Technical Templates

[Eidriel]

Hi guys!

Its been awhile. Thanks Carll for the excellent response. I have read the entire thread and tried really hard to understand the concept of it all.

But honestly, I am still having doubts if I understand the concepts clearly. I know it has been mention throughout the entire thread how easy this method works. But to tell you guys the truth, I am still struggling with it. Maybe because
I am new to forex and therefore I am finding these concepts that you guys find easy to be so difficult personally. Is it because I have not read the thread over at Babypips which is the reason I cant fully comprehend everything?

However, I really want to get this right as I feel that this is the strategy that I really want to learn and I dont want to just walk away like that. So thanks to all who can help me out here. Really appreciate it.

In fact I find Joe's post on Page 5 of the thread to be the simplest to understand so far from what I have read and it seems to make sense, so I am trying to replicate it.

From what I understand from his strategy, we look at the directional bias using the DAILY chart, and that is what I did on this EUR/USD pair. It is showing higher highs and higher lows signifying an uptrend bias, AND although there is currently a temporary retracement, it has not broken the previous swing low at 1.27573, and therefore it is all buy on dips for now.

However, when I switch to the 4H, it seems to be telling me a slightly different story. Its currently showing lower highs and lower lows indicating a downtrend bias, AND although it has been uptrending strongly all the way till 16 Sept. The current downtrend seem to already have broken below the previous swing low and therefore, I conclude this 4H chart as indicating a downtrend bias.

Now this is one of the biggest issue I am experiencing right now. The main core of the strategy itself, to identify the bias. Do I follow the daily chart which tells me to buy on dips OR do i follow the 4H chart which is telling me to sell on rallies?

So, the next thing I do is to switch to the 1H chart, assuming that I follow the DAILY, and buy on dips, Did I correctly indicate the momentum high with which I enter when the price breaks through this level at 1.29580?
and if I follow the 4H, do sell on rallies, do I short when the momentum low at 1.28360 is broken? Is this momentum low correctly indicated?

or is the best option to follow both the DAILY and the 4H? that is draw both the momentum high and momentum low, and long or short when price breaks either the high or the low respectively?

I apologise for the long post, but I am really determined to get this right once and for all.

Thanks again guys! appreciate all help from everyone!

Charts are attached.

[Eidriel]

Failure to take out a prior momentum high (in an up trend) or a momentum low (in a down trend), would have me on guard watching what the price action was doing as it slipped back.

I’d definitely want the previous swing low (in an up trend) or swing high (in a down trend) to hold with confidence in order to encourage me to continue buying dips or selling rallies.

So here’s what I mean by gauging the bias & remaining on the correct side of the directional flow.

I’ll use the EUR/USD as the example.
The last 6 months has seen steady rises with price maintaining higher swing highs & higher swing lows (the definition of an up trend).

The last major swing low prior to that 1.5060 top could be seen @ 1.4450.
That was the reference point to be wary of if the upside momentum was running out of steam. The 1st alarm bell if you like.

Price pulled back from the years highs on profit taking, & the 1st point of reference was that 1.4450 swing low.

As it pulls back (during 23 & 24 October) & goes about it’s normal transactional business, I’m looking for “continuation buy” reference points. Remember, until 1.4450 is compromised, this thing remains a “buy on dips”.



I get the 1st reference point (marked on the chart) & that’s my momentum high buy trigger.
Price doesn’t break up through there, & instead falls back further registering a second momentum high (No2). That now becomes my new “long trigger”. That actually triggers me in at October end, but fails to follow through & subsequently stops me out. The high of that move now replaces No2 as my new “long trigger” marker.

And so it goes on. I continue to mark out my “continuation buy” momentum high reference points as long as the price action remains above 1.4450.

IT’S STILL IN A CONFIRMED UP TREND UNTIL THAT PREVIOUS 1.4450 SWING LOW CAPITULATES.

I don’t need any trend lines, channels, moving averages, oscillators, elliot wave zig zags or any other fancy distractions to tell me what my eyes & plain old common sense can work out for itself.

As soon as all the profit taking has subsided & buyers are in agreement about a fair value level, then the price will rise again - & when it does, I want to step back in on a break through of momentum!

I get that opportunity at the 5th attempt on November 4 @ 1.4810.



If you wish, you can drill down further to say a 15 minute chart to pin point an entry & risk stop if you prefer that particular timeframe. Choice is personal. The levels are the same whichever timeframe you choose, the important thing is that you get your bearings right in context with the primary directional bias.



