I suppose let me put my 2 cents in worth here
and just so i don't cop any flack from any other members, let me be clear on my prediction here
This is just a general prediction (not based on any depth of study)
i don't like to predict things, i'm a believer in letting the market do what it wants to do and i roll with it.
But. IF I HAD TO MADE PREDICTION.... BUY OR SELL on EUR GBP
this is what i'd do...
Firstly, so as to not initially influence my decision , i would not initially look at an Economic calender.
I like to made a decision and therefore ensure that my Jedi Trading skills are still up to scratch
i would therefore first look at ao the Monthly
this is how my chart works
Blue Jap Candles are Bullish
White Jap Candles are Bearish
the Green overlayed candles are Heiken Ashi (HA Candles)
Green HA's are Bulls
Yellow HA's are Bears
as far as HA's are concerned, MY METHOD (That i have proven that works for me over a few years is this...
FYI, you know how i sometimes say I TRUST MY INDIES to a point
well this is one of those times when i trust my indies
I trust my HA about 80% of the time and IT PROVES ITSELF TIME AND TIME AGAIN.
i like to see AT LEAST 2 HA candles of a decent height before i decide it's going in a direction
1 HA doesn't cut it
2 HA's ... umm yeahh ok.. maybe
3 HA"s .. Ok, we are changing direction
but they have to be 3 OF DECENT SIZE, not piddly little things.
so looking at this Monthly and considering the Red Trend line
and slapping on a Fib
we can see this
WE KNOW THIS FOR A FACT
- as always , price can only do 3 things
It Can Go Up
It Can Go down
or... it can Range (go Sideways)
if it's gonna take a dive down IT MUST DROP BELOW the Red trend line (which we can argue that it has. BUT, poking it's head down a little is not always convincing. soo let's look further)
it must then Drop below the 61.8 Fib Level
and then to prove it's not still in a range it has to break below the 50% Fib Level
if that occurred, I would SELL Just below the 50% Fib and My target would be the 38.2% Fib Level as a min and then i would trail the stop to the 23.6% in extension. i would TAke profit at 23.6% regardless of what happened after that.
at around 0.7440 i would be expecting a pull back back up to at least the 50.0% Fib and then i would re assess it from there
- it must also go below that MA on the Bollinger band (which also lines up with the 61.8% Fib level.
and Must AS A MINIMUM get to that Lower 2 Standard Deviation (Purple Line) on the bollinger band.
IF THAT DOESN'T HAPPEN, IT'S NOT GOING DOWN .
Now if it doesn't do those things, it only has two options. Keep ranging or go up.
it's already above the 61.8% Fib
and it then has to break those tops at 0.9297
if that happened, my target would be 0.9728 Just before the 100.0% Fib
Now lets look at what the HA's have to say, let's zoom in a bit.
i look at it like this
I have 3 Nice long Green HA's
then i have 1 Long yellow HA (which doesn't mean anything unless it's followed by 2 More lower ones) WHICH IT IS NOT
I see this as RANGING
Now some people would see the range as follows...
if you look at it properly, the range is this....
and price is in the middle of the Range at the moment , which is always a safe place for it to be.
if i was planning a buy or a sell, i would plan it like this
the black line is the Mid of the range - I would not do anything anywhere near this point
for price to go down, it has to break the bottom of the (Lavender box) bottom of the range
and for price to go up it has to break out of the top
I would consider a BUY at the Green Line
and i would consider a SELL at the Blue Line
BECAUSE.. IF I'M WRONG, I KNOW THAT IT WILL RETRACE AT SOME POINT BACK TO HERE SO I CAN AT LEAST BREAK EVEN, but i also know that if price went from it's current price as high as the blue line, it's very likely i will be able to get into profit enough to put in a Move to Break even Stop loss
and conversely if it went to the green it's likely it would pull up enough so i'd be able to put a Move to break even on.
My stops intiially would be placed 10 pips outside the range (Purple Box) in the appropriate direction relative to my trade direction..
so. CONCLUSION at this point.
Long Term.. it's ranging
and those HA'S tell me it's going to go UP first
but let's go down in timeframes as well
Lets look at the Weekly
Here.. i see that my initial theory is confirmed... IT'S RANGING
also. if we look at the bollinger's
Price has gone from being up high to the 2nd Standard Deviation to dropping to the Mid line (MA)
and drop below it
this would suggest a bearish move
but that range would need to be broken on the lower side in order for this to be a valid point.
and THE GREEN HA's in this chart indicate that ITS' STILL GOING UP
We have seen 2 Yellow HA's and then a Range
if i was going to be convinced that it's going down, i would need to see 2 - 3 More convincing Yellow HA candles and my target would be 0.8376 if it was going down.
but i like to consider the high time frames
but i spend more time on the H4 and basically trade off the H4 but use other time frames as confluence
so... THUS FAR, the charts and indies are telling me GO LONG
let's look lower
the M30 is showing me that it's still ABOVE THE MID LINE on the bollinger
so.. still going up
but it's curently in a range as well
the H4 is showing me a Range
and a SQUEEZE on the bollinger which means THERE WILL BE A BREAKOUT SOON to one side
My Money is... it's on the High side hehe
and i'd plan it like this
based on the H4...
the yellow mid line is obviously the PRICE (The Entry)
MY THOUGHTS WOULD BE.... I WOULD OPEN A BUY TRADE.
