[B]EURUSD (22nd-26th October 2012)[/B]
Trade of the week.
Short @ 1.3080 on Monday at 15:00 GMT (London Close)
[I](Please click on links below the images)[/I]
Earlier as I was preparing the above screenshots and posts I was monitoring price trading down into the PWL. Below is a simple screenshot that highlights the core foundation of support and resistance levels that we spoke of earlier. Everything else is just simply built around this.These are the types of reaction zones that you want to be monitoring. If this was the only reaction zone you had noted the entire week, you got your trade today, provided you were patient and did not try squeeze something out of the market earlier this week. You must learn to trust your own analysis, filter out what others are saying. Price can be viewed from different perspectives and both those perspectives can be right, each trader has their own opinion and approach. This exercise will enlighten you to key reaction zones, where you can anticipate setups to form. Issues such as how you enter, how you exit, what confirming tools you use and what signals you take to give you the green light will all be up to your own personal choice and preference.
I have marked this post to be reviewed later on. We will come back to it and discuss how the other tools could have been used to confirm the trade, get you into the trade and exit the trade. For now just focus on the 4 hour reaction level I have noted in the screenshot above.
Wax on, wax off :7:
Shaunfx,
Your posts show key resistance marked as 20, 50, 70, 80. I thought ICT is only using 20, 50, 80, 00?
Please clarify.
Thanks
There is no hard rule here. Generally you round to 20, 50, 80 ,00 as I have done with the exception of the 70 as price did not quite get to 80. You can also use other round numbers. I might draw a level at 55 but in my mind it is still working the 50 level. There is no perfection when it comes to trading. I could have drawn the level at 1.3080 instead of 1.3070, it would have been a few pips off of the actual high and you still would of got your 1.3080 to go short on Monday 
Thanks so much shaunfx (and ICT!) for starting this thread! To be honest, even with the forum and the videos from ICT I was having trouble fully understanding and incorporating the strategies presented. I also felt I could not keep up with the rest of the people and felt left behind most of the time.
With starting this new thread and starting at the very beginning of ICT’s teachings and going slowly over step by step with everyone I believe I’am learning more than I did when I was second guessing myself with the materials.
Thanks again!! Looking forward to working with everyone and helping each other!
EURUSD
Wednesday Oct 26, 2012 trading:
- Price went touched PDL (1.2923) and went down by 10 pips and then went above the PDL by little more than 20 pips. This is a profitable trade
- Price again came and touched PDL and went further down and touched PWL (1.2889). In the whole week, this is the only occasion that price touched either PWH or PWL. Price went down by few pips and then bounced off the PWL. This is also a profitable trade.
For Mon Oct 29, 2012
PWH: 1.3073
PWL: 1.2883
PDH: 1.2956
PDL: 1.2883
2012-10-26_1530 - Cskrishna’s library
What have I learned in the first week? - This exercise is like putting the great stuff that I learned from ICT’s videos, into a perspective. Until now, I was doing some random trades, here and there, and lacking a foundation in my understanding.
- Started understanding the importance of support and resistance levels and their significance and understand how price reacts at certain price levels
- Patience. Wait for the setup to unfold. If it does not, stay cool.
- Now I have a feel for what ICT calls the market rhythm.
My best trade would be: When the price touched PWL. When price touched either PDH or PDL, only in certain occasions price responded the way we were anticipating. My understand is that the price would bounce back, once it touches the PWL because:
- This was the only occasion that price touched either PWH or PWL
- PWL was lower than the PDL by about 35. If piece went past PDL and reached the PWL then it would have almost met the ADR. Therefore it’s very likely that the price would bounce back and would be a good trade to go long as soon as the price reaches PWL.
Thank you so much ICT and Shaunfx.
I will start working on my homework.
GBPJPY 2012 10 22-26 D1 Magnified
First of all, I did take this demo trade but did not report it.
Pre-trade analysis
PWH : 128.22 (Judas Swing on D1)
Nearest institution level: 128.00
128.00 +/- 25 pips has been tested and rejected:
- 4 times on Sep 17/19 and Oct 5/18 in D1.
- 6 times on those dates in H1.
- 10 times on those dates in M15.
Judas swings:
- Up to 128.76 then down on Sep 19.
- Up to 128.22 then down on Oct 18. (see 2nd line on PWH above)
No major impact news to EUR, GBP, USD and JPY in the coming 48 hours.
All the above makes this a possible strong resistance and a possibly good level for Sell Resistance.
Oct 22 Monday
- H1 Judas swing during London Open on Oct 22.
- H1 high tested by Judas swing is lower than H1 on Oct 18.
Open short, SL @ PWH, TP 50 pips, targeting RRR > 2:1.
Outcome
Trade went +30 pips then headed back towards starting point. Only managed to 12 hours later at 50 pips.
End of week observations
- PWH became daily high on Monday LO and Tuesday before AO.
- PWH was broken through on Wednesday.
- CWH (Current Week High) was reached on Thursday, which the level coincides with 129.5 +/- 20.