I now have a higher low (on the Daily chart) referenced @ 1.4625 to book mark as my next alarm bell call should price fail to take out the years high @ 1.5060.

The 1.4810 add-in entry ticks up a couple hundred more pips over the next weeks worth of trading before signalling a slip back via another lower high (on the hourly) at 1.50.

So to recap:
I use the Daily as my primary reference to tell me what the price action is currently doing.
I then ask myself a couple questions about the current state of play;

Is it trending up or down?
Where are the prior momentum highs & lows where I need to be paying attention to.
Where’s my next likely buying or selling opportunity at.

Once I got those basic levels marked out I can drop down to whatever timeframe I choose & either buy or sell my momentum breaks based on the bias & flows of my primary timeframe reference.

Hello guys. This is Joe's post which is the one I am referring to.

Anyway, thanks for the great strategy Joe!

[Joe Whitehorse]

Anyway, thanks for the great strategy Joe!

You're welcome eidriel, but it's not really my strategy. It's simply a collective of simple, common sense price action concepts brought together & gift wrapped in one logical package.

But honestly, I am still having doubts if I understand the concepts clearly.

From what I'm reading I think one of the major reasons you're struggling to convert the information into practical application is because you're flipping & switching from one primary timeframe to another without offering any detail of your trading aims & objectives in the process.

From what I understand from his strategy, we look at the directional bias using the DAILY chart, and that is what I did on this EUR/USD pair.
However, when I switch to the 4H, it seems to be telling me a slightly different story.
Now this is one of the biggest issue I am experiencing right now.
The main core of the strategy itself, to identify the bias. Do I follow the daily chart which tells me to buy on dips OR do i follow the 4H chart which is telling me to sell on rallies?

From your own admission & given your lack of trading experience, if you're using the Daily chart as your primary reference for identifying the current directional bias & providing of course you're intending to hold your trades for the medium term, then you must isolate that timeframe & use the swing high/low information on that chart to identify & plot your levels & zones of significance.

Flipping from one primary timeframe to another will only serve to confuse & disorientate you.
You also have to be very focused on the specific aims & objectives of your bets.
The decisions & management of those bets will be very different when executing & managing them via a Daily chart than they will if your primary frame of reference was, for instance an hourly chart.

The main core of the strategy itself, to identify the bias.
Do I follow the daily chart which tells me to buy on dips OR do i follow the 4H chart which is telling me to sell on rallies?

So, the next thing I do is to switch to the 1H chart, assuming that I follow the DAILY, and buy on dips, Did I correctly indicate the momentum high with which I enter when the price breaks through this level at 1.29580?

You follow the information presented via the Daily chart & when you identify a likely opportunity you prepare your secondary timeframe reference (in this case your hourly chart) to set up a high probability trigger to buy on dips.

How you determine to enter your bet will be based on your preferred trigger & set up criteria.

[kipper]

I have read the entire thread and tried really hard to understand the concept of it all.
But honestly, I am still having doubts if I understand the concepts clearly.
I am still struggling with it.
Maybe because I am new to forex and therefore I am finding these concepts that you guys find easy to be so difficult personally. Is it because I have not read the thread over at Babypips which is the reason I cant fully comprehend everything?

Hi Eidriel,
I'm quite close in terms of where you're at than probably most of the others on here.
These guys are generally quite experienced & believe you me, that really helps to seperate the more competent traders from the rest.

I think novices like us have a (bad) tendancy to over complicate things, over-analyze the technicals & constantly look for stuff that really isn't there.
I had long e-mail exchanges & communications with Joe, JimmyMac & whipcrack when I first found these guys & they kindly & very patiently hoovered up my chart examples & queries, stripped them down, offered me simple, basic answers & feedback & really put me straight about deciding exactly what my trading objectives were, what my day-to-day aims & influences were & how best I could use the information presented to achieve my goals.

I don't think it has anything to do with not reading the Babypips threads. The info & material on here is of an equal quality to those, so don't fret about not being up to speed with the stuff on there.

The major turning point for me personally was I finally made a conscious decision to focus strictly on intraday trades only & restrict my opportunities to clealy identifiable dominant bias entries that adhered to the criteria on my primary timeframe (which is the 4H chart).
Once I'd made a decision regarding the bias (as I saw it), I could only then drop down to my secondary trigger timeframe (which is the 15min) & set up the pre-identification triggers to get into the trade(s) as they unfold on that chart.

