The short got triggered at 1.5769 and I closed out for +33 pips. A PVSL developed and i prefer to sit things out for now.
So you took the trade at the 11% mark.
Yes indeed.
Bank…it’d be great if you could elaborate a lot more on reversal patterns. This is where I believe I’m getting stuck. I went long on the PVSL pattern on EUR/USD @ 1.3730 and the H4 is continuing to test the 1.3830 level.
I’m trying to read and re-read the parts about reversals and though these conditions work well in certain circumstances, they also don’t hold up in a few others.
When the trend is long and the patterns continue to make buy candles, I’m looking for BEARISH PVSHs right, and then a PVSL pattern that triggers selling? It makes sense when you think about it, but is this it? Are there other subtle clues you look for?
Your insight is much appreciated!
Reversals occurs when there is a PVSH in a trough, or a PVSL at the peak of price action. As its name suggests, you do the reverse of the trade setup: key levels of PVSHs become support which we buy, and PVSLs becomes resistance which we sell. In your case, I don’t believe a PVSL reversal pattern was set up because that PVSL was not at the peak of the price action. Had you taken a normal trade setup you wold have gotten close to +100 pips as price went up significantly since then. Hope this helps.
Thanks Swallow.
I know this part already. If you take a look at historical data, just focusing on this as a reversal under these conditions doesn’t necessarily give you a strategy with an edge. I took a look at the all the peaks and troughs over the last year on the H4 charts on 5 different pairs. I breakeven when it comes to taking a trade under these circumstances. In other words, I might as well flip a coin when I notice PVSLs being formed towards what I think to be the peak.
Let’s take a look at a concrete example. On 09/28, midnight GMT, the fiber created a PVSL followed by a lower PVSH. The conditions there would prompt one to take a closer look and perhaps enter the market at the open/close/low of the PVSL when the market closes below it per the guidelines.
Well that happens 8 hours later. Thought it’s tough to see on the H4 chart, on the H1 chart, the level gets tested and holds up well.
The market then rebounds, takes a swing of nearly 100 pips the other way and then tanks.
In this scenario, two things would happen. Either a) you would have stopped out or b) you would take a modest 35+ pip profit. I don’t see where someone could have entered the marketed and taken the larger 200+ pip price movement down.
That’s what I’m asking. Is there more to this method of entry that perhaps I’m not seeing? Should I have not taken this trade (which I didn’t)? Should I have waited and if so, why?
I’m still no seeing what you’re talking about, Bank would definitely have to comment on that. But If that was a PVSL reversal, then by Banks rules you SELL a retracement to that level. So yes, price broke it and went up temporarily, before coming back down and making you +100pips, as in your example.
I went short on the EURUSD pair and was watching it on the 5 min chart.Somehow I became fearful and exited the trade.Before I exited the trade went 10 pips down.I need to trust the system more in order to back those pips.See 30 min and 5 min charts attached.
Hi everyone,
Hope you all had a good week of trading. Just getting a chance to pop in here at the end of the work week.
@amb:
Remember that the TREND is YOUR FRIEND. This method is primarily about finding key areas where the major trend will continue. So for example, in a downtrend, though we may get a little buying, we anticipate a downward reversal from that temporary buying using the PVSL, PVSH & or 11% fib level. Notice how buying this week was structured. PVSLs were created along the way giving strong support for buying to continue. So we buy until strong reversal is hinted. Hope this helps.
Bank
Hi amb,
Looking at both your scenarios on the EUR/USD on 09/28. PVSL forms and creates support around 1.3574-1.3578. If we traded the 1 hour chart lets see how it played out.
What setups do we have before us on this chart at this time?
- 10:00PM - A PVSH REVERSE trade at 1.3570
- 12:00AM - A PVSL around 1.3574-1.3578
That is two BUY setups in the same vicinity. So we mark the levels and wait for a close above one of these. See how this trade delivered +115 pips below:
Now the picture on the H4 chart hints us to caution buying. The hours leading up to 12:00midnight were full of sellers. Additionally, if we revisit the rules of reverse trades, we see that this 12:00 midnight PVSL was a reverse trade setting up for hours later.
So what setups do we have before us on this chart at this time?
- A PVSH at 4:00pm 09/27 around 1.3583-93
- A PVSL REVERSE trade at 12:00midnight around 1.3584-94
That is two SELL setups in the same vicinity. So we mark the levels and wait for a close below one of these. This trade delivered +440 pips.
Hope this helps amb.
Just saw your other posts amb. This is all I use.
Got it Bank.
I guess we have to be timid with the setups and collect gains as soon as they happen. I did the wrong thing here. I set it up with a stop above the last PVSH and bought the first time it broke the PVSL level but didn’t do a trailing stop. I stopped out and then lost this trade.
Going forward, I think it’ll be easier to just set a trailing stop that will lock in the gains and then to re-enter the market. Going this way would have net me 500+ pips instead of the 20 point loss.
Thanks for all your help my friend. I appreciate your insight.
This is an interesting week for trading. The EUR/USD and the GBP/USD have stopped after good gains at the 1.3880 and the 1.5800 levels respectively. After the G20 summit meeting, I’m waiting for PVSHs to form on the H4 charts and selling the low of the lowest PVSH or another PVSL to form and doing a buy off the high.
Either way, there’s about a 300 pip swing for both of these pairs this week. Your comments welcome (especially Bank).
No prob amb.
Will be doing some analysis later on today and share my thoughts.
what´s the indi with the dots shown in the earlier pics of this thread?
Hi ruilima22,
Those are Chaos Fractals (Bill Williams).
Hi everyone,
Holidays here in JA so on relax mode. Nevertheless, looking at a PVSH short setup on GBP/USD at 1.5782. 1.5715 support to be watched.
Also seeking to short the NZD/JPY at 61.83 PVSH support.
You’re brave. Both the pairs EUR/USD and GBP/USD are in a funk due to the G20 summit. I’m expecting range bound action at the 1.5715 support level but I could be wrong. They both flirted with the 1.3900 and the 1.5800 levels but failed to keep it there last night which I’m guessing means that the Euro party is over.
I took the EUR/JPY setup and AUD/JPY setups last night. +225 pips. I took EUR/JPY this am again at 105.5.
Also Bank – take a look at USD/JPY if you get a chance. Strong range bound action there on the H1 candles and it trades heavily during the Asian session.