They’re both pretty consistent short material on pullbacks aren’t they.
Did you take the 1655 entry kyle? Nice move all the way down to the average days range on that one this morning.
Hi Carll,
No, it was the drop through 1.1680 (1.1676) which coincided with a 5 minute hook at the commencement of the Frankfurt session.
Tell me about it. I was looking to book some profits on the approach to the ¾ mark of the days range & instead of exiting part of my bet I inadvertently closed out the whole £6.00.
Highly embarrassing considering the follow through move it put in. 
Looks as though it’s ready to jog on too.
ha ha ha. Chalk it down to the Monday morning effect.
I’d count yourself very fortunate if those kinds of annoying little irritations are the only things you need to worry about. 
Jocelyn, Hi. I’d like to direct a couple of questions your way if you don’t mind.
Is there a level that in your opinion & experience trumps all others when appraising & analysing a setup on any of the fx pairs? You all regularly point to the spotlight levels first such as last weeks & yesterdays price rejections, so would they always be your main priority focus levels?
Second question, what types of price action do you or would you typically look for on a Daily chart when assessing potential trades? I know none of you are fans of indicators but I’ve been trying to factor in the use of a couple of moving average & a stochastic to help with identifying possible trend, entry & exit levels on my daily chart & looking to tie them up with your support & resistance levels, average daily range & bias information.
I could do with a little guidance please as I’m struggling to knit them all together.
Thank you in anticipation.
Hello strobe,
First off, the fact I don’t use indicators is irrelevant. If you want to incorporate a moving average & stochastic to assist with your planning then the aim should be to determine how you can make the most effective use of them to help you achieve your objectives.
No to the trump comment, yes to the prior day spotlight comment.
There are always tiered or priority levels that will dial in & out of focus each day as the price gets driven back & forth on your technical chart.
If you stick 4 vertical lines up on your chart & mark them off at the days close (17.00 NY) then toggle to a 30 or 60 minute view, you’ll see how consistently those first line priority levels play ball.
Price has to put them in the rear view mirror before it can make headway onto the next level of priority, be it in trend or range mode.
So that always takes precedence, followed by the next obvious swing level which will be clearly identified via a 30, 60 or 120 minute chart view.
Although there are plenty examples available, I’ll cover some current scenarios when we get to the specific chart queries surrounding your indicator permutations.
I’d be looking for the common, basic herd psychology indications that price was either exhausting & slowing or preparing to re-engage a dominant trend or bias via a pullback to a prior area of support or resistance.
Typically those signs would present themselves in the form of spinning tops, dojis, small range (inside) bars - all signs of fair value & indecision.
Hammers & inverted hammers (hanging man) – typical behavioral signs of level or zone rejection.
The behavior of the market is revealed & presented on that week, day, regional session or hour by the formation & presentation of the bar.
It’s the one true reflection of the dominant market psychology at that time based on the influences that are driving it.
If that psychology is playing out on & around an area that I’ve identified as significant, all the better.
Ok, well you’re going to need to either stick up a chart or let me know what configurations your indicators are set to & I’ll construct & haul it up for you. We can then try knitting it all together & see what it looks like.
If nothing else your reply has confirmed that I’m over thinking & cluttering up my chart with too much information. I’ve cleared everything except the 4 vertical lines + the 100 & 200 moving averages & a stochastic indicator. I have the default setting on the daily chart stochastic & I’m using a metatrader chart to plot my analysis.
I was also wrongly assuming there should be more information in arriving at decisions involving probable trades on the daily, such as patterns & stuff. But again it looks as though I’m looking too deeply for answers. I’m using the moving averages as additional support and resistance & directional confirmation. The stochastic is used as a crude timing assistor.
I realise the moving averages will lag when the market changes direction, but I’m ok with that for now. But I feel there’s still something missing when attempting to get in step with the market from an entry perspective. I’m not really comfortable down at the shorter chart time frames yet, preferring the slower pace of the slightly longer term charts. But Im sure that’s more a lack of experience & competence thing than anything else.
Not fully sure I’ve been clear enough for you to offer much help. I would be grateful if you could post the charts for now until I’m able to get myself accustomed.
Ok, so lets start with what we got & work from there. It’ll be painless & remarkably succinct, of that I can assure you!
If you’re in clear out mode, then would you have any objections to sweeping that big 200 average off the chart & adding it to your clutter pile? you can keep the smaller one & the stochs for eye candy & we’ll see if we can get some mileage out of them in sync with these common price bars I mentioned above.
