Video Analysis of the Daily and 4 Hour Charts

[DRFXTRADING]

Hey traders how goes it?

Here is another trade made this week on the CAD JPY that highlights my approach to trading.

It involved trading the Double Tops and Pennant Consolidation Setup and Breakout on its 4 Hour Chart. This was traded down to Support as predicted at 81.90 for the quick overnight trading gain.

This was the 4 Hour Chart as you can see here. I identified both the Double Tops and the Breakout Signal from the Pennant that was giving me
the green light to start trading.

The Entry Setup was done using the 1 Hour Chart. Stop Loss was placed at the Downtrend Line and the blue Counter Trend Line.

And as you can see here, the pair declined to Support as predicted for the trading gain and a quick 1.18% Rate of Return.

The key to this setup was that the market broke below the Neckline of the Double Tops. This was confirmation that the market would respond to the Double Tops instead of rallying… which is the risk of this setup. This confirmation came in the form of the Pennant Setup and Breakout Signal that offered us the trading opportunity…

So this was another great trade that showed how to trade the profitable setups offered by the Candlestick Patterns of the Daily and 4 Hour Charts that offer…

1. Stable and Reliable Signals

2. Strong Stop Losses

3. Fewer False Signals

4. Clearer Movements and Setups

Check out the quick video highlights below that summarizes the main aspects of the trade. The more complete video analysis of the main Technical Factors is available upon request.

Questions ? let me know.

Duane

[DRFXTRADING]

This 2.98% Return on the CHF JPY shows how False Consolidation Breakouts are traded for Fast Gains on the Stable Daily & 4 Hour Charts. Check out how I used Candlestick Patterns, Consolidation Setups and Trend Lines to take advantage of this Sharp Market Reversal. https://youtu.be/EqGnb9HI5jU

Let me know if you traded it/understood it.

Duane
DRFXSWINGTRADING

[ZacKing]

Great stuff cheers

[DRFXTRADING]

Thanks…

It also showed us another example of solving the 5 Main Challenges that face us when trading…

Although the 24 Pips was less than the 50-Pip Minimum for my strategy, the overall setup and the potential Rate of Return were strong enough to justify the trade.

It was also a great way of starting the month and the week.

[ZacKing]

accurate ahahahah

[DRFXTRADING]

A few thoughts on this trade.

The funny thing now is that False Breakout Reversals with large Consolidations on the Daily and 4 Hour Charts are more common than Normal Breakouts these days. Even when they take place they are lot more volatile than in previous years. Maybe its due to Monetary Policy at these low interest rates/low growth levels. So I think its important to recognize them and know how to trade them.

Candlestick Patterns, Consolidation Setups and Trend Lines are also all we really need to do this because they are a lot less complicated than Indicators and economic analysis.

This might sound ironic/paradoxical coming from someone with a Masters in Economics who worked at my country’s Central Bank. But the data released to the market is less reliable than the Candles of the Daily and 4 Hour Charts.

More reliable data is provided over longer periods but these would be too long for the short term 24 Hour moves that most traders prefer.

So in other words, the short term data released each week is unreliable for the short moves of the Forex.

So stick to using only Candlestick Patterns on the Larger Charts and only trade movements within Consolidations or False Consolidations Breakouts that take us back inside of them.

Duane
DRFXSWINGTRADING

[DRFXTRADING]

Exiting trades ahead of Sharp Market Reversals.

This CHF JPY trade was another great example of this skill needed to be profitable in this Trillion Dollar Market.

See how the market eventually pulled back sharply at Resistance of 110.15, following the trade exit at that Boundary. Even though the theory of False Breakouts states that the market will breakout at the other end, sometimes it will pullback inside of the Consolidation either before or without continuing the Reversal Breakout.

This is why the trading target should be set at the Boundary and not beyond to ensure profitability and avoid trading losses!

[DRFXTRADING]

Hey traders, all the best for the Holidays and 2020!!

AUD CAD provided a 2.38% Rate of Return this week as I took advantage of the False Breakout Reversal on its Daily Chart and the Bull Crown Setup on the 4 Hour to capture this gain. Even during the holidays we can get profitable setups!!!

Check out the Video Highlight below as well as the related charts to see how I used Consolidations, Resistance for my Target and the Uptrend Lines for my Stop Loss to ensure a Successful Trade!

Again, this showing how Candlestick Patterns, Trend Lines and Consolidations allow us to capture consistent gains from this Trillion Dollar Market!!

Duane
DRFXSWINGTRADING

[DRFXTRADING]

Another trade here…this on the CHF JPY today.

This great provided a 2.66% Rate of Return in less than 24 Hours!

