a neck line of a chart pattern or something.

Really I’m looking to construct a zone with various confluences that are within close proximity to each other. If I define the market is currently in the hands of the bulls, then my BBZone will be located at a lower price (buy low). If I have defined the market is currently in the hands of the bears, then my BBZone will be at a higher price (sell high). There is only 1 BBZone on the chart… there is never multiple zones…just one at a time… you are located the pro money zone that will attract the professional money and not the retail money.

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I will be covering this in more detail very soon, but most of the training will come each day when I post my analysis charts in the mornings and afternoons.

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Dear david,

Good to have you here! Not only your knowledge but your generosity on sharing and teaching! you have my respect here. keep up the good work. Thank you.

Jack

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Hi David

Thanks for this explanation. Do you mind giving a bit more detail on your fib placement pls? It is not clear to me which high and low you decide to pull your levels from. The previous day high/low? Previous week high/low? How do you determine the significant high/low to be used for the fib?

Btw thanks for sharing. Its great to learn from someone with your experience, will follow your thread closely.

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This is from an earlier post about the fib placement:

From David Jefferson:
I wouldn’t go back several months for intra-day fib drawing… really your just looking for the last major swing to fib… last weeks high low, this weeks current high low, or if the previous day was a big mover then you could fib that. As price makes a new high or low, then you will need to re-draw your fibs… that why I included todays high.

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Ya David,

Woukd be great if you could explain in detail about your fib placement. Im having the same question in mind too.

Jack

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So, mr. Jefferson, let’s say when the price is below the BBZONE, like your last pic, and then when it penetrates it from below, I am assuming you are anticipating for it to reverse back in the Bear’s favor, as long as price doesn’t close above the BBZONE, but while it’s in the yellow area, does it have to touch the top part of the zone, or just have a close/valid entry pattern inside the zone, or just touch the bottom of the zone as part of a valid pattern, for you to consider it to be in the PRO money area enough to enter a trade?

Thanks…it’s starting to click!

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im lookin forward to learning from you

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You wrote some very intereting stuff especially for a newbie like me… Can I subscribe to all your posts because I do not want to miss a single topic?

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I’m honestly surprised people actually thought I was giving ownership just because I mentioned that he posted it. Hell, if it was that easy then I made probably 50 different tradeable patterns myself LOL.

edit: Just read your forum moniker and thought it was funny because I was saying “oh dear oh dear oh dear” to myself when I was reading your post!

In response to David Jefferson, obviously you would not only enter at the .618/.786. I know what a 1-2-3 pattern is, I know it is not only those certain fib levels and as long as point 3 does not go beyond point 1 then it is valid. I was simply mentioning the fact that the 1-2-3 pattern, which I’m sure everyone with at least an 80 IQ knows you did NOT create, looks similar to another profitable pattern known as optimal trade entry, which to save Michael’s ass was not created by him either but rather simply taught by him.

P.S. again, obviously, you (David) did not create the engulfing or railroad tracks/tweezers either because I did… Hope you caught my sarcasm on that one…

Anyways, nice stuff on the BB zones. When you mention that you look for the MAs to be within the current fib, along with other confluences of S/R, which timeframe are you referring the MAs to be on? The 1hr, 15m or do you keep an eye on both? I’d imagine you would be keeping track of both timeframes but I’d like to make sure.

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Wow, great stuff here. Thank You David for your generosity. You do not have to do all of this, you are successful already which makes it all the more special that you are here helping traders. I have several questions HOWEVER I believe they will all be answered just by you posting charts and comments. I eagerly await your next analysis. I hope you never go away, even if you get your head handed to you by people who don’t even know how to trade but have enough program skills to create EAs. Thanks, TJ

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I got stopped out early at break even, should have given the trade more room to move. Never took any trades after that, even though it gave a great sell at the middle level of the range it had formed after breaking lower to test, with a 15min divergence sell, but at that time I was looking for other signals with divergence, but now I realise I should have just pulled the trigger. It would have only been a 12pip stop with a 54pip target. But thats gone now and I have moved on to the next trade. I am seeing the usdcad coming into a daily support zone of the bulls/bears and at the 100/200sma. I am looking for a 32 pip drop into the buy area.

joffie

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Hi, just want to say, I agree whole hartedly with you, traderjosh

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Hi David,

After little search on Google found your old forum and did go through that. I am still struggling to make the BB zone. But probably will need to read the thread again.

Cheers
HA

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I am glad there are others who appreciate what this obviously successful trader is giving us. I am just hoping that we (myself included) don’t wear him out with repeated questions and comments that he just says: forget it! I think just a daily dose of charts and comments will have us all up and running in no time.
TJ

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I agree with you 100% traderjosh, remember his priority is his trading and there is no incentive for him to post here, I reckon we must chill with the questions and take it easy before he gets fed-up. Especially the newbie questions.

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David thank you for having traders bests interests in mind, we really appreciate the value of your experience and we are with you all the way on this learning experience. Excited to learn and take in as much from you as I can absorb. Thank you again for sharing. Your posts I will read and re read as soon as you can post them.

About me , I started trading part time in 2006 and still learning.