That’s what we’ll be focusing on, everything else will pivot around them.
I don’t know what your time availability is like so for now I’ll assume you can access a chart at least a couple times per day.
You don’t need to drill down into the faster timeframes if you don’t want. The daily is your primary focus & you can wrap a secondary timeframe (hourly) around it to assist with triggers, risk & trade management if you so wish. All will be explained.
So, to that end do you want to pick a pair to get it started?
Any pair will do, I’m not fussy. Perhaps one you’re currently trying to make headway with.
Primary TImeframe: Daily
Execution TImeframe: H1.
Indicators: 100 SImple Moving average and a default stoch settings plus PDH, PDL, PWH, PWL
Use Daily Timeframe to determine the bias and hourly to execute.
A simple trigger to go along with it will be the final touch.
That looks like a sound template.
Thank you Matt & Ray for your comments. Yes that does seem like a practical template Ray. Although I’ve read of the many examples posted here about combining setups based on the lower timeframes, I couldn’t/can’t translate exactly what would be considered optimum opportunity from the Daily chart. Now that Jocelyn has offered a few clues & you both have reiterated those technical basics I’m beginning to see the potential.
Thanks Jocelyn, I appreciate you offering to go through that procedure. Could I ask for an example on one of the higher performing average range pairs so I can fully appreciate where you’re coming from?
Either the EUR/CHF or GBP/CHF as Switzerland’s currency is considered a safe house when market risk becomes intense. That currency has been trending strongly & exhibiting the type of price action I would be considering as higher priority.
The guys have the basic structure pretty much covered. Your primary or leading timeframe dictates directional bias.
You’re taking your cue from the daily, therefore when it’s in bearish mode you ignore all long signals on any lower secondary timeframe(s) & only trade from the short side when the opportunities set up.
Those common behavioral bars (dojis/spinning tops) previously mentioned show up at the top of every main pullback, confirmed by the extreme stochastic readings. That’s one of your cues to begin preparing for a likely low risk, high potential entry.
I’ll zoom into the most recent examples to give you an idea of how you might proceed in future when spotting these potential set ups.
By earmarking the lows on those bars you can either choose to engage directly from the daily chart or drill down into your secondary timeframe to better time your entry if the risk is unacceptable, the average range availability is tight or the time window doesn’t match up with your usual working hours.
The hourly focuses this last daily chart spinning top pullback level below last weeks 1.17 round number highlighting the typical set up opportunities available during the early european business day. Notice the same bar types showing up at a level of interest?
And the current weeks take on the pair. Same price bar behavior with a second rejection at the prior days high with double stoch confirmer.
After that example how silly do I feel I don’t know why I got it into my head things would be any different or slightly more complicated just because I was looking at much higher timeframes, but I did.
That was a very useful & helpful exercise, so for that I thank you. I can better appreciate now how introducing a variety of timeframes will offer me choice about where I decide to enter, how much risk I’m prepared to allocate to each trade & how I might manage the entry. Because regardless of the timeframe, I’m only considering trades in one direction until my primary chart tells me otherwise & I’m going to have plenty of forewarning of a possible slowing in the momentum by watching for those indecision candles at either end of a daily swing move.
I’m assuming the average day range takes on slightly less importance when my trade timeline is geared towards overnight or longer duration? I can see the big advantage of entering when there’s plenty of available room as it offers better risk & profit potential, but in your experience does the above example carry any increased or negative risk implications?
I’m going to spend this weekend confidently expanding my watch list of pairs & working through some more examples.
I would highly advise sticking with just one until you get your setup so dialed you can do it in your sleep.
These things have a habit of sneaking up on you, and if you are scanning too many pairs, you’ll lose focus.
I can’t tell you how many plum opportunities I missed early on because I was all over the place flailing away looking for setups, and missing the most obvious ones.
Once you’re in sync with things it gets easier. For instance, I haven’t traded much else for the last few weeks other than the GBP/CAD.
The last 5 weeks there have been textbook examples. All the way up to the 100 pip one hour drop Friday morning.
That’s very good advice Master Tang. I totally agree that spreading myself too thin would be counter productive. I’m only looking to compile a total of 4 or 5 pairs in my basket with the aim of introducing a little choice & take advantage of currencies that are in the spotlight at a specific time.
I’m not interested in daytrading, so my focus will be geared more towards identifying the opportunities setting up on the hourly chart, based on the daily bias such as those Jocelyn kindly opened my eyes to yesterday.