By keeping my mind & preparation clear, it's forced me to focus on repetitive disciplines that are straighforward & simple to implement & stick to.
Unless you know exactly what type of trading you want to practice, & begin to organise your prep & set up in a disciplined fashion you'll continue to drift & wander around aimlessly with little focus or direction.

To that end, I scrolled through my usual selection of 15 pairs early Saturday morning for an hour & identified 2 or 3 pairs for next week that caught my eye.
I then prepped the nearest key S&R zones, marked out the previous weeks high-low levels, structured the likely potential swing levels that I need to hold in order for me to begin preparing to set up my bets & put the pairs in order of preference based on the bias criteria (vicinity & slope of the 60SMA & peak-trough of the price action swing behaviour).

I can now open up my charts tomorrow morning knowing exactly what's required in order for me to take action!
I'll post up one of those options (the nzdusd) on my watch-list to give you an idea of what I've prepared for next week.
If it works out, fine. If it washes out, equally fine.
The main thing is I know exactly what my objectives are & I know exactly how I'm going to go about achieving them.

I'm looking for long opportunities on this pair anywhere from current price back to the higher swing low at the 0.8190 zone.
If a pullback ensues & I get a (4H) hook at a higher low all the better.


Failing that, as long as the price action behaviour dictates it's receiving support, I'll look for 1-2-3 continuations and/or stochastic hook entries via my secondary 15min chart & calculate the risk/profit objectives from that view.


eurusd isn't on my current watch-list, but if it was I'd be erring towards selling rallies based on my intra-day objectives & my primary timeframe view.
Any move back beyond the identified twin lower swing highs would obviously invalidate that view, but providing the price action begun to turnover anywhere from current levels back towards that zone, I would go through the normal process of looking for hooks/price action triggers/risk placement & profit destination via my secondary trigger chart to get onboard.

[Eidriel]

Thank you Joe and kipper

I am so glad that the people on this forum is patient enough to take their time to help novices like me. It is just really what we need!

kipper, hope you dont mind me asking

If you are going for intraday trades, do you usually have to sit through the London session everyday?

and also, mind if I ask why did you choose NZDUSD to be in your watchlist? As from my perspective, it seems to be in some kind of a range movement on the 4H?

and why did you not consider EURUSD in your watchlist as it is making clear lower highs and lower lows on the 4H?

Then again, my perspective might be wrong. Since I am still new to this. Maybe you can share with me your ideas for why did you pick those pairs?


Best regards!

[kipper]

I am so glad that the people on this forum is patient enough to take their time to help novices like me. It is just really what we need!

I totally agree.
I wouldn't have progressed anywhere near as quickly as I have without the kind help & encouragement of the people on this thread.
There are some very smart guys posting on here.

kipper, hope you dont mind me asking
If you are going for intraday trades, do you usually have to sit through the London session everyday?

I'm lucky in that I work for myself from home Eidriel so I'm able to devote a couple of monitors to exclusively following my pre-identified pairs virtually all day long.
So yes not only am I able to log in around 6.00am bst every day, but am in the enviable position to follow both the european & american sessions from Monday to Friday.

and also, mind if I ask why did you choose NZDUSD to be in your watchlist?
and why did you not consider EURUSD in your watchlist as it is making clear lower highs and lower lows on the 4H?
Maybe you can share with me your ideas for why did you pick those pairs?

I've chosen to trade the euro & sterling via the Australian & New Zealand Dollars for most of the summer.
The reason being purely from a smoother, clearer price action journey & the behaviour of price in relation to the 60SMA.
It's delivered some really nice trades for me (& others judging by the regular appearance of the technical charts) over the past 2 or 3 months, so I've tried to ring every drop of potential out of them while the going is good.

audnzd is on my watch-list this week too along with gbpaud. If you take a quick peek at the 4 (& 1 hour) chart you'll very quickly see why.

[zilly]

mind if I ask why did you choose NZDUSD to be in your watchlist?
and why did you not consider EURUSD in your watchlist as it is making clear lower highs and lower lows on the 4H?

Hi Eidriel.
Each one of us who post & contribute here have particular favourites & pairs that we feel more in tune with.
Hopefully as you progress & become more familiar & confident with a certain approach, you'll develop your own style which will influence your choice of instruments, specific technical behaviour & favourite trigger set ups etc.

I've been tracking & trading EUR/USD on this recent decline during the second half of September. The first shorting opportunity for me occured on Friday 21st. I got stopped out at breakeven on the 24th when it moved back up off 1.2900 & the only other opportunity I took was to short it again on Friday lunchtime through 1.2920.

