Tymen interesting discussion on those bands. Here is an example of what I posted last week. This shows a daily signal then a slip down to 4h to confirm the daily. This works on any time frame. I guess you could use the daily as the signal and the entry on a smaller time. Once signal is alerted the Vertical line is drawn, then again on the 4h. If someone was trading the high times then naturally your stops are not 20 pips away. Some might consider using a volatility stop off some ATR or below support. Like any trending system you never know when the trend will end.
Daily is like the heads up display and the 4h confirms the signal. Something like this is mainly for longer term positions or those who can not stare at the screen all day.
Sorry for getting off track and away from your main topic.
Thanks guys for the help.I was pulling my hair out trying to figure that out.But we are all set up now!!thanks!:DBy the way Tymen I am grateful for this threadā¦I have been waiting for thisā¦since christmas time!Keep up the good work.!
One fast question, my KC comes with a default setting of period 10ā¦I have switch it to 5 as you instructed,but I do not have a factor setting(Is this important?)
>>> Ideally, to scale the vectors correctly, the main chart should be full size, then the MACD chart should be full size. This way you get the exact angles of the vectors.
Note that the middle BB (blue) is going down, whereas the MACD is going steeply up.
The resultant, therefore is nearly level, [U]just a tiny bit up[/U]. So the price action which would be at the [U]yellow middle KC band [/U]for a [U]level[/U] [U]resultant,[/U] is hovering just above the [U]yellow middle KC [/U]for a [U]resultant a tiny bit up[/U].
Again, the predictions are accurate.
[B]Next post, we will do a prediction first, then look at the final result.[/B]
See the slide down from the 2.0200 to the 2.0000 level. I woke up part way through that and missed the beginning of it, where it came off the top BB with a reversal pattern.
Iāve attached a 1 hr and 5 min chart. Thatās the GBPUSD.
Iām just wondering if there was anywhere in the 5 min chart that I could have entered once the drop was underway.
It is very difficult to see your evening star pattern on the 1 hour chart(magnification would be helpful) but I think I have found it.
I would not have traded this pattern - too risky.
why?
Later rules.
With an evening star pattern we look for candles to walk the upper BB. This indicates a trend - in a 1 hour chart this could be reasonably strong. When the evening star appears it signals and end to the walk and we can expect the trend to reverse - even if only for a short time.
In your pattern there was no such trend. The price shot up from below, then shot down again - more of a price spike. Trading this is very risky.
As such, I have set a rule that the candles of the pattern must never penetrate the middle BB - they should be smaller than that. Preferably the green candle just prior to the pattern is also well above the middle BB.
You then give your downtrend room to move. Remember that the middle BB is the average and price action tends to return to this point. There is no guarantee that is will go past this point.
If you did not trade this one then just forget it. I will talk more about good and bad patterns later.
Amazing prediction accuracy. You may argue that this chart has been carefully ācherry pickedā but I can tell you from experience that it works all the time.
[U]Comments invited[/U]. We can now use this to get quality entries on the evening star pattern using a 5 minute chart.
At this point, stop losses have not been discussed - coming later.
[B]Next charts - a fully live trade with the evening star from start to finish[/B]
The vectors are drawn exactly parallel to the lines ie the BB vector is parallel or even on top of the middle Bolinger band.
Same with the MACD vector. Use charting tools to draw.
Now you donāt have to draw them - you can make a mental note of their direction.
[U]Examples[/U] :
up BB+down MACD=level priceā¦middle KC.
up BB+up MACD=up priceā¦top KC.
down BB+level MACD=slightly down priceā¦below middle KC
down BB +down MACD=down priceā¦bottom KC.
level BB +up MACD=slightly up priceā¦above middle KC.
ETC.
Hope this helpsā¦if not post again and be very specific with your question.
The chart shows a beautiful evening star highlighted in light blue. The 2nd candle has peaked beautifully.
It is also on the upper Bolinger band which, together with the lower band, is shown in grey. The middle band is in blue.
The profit potential is shown by the dark blue dots - you [U]trade short[/U] as far as you dare or use a MACD or stochastic or otherwise.
Now the 4th candle (green) is the entry candle at 11.45am. You can see that this candle has a very long upper shadow (wick).
The traditional [U]shorting[/U] entry point is at the bottom of the 3rd candle and I have labelled this point "[U]poor entry[/U]"
If you were to enter near the top of the wick you would have the āgreat entryā as labelled.
The difference between the [U]great entry [/U]and the [U]poor entry [/U]is about 30 pips. [U]This is a whole shorting trade in itself [/U] let alone any further pips we get from shorting from the traditional entry point !!!
So you can see that good entries here can make a difference. This is for scalping. If you are a position trader (long term) then specific entry points would make little difference.
When you are looking to trade this set up it is assumed that you have a 5 minute chart fully ready with MACD, BB and KC already on it. You are already watching it, and when the 4th candle appears on the main chart, you are ready to attack.
Tymen,
Learning a lot here.Thanks for the reply.I am quiting my job to trade this system next week!!Just kiddingā¦keep up the good work though very interesting,I have never looked at price this way.vectors and resultants,good stuff keep it up.
