Hello.
Yes UJ triggered… But be careful, take notice to trend strength . MACD is negative almost at all time. 3-top MACD divergence really help me to take decision.
Do not wait for third candle of morning star. Earlier we got nice bullish engulfing and then doji breaking support ( testing support defined by bullish engulfing ). Of course if we have same situation below support we have to wait for confirmation ( next candle ) with nice price action.
To sum up what is important:
Price action
Divergence ( if you see 3 tops MACD or Stoch be more confident)
Strength trend (check MACD,BB,ADX)
Area of significant sup/res level ( daily low\high )
( minimum 2 of 4 conditions must be confirmed )
To compare check similar U\J trade. ( check pictures )
No I don`t change indicator settings ( I used them only for divergence and sometimes for measure strength trend ).
As for the system. Generally we trade when we expect false breakout. Probability for that setup will rise if we had:
Price action ( e.g. engulfing pattern )
Divergence ( if you see 3 tops MACD or Stoch be more confident)
Strength trend (check MACD,BB,ADX) and/or you trade with or against
Area of significant sup/res level ( daily low\high
( minimum 2 of 4 conditions must occur )
And that’s all you need to know. ( if divergence not occur try to spot pair of engulfing pattern testing each other).
English is not my native language. But I will try to explain if something is unclear. Look at my charts, follow to 4 important points and I hope you understand it.
Why do you say the first signal was “poor price action signal”? What made you stay out of that trade and wait for next signal? It had divergence and an Evening Star formation, plus was at outer BB. Would have got stopped out according to your SL rules, so would be good to hear your reasonings for noe entering - I can see why you enter trades, but not always why you sometimes don’t.
I don’t mark evening star as a poor price action signal. I mark only 2 candles. Look at strength of up trend. I was afraid that trend will overpower it. But if first black candle was at least piercing pattern I will probably trade. I want to see clear down move.
After formed evening star I would have to set SL about 23 pips ( top of candle )- and TP would be 69 pips -too large for U\J. Second signal was testing evening star, nice black candle wrapping around about 5 candle bodies – this is strong price action.
Will be interesting to see what you say about EU today. I see three possible trade entries, the first as marked on attached chart was a possible long, no divergence though but would have been a succesful trade. The second short trade had divergence, but would have failed. And the third another long (continuation of first long really), which would have also worked out, altho pretty large SL on that one and had hit the asian high already.
Hello Kodziro, Is your indicators on the default settings ?- for example 12.26.9 on macd - Stoch 833 etc etc ? Could you please post your indicator settings if that is not a problem.I understand your method and very good examples. Thanks,Rob
I have enterned with first signal, why ? Check 4 conditions :
Price action was very good-white candle wraps around 3 real bodies (+1 )
Divergence- no
Trend- we traded with trend ( +1 )
No daily and other important sup/res level.
So 2 of 4 points completed.
Second setup we don’t count because we had already false breakout and our range between SUP/RES is low.
As for the third setup liked you said too long body and what’s important hit our RES
I use Stoch ( 10,3,3 ) and default indicator setting (MACDColored, ADX, BB)
But you must know that indicators settings is not important for this strategy.
Hi Kodziro ,I realize that because they are all lagging. I’ve been testing a similiar strategy but watching for 30 to 60 pip swings and enter and exit on big numbers .Only trade the g#,ey and eu.
hi kodziro, thanks for the strategy. I didn’t understand how you enter, do you enter as soon as you see a pattern or a divergence? or do you enter after the candle with the patterns closed? for some of the examples, when you see the white candles wraping the back candles then enter, it seems a bit late (stop loss would be bigger).
Also, I’m wondering have you been using ‘break even’ at 30-45 pips? if you did, have you been stopped out more than if you didn’t?
I enter with price action and divergence if occur. I enter after close last candle not forming. If candle is long I didnt use SL larger than 25 pips for G\U and 20 for U\J ( this is max although I never used max so far ). As for the breakeven I cant tell you yet, to small number of trades. After 1 month there will be summary and we will see.
I mean that I don’t enter when I see forming ( creating ) engulfing candle, I always wait for close. Don’t worry too much about long candle bodies. In worst case make sure to set SL below/under 50% of long real body.
What constitutes “nice price action” in the EG trade? The only thing I see was an engulfing bar after a fairly strong bearish drop - no divergence either. Why not take the previous engulfing bar, which did have divergence and was at the session low (and would have been stopped out) - and also looked to be a strong bullish bar?