I tend to focus on the 1 hour 60sma as my guide for the strength & potential of current directional bias. Preferably I like to see price either above or below both the 4 & 1 hour averages & putting in higher highs & lows going up or vice versa going down, but my primary timeframe is the 60min.

I start to pay increased attention whenever price begins converging with the moving average on the 60min as that tells me the trend or bias is beginning to run out of steam, especially if it stops making higher highs or lower lows. Usually there will be a prior support or resistance zone close by when that behaviour plays out, so you can often pre-empt that type of price action behaviour.

Like the guys have mentioned, the more you read & digest the material on here, the more conversant you'll become with how the structure & basic framework knits together.
Eventually, if you can find a groove with this style of trading you'll discover your own style & put your own stamp on it.
You're already successfully identifying the basics of trend/bias confirmation, just try not to overcomplicate it & stick to the concept of how they explain & present the core structure.

[Eidriel]

Thanks Zilly and kipper once again.

In fact I have only started playing around with forex for 3 months, and the past 3 months was not so successful. I picked up the basics, such as the terminologies and stuff.
Tried out a whole bunch of indicators but just cant seem to get them to work. Read everywhere that price action is key, and so I thought this thread really is what I need to master price action trading, and I am so glad I found this thread.

Although I think most traders here are intraday traders, I definitely cant devote the time to study the charts (can only look at the chart once, then go off for 5-6 hours at least before I can look at the chart again), so Im looking for a short to mid term trading style, such that I hold trades for several days or maybe even an entire week before closing them. I was thinking of just sticking to the Daily and 1H timeframe, and of course when the price approaches near my momentum high/low (on the 1H), swtich to the 5M to enter and place a stop loss below prev. swing high/low.

You guys think this is feasible? Also, do any of you here also adopt a mid term trading style? Would love some advice from you guys who cant trade intraday


If you all dont mind, I would love to post some charts here on some trades that I take, and so I would love if you guys can help comment if Im doing things right.

Cheers to all!

[Eidriel]

While I am here,

I would just like to share a trade which I just made

Pair: EURAUD

Daily chart showing an uptrend.

1H show a break of momentum high at 1.24227. Upside target at 1.25331.

5M shows the break of momentum high highlighted in 1H, and also a pullback. Hammers add confidence to the upside movement.

Would love some comments from you guys whether there is anything else to improve on or to look out for.

Thanks guys!

[xerb]

I was thinking of just sticking to the Daily and 1H timeframe, and of course when the price approaches near my momentum high/low (on the 1H), swtich to the 5M to enter and place a stop loss below prev. swing high/low.
You guys think this is feasible?

Anything is possible, but given the time periods you're intending to hold most of your trades for there will be occasions when tucking stops behind the swing highs & lows on the 5 minute chart will be ineffective, resulting in a fair amount of premature stop outs, especially if you're not in a position to monitor your charts for long periods of time.

An uptick in volatility for whatever reason will spike you out before the trade has had a chance to bed in + setting stops too close, particularly if you enter when price has already travelled a fair amount of its normal average daily range movement, will also account for a good degree of negative results.

If you're using a Daily and/or hourly frame of reference for plotting & setting up potential orders, you might want to consider focusing more on the the hourly swing zones to gauge your stop/risk guide. Obviously a lot will depend on the technical positioning of the swing zones at entry, but you will need to seriously consider the vicinity of your stops in relation to entry when assessing the bet sizing & forward potential of your trades.

Do any of you here also adopt a mid term trading style?
Would love some advice from you guys who cant trade intraday

I'm pretty sure most of the guys on here are able to monitor their trades at quite frequent intervals. And although I (& few others) trade both short & medium duration, most if not all those medium term trades start off as shorter term bets that simply stretch out according to, & based on the technical behavior at the time.

I would just like to share a trade which I just made
Pair: EURAUD
Would love some comments from you guys whether there is anything else to improve on or to look out for.

Looks like a well prepared entry to me.
If you don't already, I would pay close attention to the pairs average day's range, particularly the amount it's travelled prior to entry.
There is always a high likelihood of price reacting to & pulling back when it reaches or slightly overextends it's normal range barrier, such as is occuring now up here at 1.2440 on that pair.

It's not a reason to panic & cash out, just something to be aware of so you can maybe adjust your risk or prepare for a prolonged pullback etc. But you look like you identified the bias ok & locked into the momentum shift pretty efficiently.
I hope it returns a decent profit for you!