Me being greedy as ever, if you saw good PA story at #5 along with your broadening top theory, you could set 2 t/p’s one for #4 and a open order with a stop loss to see how well this theory works. Demo, tiny lot or normal and just go for it for those with more risk appetite.
Jedi F
Intriguing higher highs & lower lows pattern as opposed to lower highs & higher lows, i.e. triangular wedge. Will watch how it turns out.
So you are talking about still entering at five but having a conservative TP at the break of 4, and the aggressive TP at the full TP level? I think this would be ok. There are usually 3-4 ways to trade any given pattern. In this case you could have multiple TPs as you mentioned. Another way to trade this is to wait for the break of #4 and then enter. That is actually the most correct way to trade the pattern since it’s not a valid pattern until that happens. You would put your TP some set number above the break of #4, and shoot for the patterns TP, and still be able to get somewhere in the 1:3 to 1:5 Risk:Reward.
I would be careful going long on the indices at this point. The markets have high correlation with each other, and if the Dow Jones breaks below 15400, we would have an almost complete reversal pattern. As I have been saying “If the Dow Jones breaks below 15400 there will be nothing left but the cryin’”. Now that reversal could be invalidated, but it is 1 more nail in the coffin for a true reversal. Other markets may be a little more bullish, but overall they will all be drug down together if 1 really starts to go.
This is all my humble opinion, take it as you would like. If there are tradable setups forming on the indices(long or short), I will certainly be here to give my commentary and opinions on them.
I noticed the same thing Henry. Some of the pics I post are really sharp on my computer and kind of blurry when I upload them. I plan on start to upload my pictures to a photo-cloud website and then just use html tags to embed them into my post. That may fix the blur issue.
Good point, even with out the broadening top theory #5 to #4 looks like a good place for t/p if a good PA story presents its self. But I’m wary of 1.66 area as looks like solid S/R area.
As ever I’ll be waiting patiently till the time to strike arises.
F
Your humble opinion is always welcome, well hopefully my sell order on the sp500 will get triggered and price bottoms…£££.
F
If you look at the dow over the last 15+ years there is a massive what you would call brodening top pattern. This pattern is also reffered to as an expanding triangle or 5 point wave reversal pattern. They are very similar to the 3 drive pattern, except that point 4 goes lower than point 2. Time symmetry between the tops/bottoms is important.
This pattern on the dow is pretty ominous, but there’s no telling what the correction will be. Plus, it’s so very long term that the top could occur over a long time period and it still be considered a valid pattern (makes it tough to trade from the dialy TF… need to check monthly TF probably)
Fully agree with everything you mentioned about the current market patterns. Although I am not proposing trading monthly signals from the daily. There are daily bearish signals being fired such as yesterdays “Engulfing Bar”/“Inside Bar False Break Bearish Reversal” which is a valid signal in it’s own right. [B]But[/B] every once in a great while, due to the fractional nature of the markets, a daily price action pattern that is playing out is the start of a larger time frame signal. We see this all the time with pin bars, many of the daily pin bars that form started out from 1 hour pin bars, and the hourly pin bars started from 15 minute pin bars. Sometimes you can get in on the hourly pin bar and the completion of that pin bar is actually the start of a daily pin bar. Now you can continue to hold the position and also play out the daily pin bar. Perhaps the daily pin bar playing out is the start of a weekly pin bar, and you play out the weekly pin bar.
Taking that idea back to the DJIA example, because the short term is a bearish reversal PA candle(daily), the medium term is a rising wedge(weekly), and the long term(monthly) is a broadening top, we may or may not have the rare opportunity to trade a smaller time frame setup that is setting up a higher time frame setup.
Also here we don’t subscribe to a lot of the beliefs and rules floating around the mainstream PA universe. For one, we do pay attention to what is going on at other time frames of the time frame we are wanting to trading from. The closer the other time frame the stronger the affect that price action will have on our trades time frame. I.E. If there is a huge weekly bullish pin bar at a key level, and a daily bearish pin bar, I will urge the members to not short the daily signal [B]or[/B] at the very least be extremely defensive in the trade.
After seeing how profitable wedges were the other day by the mighty Dudest. I have my own.
Here on the USDJPY price has been in a tight wedge for a week or 2 and looks reading to bust with all those daily bullish pin bars not to mention the weekly bullish pin bar last week. I’m already in this trade from the weekly pin bar but set another order after seeing this formation. Seems most of the yen pairs are rather bullish and they tend to move together.