Check out the Video Analysis summary and the Charts below to see how I used the Candlestick Pattern of Double Bottoms, Uptrend Lines and Resistance & Support to capture this quick trading gain!

Once again, as long as you know how to analyze the Daily and 4 Hour with Candlesticks, Trendlines and Consolidation Patterns, consistent trading gains per week can be yours Short-Term and over the Long-Term.

Duane
DRFXSWINGTRADING

[DRFXTRADING]

Started off the New Year on the right foot with this 1st trade that provided a 1.41% Return on the USD JPY. As you’ll see in this highlight video, I traded the Range Consolidation Breakout on the 4 Hour that was leading to the formation of a larger Range Setup on the Daily Chart. https://youtu.be/NC3BKoS2Vco

Traded the Bearish Movement that was leading to the formation of a Range on the Daily.

Duane
DRFXSWINGTRADING

[DRFXTRADING]

This trade on the AUD NZD provided a quick 2.99% Return as I traded the Bearish Pennant Consolidation Breakout on its 4 Hour Chart down to the Support of the larger Pennant on the Daily Chart. Check out the Video Summary and Charts below.

Another example of the fast moving setups I target.

Duane

DRFXTRADING

[DRFXTRADING]

This Chart can help in deciding how to trade. Trading in the direction of the main trend direction of the Daily Chart increases your chances of success. Trading against the trend can also be done, but those movements tend to be associated with weaker, less reliable signals.

These signals in the direction of the trend are a lot stronger because they are supported by the greater liquidity /market momentum of the main trend.

As you see from the last trade this week on the AUD NZD, the main trend was Bearish on the Daily Chart.

The market had also formed a Pennant and was at Resistance, with the prediction that it was heading to Support, in the direction of the main Downtrend…

And as you can see, the 4 Hour had formed a smaller Pennant at that Resistance, with a strong Setup and Bearish Signal.

So given the strength of the signal that was supported by the momentum of the downtrend, a short position was opened…

…with the pair hitting Support as predicted…

So this strategy will reduce the temptation to trade against the trend and focus only on setups that have a higher probability of success.

There are some exceptions where trading against the trend is justified, but there is greater peace of mind when you know that you are trading in the same direction of the major players in the market.

Duane
DRFXSWINGTRADING

[DRFXTRADING]

Since the new strategy was implemented on December 1st, 2019, the Rate of Return is now at 12.87% for the 6 week period up to January 10th, 2020. This is a little behind the 14% Monthly Target, but only a few trades will be needed to put us back on track, before heading to the next target of 30% by the end of January!

The significant aspect of this performance is that it has come from just a few trades and only one small losss. This is confirmation that we do not to trade several times to achieve large Rate of Return Targets in the Short-Term and over the Long-Term.

As you will see from the Videos of these trades below, the key elements of this trading accuracy are:

1. Trading the Accurate Candlestick, Consolidation and Trend Line Patterns of the Daily and 4 Hour Charts.

2. Trading Setups (Double Tops and Bottoms, Consolidation Breakouts, False Breakout Reversals) that are likely to move the market quickly to Support and Resistance Targets within 24 Hours.

3. Never using Statistical Indicators or Economic Analysis.

4. Having the discipline to never monitor our trades.

5. Obeying the trading rules and guidelines to ensure trading success every week!!

VIDEO HIGHLIGHT OF THE AUD NZD TRADE

VIDEO HIGHLIGHT OF THE USD JPY TRADE

VIDEO HIGHLIGHT OF THE AUD CAD TRADE

VIDEO HIGHLIGHT OF THE CHF JPY TRADE

VIDEO HIGHLIGHT AND ANALYSIS OF THE CHF JPY TRADE

It is very important to also resist the temptation to trade the smaller charts. These may have some advantages, but given their volatilty and high number of False Signals that lead to unexpected losses, profitability from them will be hard to achieve.

Instead, if we stick to trading only on the Daily and 4 Hour Charts that provide:

1. Reliable Signals with Fewer False Signals

2. Small and Strong Stop Losses

3. Average Rates of Returns of 3.0% in just 24 Hours!!

…Trading Success from this Trillion Dollar Market is almost Guaranteed!!

Duane
DRFXTRADING

[Ellisss]

Nice strategy by the way, the signals are supported by liquidity.

[ZacKing]

what signal provider do you use (if any)?

