THURSDAY 29 SEP 2022: AUD/USD: SHORT DAY: turned at 6436 (so +60p net or 10 bugger!)
The H2 has formed a nice Harami at the Convergence of DTL & Fib 50% of the larger main Down Swing, which is also a Past Resistance Level.
The picture show the following (sorry hard to explain my thoughts, but it is much easier than this!)
First False M30 Signal at 00:30 (red vertical line) at H2 Fib 38.2%: Notice however that we had to wait for Step 5, which didn’t happen, so no entry!
Second False M30 Signal at 2:00AM (second red vertical line) between H2 F38/50: Notice once again that Step 5 is critical here, since the market doesn’t go down then rally back up and form a new high "below the last M30 candle high’, once again since Step 5 didn’t happen, then ‘no entry’… and we save some $$$
If we ignore STEP 5, and just enter on the first M30 signal at the Fib 382 we lost, then we enter again at 2:00am at the next M30 candle, we lost again!
First Real M30 Signal at 3:30AM (1st green dash line) at H2 F50% & DTL: Now we are talking!.
Once this M30 Bear Dark Cloud Cover closes at 3:30, we wait for Step 5 to occur. The market had gone down (when forming the M30 DCC), hits the M5 EMA 25 (not that we care), rallies once more and forms a M5 little engulfing candle at the M5 79% (I hadn’t drawn this Fib coz it will cloud the other charts!) But to explain you draw it from the last M5 high (which formed before the Green Dash line), to the last M5 low (the one hitting the M5 EMA25). Anyway, this entry (“S” arrow) costs only 5 pips!!!. And the market doesn’t go near our SL (0.65313) and with a 5pip entry cost for a M30 (at this stage) Trade this means a huge R:R potential!
Second Real M30 Signal at 5:00am (2nd Green Dash Line): We already entered the trade, so this is just a confirmation that the M30 Signal has a good chance plus that the H2 may form a Bear Candle to boot as well!
First Real H2 Signal at 6:30am (Solid Green Line): Now we are talking!. If we missed the first or even second M30 signals, or are trading using the H2, now we can look for entry (after the Solid Green Line) in the M30, and this happened just one hour later at 7:30 when we have a Bear Engulfing M30 candle! This trade only costs 7pips! Still pretty good for a M30 trade!
KEY POINTS TO REMEMBER:
(1) If we have a H2 signal trigger, then we look at the M30 for entry
(2) If we have a M30 signal trigger, then we look at the M5 for entry
BABUSHKA DOLL METHOD… LOL
(3) ignore the EMAs 25 & 50 when looking at the M5 for entry. All we are looking for here is the Swing + Fib + Candle combo. The EMAs as IRRELEVANT.
When we start with our first entry from a H2 Trigger, then the H2 EMAs are the only one that matters
When we start with our first entry from a M30 Trigger, then the M30 EMAs are the only one that matters
The M5 EMAs are completely IRRELEVANT.
Unfortunately my software doesn’t allow me to overlay the H2 EMAs on the M30 & M5 charts. I believe MT4 or other softwares out there allows for this.
I have to create multiple charts to do this, to clear up my chart, but we play with what we got!
Now, all this mambo jumbo leads us to today. I entered my trade on one of the swings at 8:49am, I was meditating! The perfect entry was a bit earlier. Anyway, my trade is at 6 pips risk.
ATM the market is past the H2 EMA 50 which could’ve created a temp rally and stop us out, but it seems we might be clear.
TODAY’S PLAY:
For those of you that are on the sidelines, we have a plan!. We will be looking for a 618% or 786% retracements of any M5 Down Swings throughout the day.
How far down we can go, you ask?
We have a few key areas to watch out for but since this is a H2 TRIGGERED TRADE, then only a H2 Bull Candle at any of these points can mean a full profit take or at least a Stop Protection using the M30 Last Swing High… (mouth full!)
Risk: 6 pips
H2 Fib 61.8% Support at 0.6426 (80 pips from my entry lucky those in USA! that caught earlier)
H2 Fib 78.6% Support at 0.6398 (111 pips or 18:1 )
H2 Low Support at 0.6363 (145 pips or 24:1 )
IF we pass the above then we are up for a nice jackpot day! since the next actual Take Profit Target would be the H2 Fib 127% Extension at 0.62718 (237 pips or 40:1) and beyond this the H2 Fib 161.8% at 0.61537…but let’s not get carried huh?
CAVEAT: No matter how much we think we know, the market will always do its own thing. We could have a bunch of H2 Swings, a retest to the entry level, etc, so any M5 Swing Trade I enter from here on, will target its own M5 Fib 162% (as per the options listed on Step 7)
GOOD LUCK AND LET THE FOREX GODS GUIDE US TODAY!