Any advice on this or opinion would be appreciated.
Darth
I agree with everything you said. I didn’t mean to imply you were suggesting anything of the sort… just merely making a comment.
I am curious what you do when you have conflicting price action signals on the same TF with no other higher TF signal. I’m currently long on GBP/AUD. Today brought a bearish reversal pinbar. I am curious of peoples opinions on how they would manage this. I am trying to get away from over managing my trades…
It depends on the trade, if the counter price action signal is off of a somewhat important level or is forming off of some sort of counter pattern I will close it out. There is a fine line between over-trading and being a prudent trader. Although I would say the more experienced you are with trading, the more you comfortable you should be with interacting with your trade. When it comes to suggesting to traders to be a littler more interactive with their trade, I worry less about them over-trading and more about them over-reacting. The worry is them closing trades they should have left open because of a perceived risk that didn’t really exist. Sometimes going into trades I will find 1 or 2 minor S/R lines, and if any clear and solid PA forms on those lines I will get out. If the same pa formed kind of out in the middle of nowhere, I will let the trade keep running. I hate to say this because I just got on other members about mentioning it, but your pin bar is forming the right shoulder of a H&S bearish reversal pattern. So what I mentioned earlier, I will close if the reversal is from a some what significant S/R level or if it is forming off of a counter pattern. In this case the H&S is nearly complete and is counter to your long position. It could break the pattern and reach your TP yet, but trading is all about probabilities. At this point there is a higher probability that price will move down 70% to hit your stop than it moving up the 30% to hit your TP.
Hold in until it hits the SL or TP, you make the plan before you make the trade, same way you draw house plans before you build it.
Often on breakouts, for example, a pair I am watching closely atm, EURAUD, daily, a breakout, and a massive bearish pin bar, but I ignore that, as often after breakouts, a reversal signal forms making people worry and close out, then price will continue to hit TP…
But, for that trade on GBPAUD, it is at resistance, so I would have made that my first target and SL would be at BE now.
Yeah, my first TP is not really in a smart place… lol
Here is a nice setup, with amazing R:R that will bank hard if it plays out to plan.
EURAUD H4
Here are profit targets on Daily… Sorry, using 3 different platforms from 3 different brokers lol…
Hey Adam, just some advice, as I’m looking to short this trade so I’ll play devil’s advocate.
Here on the EURAUD D1 you have 2 major S/R one at 1.5300 and one at the VBRN of 1.5000. Price has been moving up from the last support of 1.5000 and now found resistance at the 1.53 mark where it has printed off a great bearish pin bar.
For me thats good enough to short. Plus the Euro zone isn’t looking to great atm and the AUD is looking ok.
Also and correct me if I’m wrong but isn’t your wedge invalidated as price has already broken out and return within it instead of climbing?
Anyway excited to see how this plays out.
Darth
Hi Aaron
May I seek your advice on breakout trades please.
When taking breakout trades, whether it be breakout of horizontal or diagonal S/R as in bullish/bearish flag, ascending/descending triangle, horizontal/ascending/descending channel…, when do we enter trade on close of breakout candle & when do we wait for pullback after breakout?
Thank you & have a great weekend ahead!
Henry
Henry, I want to make sure I understand your question correctly. It sounds like you know the proper steps to entering at the breakout and entering on a pullback, but you aren’t sure how to decide what method to use? You should use the method that fits your trading style and also your risk appetite. If you are a trader who trades more conservatively, generally shoots for smaller risk reward but a higher win rate, you may just want to always wait for pullbacks. There is a risk the pullback never happens and you miss the trade, but if you wait for the pullback and a PA candlestick entry signal, you boost your win rate of those patterns. You may decide to take a different approach and instead do a more risky entry at the break when you deem the trade as a 4-5 star quality, and do a pullback entry when the trade is 3.5 or less quality. How you decide to enter trades becomes a part of your own unique trading style.
You have a great weekend also!
Hey Darth.
This will still go up. There is an inverse H&S, and price has broke out, and come back down yes, printing off the bearish pin, but it will still go up again. Usually after a breakout of this formation, there is an opposing signal that shows, in this case the pin bar, but ignore it, you will notice this time and time again.
Check Gold daily, it happened a few weeks back before that big breakout and actually fakes out a lot of people.
Got it Aaron. Thanks.