[DRFXTRADING]

These signals are from my own strategy that I created. Entry, Stop Loss and Targets are based on targeting a minimum of 3% on average, once the setup meets the criteria of my strategy,

[DRFXTRADING]

Hey traders,

This recent trade on the GBP JPY provided a strong 4.96% Rate of Return today, as I traded the Consolidation Breakout that was taking place on the 4 Hour Chart. This has pushed the overall Rate of Return up to 18.47%, since the new and more refined trading strategy began on December1st last year.

Amazingly, this has come from just 9 trades with just one small trading loss…

…which has now pushed the return above the half way point to the next target of 30%.

This table represents the 6 main targets to be hit over a 6-Month Period. It assumes a Monthly Return of 14% (compounded) and based on this impressive performance so far, the 30% target should be hit by the end of January with just a few more trades.

TRADE SETUP

This trade involved trading the Bullish Breakout from the Range Consolidation Setup that had been formed on the 4 Hour Chart. This was also part of the larger Range Consolidation Setup that was gradually being formed on the Daily Chart…

As you can see, the pair was expected to rally to the Resistance at 144.35 at which point it would then reverse Bearish to complete the Range Setup. So the trade was expected to take advantage of the brief rally ahead of the reversal back to the major Support on the Daily Chart.

STOP LOSS AREA

To protect the trade, the Stop Loss was placed just below the Uptrend Line that was formed as part of the breakout…

This was in keeping with my strategy of using the 4 Hour Chart for Stop Loss Placement. In some cases where necessary, strong areas on the 1 Hour Chart are also used if the Stop Loss area on the 4 Hour would be too far away from entry.

TRADE RESULT

After entering the trade, I then followed the following guidelines that I highly recommend to traders in order to ensure success and avoid self-sabotaging your results…

1. Use a 24 Hour Maximum Holding Period for these short term trades.

2. Close the Platform and only check back periodically. Configure your trading platform so that you can only see that the trade is still open, WITHOUT being able to see the Charts or Floating Profit. This will help avoid the temptation to interfere with the trade.

3. Do not follow news related to the market or your traded currency pair.

4. Always close trades within 24 Hours if the target has not been hit.

These are important rules that I emphasize must be followed so that we do not interfere unnecessarily with the trades.

After patiently waiting for the trade to be completed, I received the email alert from my platform indicating that the trade was successfully completed in just over 14 Hours. The Resistance target was hit as predicted to provide the 45 Pips Gain and a strong 4.96% Rate of Return.

REVERSAL AND TRADING LOSS AVOIDED

Now, a very important aspect of this trade and my strategy in general, is the ability to successfully exit trades ahead of market reversals - a major hurdle faced by many Retail Traders.

As you can see from the Chart below on the 4 Hour, the trade was closed just ahead of the reversal that took place as expected. As you can see, the market pulled back to where the Stop Loss was placed at 143.57 which would have led to a trading loss had I made the mistake of aiming for a target beyond that Resistance !!

This proves once again that staying on the Larger Charts allows us to better see these major pullback points that start major trend reversals, which can easily be overlooked when trading on the smaller charts.

It also shows that Consolidation Breakout Signals on the Larger Charts - once strong enough - are more reliable compared to those on the lower charts - with fewer cases of False Breakout Reversals.

Check out the video below of this trade and let me know if you have any questions regarding the setup or my strategy.

As I keep saying over and over. You do not need to use Statistical Indicators, Economic Analysis or the Smaller Charts to profitably trade the Forex. Once you have a good strategy based on Powerful Candlestick Patterns formed on the stable Larger Charts and do so with a strict set of rules and guidelines everytime you trade, consistent trading success will be yours over the Long-Term!

Duane
DRFXTRADING

[DRFXTRADING]

Hey traders, how goes it with the market?

Last week was quite exciting with the market patterns of the Forex heavily influenced by the Interest Rate decisions and Monetary Policy Committee Minutes of the major Central Banks as well as important Inflation (NZD) and Employment Data (AUD). Similar announcements are also scheduled for this week which means more opportunities to capture strong trading gains are likely for us in the days ahead!

The latest trade from my new Trading Strategy came on the NZD CAD earlier today, Monday January 28. The trade provided a quick and aggressive 17- Pip Gain and a 2.96% Rate of Return, as I traded the False Consolidation Breakout Reversal on its Daily and 4 Hour Charts. This has now pushed the Rate of Return of the new strategy up to 21.94% since it began on December 1st, 2020.

Amazingly this has come from just 10 trades and only 1 small loss!

What this trading accuracy means is that only 3 successful trades are now needed to hit the next target of a 30% Rate of Return!

Hitting this next target will demonstrate that fast and large Rates of Returns are possible on the Forex with a tremendous level of accuracy once we correctly use the reliable Candlestick Patterns, Trend Lines and Consolidation Patterns on the Daily and 4 Hour Charts!