Interestingly, since setting up my hourly charts based on her template & going back over the last weeks trading, 2 of my watch pairs were off limits due to moving against the primary (daily) rules & the other 3 produced 4 clear opportunities inside the time window I would normally be active.
I’ll keep my three core pairs for now (EUR/CHF, AUD/USD & EUR/CAD) & experiment by observing a selection of other pairs during my testing period to try & achieve a balanced portfolio, along similar lines to the objective kyle morgan appears to be striving for. I like that idea & think it makes a lot of sense.
Matt’s right, weekly range numbers will certainly rank high on your list if you’re leaning more toward longer trade time duration.
If a potential bet is setting up that you like the look of but you need to utilize a slightly wider stop to get aboard, simply adjust the your bet size down to maintain the account risk exposure.
Some of those rejection dojis, spinning tops & inverted hammers can be pretty wide bars & carry long wicks if the defense at a particular level proves strong or volatile.
If the bar lengths are outside your comfort level, then either let that bet go or drop down another notch to the 15 minute & overlay the same template as the hourly on that chart to see if you can get a more appropriate entry.
Don’t be afraid to use all the tools at your disposal to achieve your objective. It’s what they’re there for.
Thanks both of you, that’s another one cleared up.
I’m now seriously re-thinking my views towards those timeframes Jocelyn thanks to last weeks effective top down example. Whilst going through more testing over the weekend curiosity got the better of me & I included the 15 minute chart, revisiting all of my previous hourly research checks.
Unsurprisingly the results of the exercise were very encouraging. In virtually all cases where the hourly continued to confirm the bias of the daily, the 15 minute offered numerous follow up opportunities to get in on a trade by ignoring all counter trend signals on the stochastic & only considering signals in the direction of the primary bias.
Todays price action on the EUR/CHF being a prime example of the above. Needless to say that plea for a little guidance on knitting things together is looking more & more like a very smart request
Yeah, there’s an awful lot of nonsense that does the rounds in these places surrounding the use of shorter timeframes.
Contrary to popular belief they don’t have to be viewed as high frequency vehicles for the grabbing of 20 or 30 pip moves, dragging tight stop loss orders behind them.
If you use a little common sense & introduce some initiative into the mix they can form part of a very efficient & solid framework, especially for the nimble footed retailer.
Trouble is most folks have blinkers on where they’re concerned.
Good stuff.
Glad you’re able to get something useful out of it.
You already had all the ingredients of a simple, straightforward set up anyway.
You’re the one whipping it into shape, as long as it sits comfortably with your style & risk attitude you’re on the right track.
CHF is so strong now. I didn’t take EURCHF, but got into USDCHF. But I am still cautious about CHF, as the CHF government may intervene to prevent their currency from becoming too strong.
If you’re following the set up criteria on the structure strobe enquired about then the daily bias is still heavily bearish Matt.
Swiss will continue to attract safe haven flows with all the global turmoil still in evidence.
Therefore shorting into strength on the lower timeframes continues to be the valid play.
Hourly hook off the top tier (80) which closed out on Friday confirmed into today’s market action all the way through the Tokyo shift.
So, drill down into the 15 minute & wait for a likely hook opportunity to get short again during your time window of activity.
You had two opportunities to take it on this morning by the looks.
[B]1)[/B] The early bird worm via the 15 min extreme hook off [B]Fridays high[/B] through 1.0920 or
[B]2)[/B] Shorting through the hourly inside bar an hour later through 1.0860.
You don’t need those indecision bars on the shorter timeframes to get a leg up into the flows. Once you identify the dominant flows from your higher (primary) timeframes, you use the extreme hook at levels of significance (in this case a [B]prior day high[/B]) to get you seated with acceptable risk & decent forward value (plenty of gas left in the average range tank).
Hi Jocelyn,
With the EURCHF for example, what would it take to get you trading on the long side? What are you looking for that is? High highs and higher lows on the daily?
As a very bare minimum yes.
If I can’t see clear evidence of a determined effort to either establish some kind of base with the potential to flip the bias then the logical conclusion is to continue selling into rallies.
Obviously folks will have slightly different views (regards timeframes) of how they evidence that behavior, but essentially for me that’s number 1 on my list of priorities.
Your currency v/s the $US is a prime example of that very scenario. That pair has been a strong buy on dips for a good while now, but the shine began to wear off during mid June & finally got shelved on the drop through 1.0450 on the back of that spinning top last Friday.
For me to get interested in going long dips again, that level is going to have to hold up to inspection if it comes into focus next time around, otherwise that pair gets put on the radar as a candidate for selling into rallies.