Thanks for sharing this incredibly simple system with us. very exited to start looking for Z patterns all over
wanted to ask you a couple of questions:
what is the frequency you find these patterns? i mean, how many a day? i noticed you started trading them on different pairs and TF, so little statistics would be great.
what is you win rate? i didn’t see any loosing trades examples… wondering if there is any
what is your policy on news reports?
would you say it is a good rule to move sl to break even once the price moved 50% to TP?
how many candles after the Z pattern is ok to enter trade? or it doesn’t matter as long as the price moves between SL and entry point.
sorry if i overwhelmed you with all these questions
The Z appears on all timeframes and pairs. But not all are tradable unless they appear on the Eur/Usd , that pair is very reliable. Moreover many times a perfect Z presents itself but gets invalidated and we would have to delete our buy or sell stops. That said I personally trade between 5-10 Z Patterns a month.(note that this is a rough statistic and changes depending on market conditions and whether I am day trading or not at the time being)
Following the outlined patterns on the first page and trading them on the Eur/Usd will always present you with a high probability trade. However there are losers every now and then which is inevitable in my oppinion.
I prefer to leave that to the discretion of each and every trader and experience. You see, there are lots of news going on that effect the market some are listed and some are known to veteran market participants, like when huge amounts of opptions get liquidated or future prices get crushed, these are news effecting the FX market but are not listed on any news calendar. Therefore it is not feasable or rather fair to account one or leave another out. Hence it is totally up to you and your understandings of the market.
In General I don’t move stops at all unless, 1-price just missed TP by a few pips 2- TP is very far then I it is a smarter play to either A- take half the money at a R:R of 1:1 and leave the rest to run,which in this case if price hits SL I sit on a BE or B- I move SL once price moved considerably.(like you mentioned 50% or at R:R 1:1)
What happens is that sometimes after the Z gets completed the market goes in a low volatility phase and creats Inside Bars, which in that case is a great thing. Because it will explode one way or another, either making you money or leaving you with deleting your position.
I tried to answer your questions as good as I can,hope it helps.
Trading experience differs over time, thus utilizing tools differ too. I elaborate;
Forex new comers Love to deploy trendlines and place their anticipation of how the market will behave based on that(take note this is an example and in no means diminishing or justifying once approach) where a more experienced trader takes advantage of a trendline, he/she won’t take a trade based on a single trendline, in fact that is a total no go.
This goes with every other tool,pattern,indicator,MA…etc. or what ever one might utilize. The more seasoned a trader becomes the more they understand when Not to deploy a tool. However as a start a smart approach is to find a confluence that presents the best opportunity and take it from there.
Thus if one is trading the Z on different pairs and timeframes (TFs) keep in mind that a sound knowledge
is the Core of Success.
This is a live setup I’m currently playing. There is the possibility that price invalidates the setup which in that case I’ll delete my pending orders.
This setup is in confluence with my current market anticipation, thus I will re-assess the position once price closes in to my Tp. In order to catch a longer runner.
While usd/chf gained a strong momentum, on the 30 minute chart a perfect Z emerged suggesting a counter move which endangered our initial Setup. Leaving us with no choice but closing the position and playing the new setup.
It is quite rare that two Z Patterns cancel each other out, but it is vital to keep an eye out for it. Moreover lower timeframes are usually less commanding unless their setups carry a big move and momentum such as the one today.
Today the kiwi offered a superb setup on the 4hr chart.
Once price broke the high of the last candle it shot right up to TP.
Relevant line chart.
That Z pattern ended with a pinbar, which is an important Price Action reversal signal.
Bringing those two together creates a powerful confluence which is what traders favour.
Price presented a neat setup, I wanted to post it earlier but wasn’t able to.
However Aud/chf is moving ultra slow and keeping a tight SL is vital here.
Last Friday that pair presented a clear setup. However the high of the pattern was taken out before any sell stops got
triggered. Regardless price hammered down.
Price yesterday slowed down by the end of the U.S. session and over night, but was picked up by a slow and steady
move today. Price managed to push towards TP and beyond.
There was a perfect setup today on the CAD/JPY 4hr too. Which was the start of a big move. I’ll try to post some
charts soon.
I had a question on this line if possible and my apologies if Im asking a silly question.
I just wondered why you drew your point 1 where you did and not at the top of pattern. What I mean is, how did you determine point 1 when it seems to start higher…to my eyes at least
Was there a kink at point 1 which differentiates it from the part where I have marked?
Unfortunately what you spotted is nothing like a Z pattern. You might want to refer to the first page and the outlined
pattern types. Moreover I’ve noticed you marked SL at the top of the last bar where a safer play is to leave it on top
of the pattern.
When I look for patterns I look essentially for fractals with 3 movement lines. That means in that case point 1-2 was mirrored by point 3-4, that’s why they fit in the channel so neatly. That is when you’ll see the letter Z too.
Gradually you’ll go and only hunt for Zs and verify them through putting them in a channel.
Hope that made sense.
Cheers
Note: in that example points were not in proportion .
The Canadian dollar had a pullback from it’s strong up momentum against the yen. Presenting a z pattern in such
a situation on Friday was a golden opportunity.
Most traders might be comfortable to only trade EUR/USD ,which is totally fine. Intraday trading with different pairs
is not conventional if your broker doesn’t offer reasonable spreads or you are not familiar with it’s price movements.
The best way to come out profitable is to trade pairs,situations and setups that one is accustomed to.
Nice post! I’ve never traded the cad/nzd, would have to familiarize myself with its historical movement and behaviours. Thanks for the tip! New to the forum, have a great week!
Hey Kasravi … I’ve been experimenting with line charts as of late and been hunting price patterns relevant to line charts. Checking out the Z-pattern … will be posting some results from my tests! Do you recommend time frames for using the Z-pattern? like long-term charts possibly?
I suggest 4hr and 8hr charts and preferably EUR/USD pair. Other time frames and pairs come with a lot of IFs and WHENs.
That’s why I would suggest playing it simple for a start.
I wish you the best and looking forward for some charts.