- The entire week ended back to 128 +/- 20 level.
Questions
-
I personally like the trade because of the application of PB/JS, key S/R. But would this be considered a counter trend trade because HTF is showing uptrend?
-
Is the analysis that leads to this trade sound enough?
Thanks to all. Especially to those involved in FX for giving me this opportunity to learn, apply, make money and help others.
Friday’s trade was a good example of combining a PDL with a higher time frame support and resistance level. In this case that higher time frame support level was the PWL.
As you said, price traded below PDL (Thursday’s low) but also note Wednesday’s low was 6 or 7 pips below Thursdays low. So price traded below PDL and Wednesdays low and we saw a 30 pip bounce from Wednesdays low.
Where does price go to? Just above the 78.6% retracement level (Fridays high to the low just formed below Wednesdays low) to get short and back insync with the higher timeframe move. We then trade into PWL @ 1.2890 (also 78.6% higher timeframe retracement to long) and we see profit taking and a NY reversal. When you say you are getting a feeling for market rhythm I get what you are saying because you are slowly starting to understand why price does what it does and how price searches for liquidity. Continue to study this and take notes. You might not have your directional bias right for the day or the week but if you are trading around these levels, the odds will be in your favour. You might get many breakeven trades, but if you take 1st profit at +20 pips you will get something more often than not. Follow a strict risk management plan to limit drawdown which will enable you to be here a year from now, with experience you will get better and then the market will pay you. Just be strict in your approach to taking trades, do not over trade and only trade around key areas of support and resistance and you will be fine. Sorry for the ramble.
USDCHF (22nd - 26th october)
USDCHF Daily:
USDCHF Daily zoomed:
USDCHF 4hour:
USDCHF 1hour:
Trade of the week:
My trade of the week would be (as seen on the 1hour chart) long on monday @0,9250. We have the swing low the week bevor and price trades in this old Support level.
@shaun: Thanks a lot! This is awesome I am looking forward the the coming weeks!
- The trade you described above was definately a counter trend trade.
- I would not call the Monday move up a Judas Swing. Notice how price failed just below last weeks high. When price goes that close to a higher time frame level you should expect price to run up into that level or blow right through that level as it did. This in my opinion was a market maker play where stops where built up above PWH. Below is my analysis for GBPJPY. My trade of the week would have been Tuesday’s London Close reversal at 127.00 or Wednesdays London Open.
The majority of my levels where taken from the weekly chart.
Very nice Shoe. Glad you are finding it useful.
Hmm… need more wax…
So the choice entry for this case is based on:
- Current trend/bias - up in this case.
- Weekly S/R levels.
- Look for suitable entries at retracement.
Regarding the 78.6%. I ran a fib from PDL to PDH, but 78.6% is at neither of the price level you stated. Can you draw one to show me?
Thanks
Wouldn’t the “buy support” in this case be conflicting with down trend in D1/W1 chart pattern?
Are the following reasons for taking the long at 127 good enough?
- Current trend/bias - up in this case.
- Weekly S/R levels.
- Look for suitable entries at retracement.
It is a counter-trend trade yes, but the point was to show that trading around these key levels offer up higher probability trades. A trader might have their directional bias wrong for the day or week but when trading around these levels you can still give yourself a chance.
There were many other factors to take this trade, I have already mentioned the 78.6% higher timeframe retracement, there was time of day, a smaller retracement at pivot S1. Earlier I said I would review this trade at a later stage. I do not want to get ahead with other technical factors.
EDIT: By D1/W1 I assumed you were refering to the current day (Friday)/current weeks(Monday 22nd- Friday 26th) trend which was down. The 4 hour chart is range bound so when I refer to a the “higher timeframe move” I am refering to the short from the 1.3140 key resistance level.The question was also made with regards to EURUSD. I thought I should clarify this for future readers.
Yes, that is as simple as what it should be.
EDIT: Above comment made with regards to GBPJPY
Thanks. Picked up lots from this week.
Let’s continue next week where we left off.
Here is my homework
Shaunfx,
Can you please take a look at the chart and see if I got it correct?
Why I am asking is, once I plotted overlap then I am able to see trade opportunities, almost, everyday.
Just want to make sure that I am doing correctly.
Thank you so much.
2012-10-27_2250 - Cskrishna’s library
Just wanted to make sure that I am getting the 4H support and resistance correctly?
Shaunfx,
I have a couple of questions here:
-
As we are considering the PDL, do we also consider the low that is made a day before of PDL? When we are studying the price on Friday, the low that was made on Wednesday, in our example. Does it become more significant if the price goes below PDL and also below the low made a day before PDL (Wednesday)?
-
Here is my question about entering the trade with this setup. Let us consider the Thursday’s trade. PDH is 1.2995 and we have 1.3020 higher time frame resistance. There is 25 pip difference between them and therefore we may not consider it as an overlap. Am I correct? In such situation when do I need to enter into the trade considering the setup that I am working with?
Thank you for all your help.