THE TRADE SETUP

As you can see from the Daily and 4 Hour Charts below, both had recently formed Pennant Consolidation Setups with a recent attempted breakout above Resistance. However, because of the weakness of the Bull Candles, instead of continuing to provide sharp Bullish Gains in favour of the New Zealand Dollar, the market reversed sharply to take us back inside of the setup…

In keeping with the theory of False Consolidation Breakout Reversals, this meant that the Support Target was likely to be hit to complete the move, ahead of a possible breakout Bearish below that boundary…

Given the likelihood of this continued decline, I decided to trade the pair short…

After pulling back to trigger my Entry Order…

…the market continued towards Support to provide me with the trading gain…

Check out the Video Highlight of this trade and let me know if you have any questions.

MAIN TECHNICAL FACTORS OF TRADE:

1. Weak Breakout Candles often indicate the likelihood of a False Breakout Reversal.

2. False Breakout Reversals will usually take the pair back towards the other boundary.

3. Even though the reversal usually leads to a breakout at the other boundary, it is always better to exit at this boundary to secure a trading gain. This is because there are times when a breakout may not take place or will do so after a very long pause.

4. Downtrend and Uptrend Lines can be used for safe Stop Loss Placements.

5. Accurately identifying Support and Resistance lines is key to spotting profitable trading opportunities!

Regards

Duane
DRFXTRADING

[DRFXTRADING]

Hey traders

Another quick summary of a successful trade using my strategy, as I target High Probability Trades that can provide fast gains in less than 24 Hours!

This took place on the AUD USD this week as I took advantage of the Consolidation Setups on the Daily and 4 Hour Charts, to capture a fast and large Rate of Return of 3.13% in just 4 Hours!

As you can see in the chart below, the Daily was completing the formation of its Pennant with a Bearish move down to the Support at 0.66724.

Supporting this forecast was the Bearish Breakout from the Pennant Setup on the 4 Hour Chart…

These Pennants represent one of the 4 main types of Consolidation Setups that we see formed on the Daily and 4 Hour Charts every week…

The Breakout Signal provided on the 4 Hour was also one of the 3 ways in which Consolidation Breakouts take place…

1. A Single Candle Breakout
2. A Temporary Pullback at Resistance/Support before the Breakout
3. A Breakout followed by a test of Resistance/Support, before resuming the Breakout.

After analyzing the setups and signals on both Charts, I decided that it was a High Probability Trade that was likely to provide me with a profitable outcome.

Now although entry at the closing price of the Bear Candle was possible, it would not have allowed me to capture my minimum Rate of Return of 3.0%. This meant that I had to use an Entry Order to get in at a higher price to meet this rule…

To protect the trade against possible temporary reversals that could have taken place, the Stop Loss was placed at the Downtrend Line on the 1 Hour Chart. Although I usually use the 4 Hour Chart for my Stop Losses when trading, I will sometimes use the 1 Hour if the 4H does not provide one that is close enough to my entry. In this case, the closest Stop Loss area on the 4 Hour Chart would have been all the way up at the Resistance of the Pennant - much too far away!

Trendlines are great areas to protect our trades because they act as barriers that limit temporary reversals until the trend finally ends.

After pulling back to trigger my order and take me into the trade, the market immediately resumed the aggressive Bearish Breakout to hit my trading target at Support…

You can also see that the trading gain was captured right before the Sharp Bullish Reversal that took place . This highlighted the accuracy of my trade target decision…

So another great trade that showed once again that Candlestick Patterns , Trendlines and Consolidation Setups are all we need to profitably trade this Trillion Dollar Forex Market - as long as they are used correctly with the right Trading Strategy!

Regards

Duane
DRFXSWINGTRADING

[DRFXTRADING]

ACCURATELY EXITING YOUR TRADES AHEAD OF SHARP REVERSALS

Recent trade on the AUD USD shows how I accurately exited the trade for the 3.13% Return described above ahead of the Sharp Reversal at Support!

When I actually checked my charts, I noticed that the market reversed within 1 Pip of the 0.66724 Support. However, since the Pip Spread was 2 and I set my exit 3 Pips of that price, I was able to capture the gain in just 4 Hours. Even though the market eventually reversed Bearish once again to break through the Support, I would have had to wait 36 Hours instead of just 4 Hours for the same trading gain!

This is why we should always exit trades within 3 to 5 Pips of Support Prices to cover the Pip Spread and in case the market reverses without hitting Support!

YouTube Video Highlight of the trade: https://youtu.be/H3LsyWAeDNk

Duane
DRFXSWINGTRADING