The top blue (Cyan Line) is the highest point i woud aim for
the bottom blue line is the lowest point i would aim for
but realistically i would place my TAKE PROFIT at the green line
which would Yield a 57 pip profit
and i would put my stop loss at the red line IN CASE I WAS WRONG
which would yield a Loos of 49 pips
IF IT WENT AGAINST ME, I WOULD RE OPEN A BUY AFTER MY STOP GOT TAKEN OUT.
and re plan the trade
but i would also open another buy that would take profit a few pips above the Entry of the first trade.
this covers the loss initially
but would i enter at this point.... NO
i'm just saying , if we are talking about jumping in now
NOw. i would enter here...
the top black line is where i would consider a SELL
so... we could sell now
but then you might say..
Hang on martin, you said you were buying
YES.. THAT'S RIGHT
so.. to be clear
I PERSONALLY , Given that i have already concluded that price is going up (in my opinion)
i would not go against the trend
i believe and have proven , that in forex if YOU ARE NOT WAITING FOR SOMETHING TO HAPPEN.... YOU ARE DOING SOMETHING WRONG
so.. What am i waiting for ... ???
I would be WAITING for price to get to the bottom Black line
i would then BUY and set my Take profit at the top Green Line
this would yield around 156 Pips profit
i would also put down short term trades, that would take profit every 30 pips on the way up.
I personally do this, so that if i'm wrong, it offsets the loss that i would suffer
and given my track record, i know that i can pull off around 15 - 17 out of 20 of these before i get one wrong
so.. it's sort of backup safety blanket if you will.
and if it goes in my favour... it's just more profit, simple as that
however, if a person wanted to scalp or do short term trades,
i suppose something like this would be viable
Let me get rid of some of the lines so it's not so messy.
if someone chose to enter at the BLACK LINE
say on Tuesday and SELL
i would advise.. Take profit at the green Line
the red line merely the mid point in the range
You see, so long as price stays above the mid point in the range, its going up
and you are risking a lot if you sell at this point
so as for a short term thing... sure
and PUT YOUR STOP LOSS AT THE TOP BLUE LINE, In case you are worng
if you do this...
you should profit 30 pips (which is not bad)
and your stop loss is unfortunately at 39 pips
but hey.. these things happen and the whole Risk to Reward 1:1 min ratio is not always the best rule to follow
if you were to BUY LOW you could set up your risk to reward to be much better.
finally, since i have concluded here that i would go long if i was trading this..
i would now look to my short time frames for a specific entry
i look to the M5 to avoid Noise at times on the M1
but i like to plan the fine tune entry point off the M1
KEEP IN MIND I'M TRADING OFF THE H4
but the M1 is a fine entry point, and nothing more.
if i look on the M5 i can se it's ranging
and i would want to enter a BUY at the bottom of the range
i like to use the MACD to show me when it's changing direction
so as it stands now
if someone was to sell now.. i would say WAIT
if someone was to buy, based purely on the M1 and M5 i would say yes
but, then again, i would wait until it got to that point on the H4 before i considered a buy
so what do i believe
I BELIEVE IT'S GOING UP
but, i would wait for the right entry
now. if i didn't get it and it shot up, i would be paitence
and I WOULD WAIT for the pull back and then enter the Buy
that's what i would do
i would also check economic calenders to confirm my theories
of course i would plan my trade and lot size and assess risk
but, i'll leave that up to you to plan yours
I'm just discussing direction and risk
but not risk as it pertains to lots or money.
what i have described here is WHAT I PERSONALLY REFER TO AS "BUILDING A CASE"
aka.. Proving to myself Logically that what i believe to be correct is correct.
Now.. it doesn't matter if i'm right or wrong this is what i've learned over the last 7 years.
all that matters is WHICHEVER I AM.... What will i do as a result
so... if i'm right.. I learn from conclusions and how to stick to that train of thought
Now Logically , if i do that ... I WILL ALWAYS BE CORRECT
Unless... I'M WRONG
now.. If i'm wrong
I then learn from my mistake and understand where my logic was flawed and tweak it until it proves to be correct
in which case, I HAVE TO BE CORRECT hehe.. don't i
Now doing this, does not by any means ever get you to a point where you are never wrong
but, it does bloody ensure to a very very large degree that you are correct most of the time and you are very aware of what you are doing wrong and you can pinpoint it
and that's what i like about it
you can pinpoint things and you can gain control over what you are doing and your mistakes
this is , to a very large degree how i trade and how i stay profitable.
another thing is this
I don't like jumping in on instruments that i'm not familiar with ,
if me and you now decided we were going to trade EUR GBP together, i would want to test it on demo with my method of trading for like 5 - 6 months to get a feel of how it behaves
i would also use other charts on both the Weekly, Monthly, M30 H4 and so on
to give confluence
i might (off the top of my head) use confluence pairs such as
i would then test the valiidity of the relationships between these confluence pairs and the EUR GBP over months
because of this extensive testing period
this is why i trust (to a degree) my indies that i use and my confluence pairs that i use
and i know that if they don't line up, and i'm wrong.. it's going to be very rare, but not impossible
these are my thoughts on the direction of EUR GBP and how i came to the conclusions.
I hope this helps you out and gives you ideas.
if you make a packet.... hehe.... don't forget who told you about it... LOL
Happy new year mate