Technical Templates

[round number]

Thin markets are squeezing each-way bets on eur/usd & the current one has pushed it up into stiff resistance at the 3150-70 zone.
Unless & until the big figure at 1.30 gives way this pair will remain another buy-on-dips play, especially if the US fiscal cliff can continues to get kicked down the road.

eur/aud is moving up into a prior area of resistance with decent support underneath to encourage the continued buy-on-dips play into years end

Looks like euro is making a play for the the 1.32 barrier options into the London fix.
Pulling eur/aud (& respective crosses) along with it.
I guess we'll soon get to see the strength of the stops (& offers) laying above the 32 handle!

Staying long remains the value risk play so far this week midge

[jcpfx]

Good morning all,

time for a newbie question

Yesterday I got stopped out of a EurUsd long trade along tuesday's highs, which was already a resistance & support on the 15min chart.


I think I may be confusing time frames here...but you guys probably wouldn't have taken that long, right? Even if we are in a clear uptrend..whilst you probably whould have considered it either overnight or this morning (where I took my second long at 3227) after price had retraced into the deeper area shaded in yellow, from the 4H chart.

Am I correct?



I think that I am still playing B and C level setups, letting myself be confused by magnificent looking sup/res areas from the lower time frames. Inevitably, they carry less weight and I am probably going to avoid them.

Do you have any thoughts on this? Thank you.

[hawkmoon]

Good morning all,
Yesterday I got stopped out of a EurUsd long trade along tuesday's highs, which was already a resistance & support on the 15min chart.
you guys probably wouldn't have taken that long, right?

I wouldn't say that jcp, because it depends on the tactics for that specific opportunity.
I've seen Carll & one or two others take those types of triggers in live circumstances quite a lot.

There will be many who adopt that sort of approach & benefit from the momentum kick into the next round number zone.
It was actually a classic stochastic hook entry with 60sma confirmation through the Asian top in sync with the dominant bias – so all in all was a typical entry opportunity for that particular set up.

The entry (if you took the long around the 1.3240 level) offered up 40-50 pips profit as it faded away from 1.33 for an outlay of 20 pips (stop underneath Wednesday's Tokyo lows) which equates to odds of at least 2:1
Not to be sniffed at in these low liquidity, smash & grab periods.

..whilst you probably whould have considered it either overnight or this morning (where I took my second long at 3227) after price had retraced into the deeper area shaded in yellow, from the 4H chart.
Am I correct?

Again, dependent upon the tactics & trading objectives - it's simply another valid, viable set up opportunity typical of the structure you're obviously becoming quite familiar with

I would certainly agree that the higher timeframe support & resistance zones trump the lower timeframe zones every time.
But if you have a clear dominant bias in evidence, a valid cyclical price action sequence in play (HH's & HL's etc) & either/or match up with a typically common set up such as a 60sma/stoch hook trigger....then providing the risk, available ADR & upside potential is ok, the decision is virtually made for you.

The positive thing about the material presented here is the fact there isn't a lot to think about.
Once you've determined & identified the directional bias based on your own individual primary timeframe reference, you can bring any of the 2 or 3 set up/trigger combinations commonly presented here into play, or use your own favourite(s).

It's the same deal for every bet.
Your first & most important consideration must always be:
What is my preferred tactic for today or this week's market.

Once you've established that, the other usual criteria can then be referenced;
1) What's the dominant directional bias currently in play.
2) Where is price located in reference to the available daily range
3) Is there sufficient & acceptable risk at point of entry....&
4) Which set up/trigger combination is available to get me onboard.

I for one am enjoying your input on here & look forward to interacting with you (& the other regulars) next year!

[jcpfx]

Good morning all,
Yesterday I got stopped out of a EurUsd long trade along tuesday's highs, which was already a resistance & support on the 15min chart.
you guys probably wouldn't have taken that long, right?

I wouldn't say that jcp, because it depends on the tactics for that specific opportunity.
I've seen Carll & one or two others take those types of triggers in live circumstances quite a lot.

There will be many who adopt that sort of approach & benefit from the momentum kick into the next round number zone.
It was actually a classic stochastic hook entry with 60sma confirmation through the Asian top in sync with the dominant bias – so all in all was a typical entry opportunity for that particular set up.

The entry (if you took the long around the 1.3240 level) offered up 40-50 pips profit as it faded away from 1.33 for an outlay of 20 pips (stop underneath Wednesday's Tokyo lows) which equates to odds of at least 2:1
Not to be sniffed at in these low liquidity, smash & grab periods.


I for one am enjoying your input on here & look forward to interacting with you (& the other regulars) next year!

First off Hawkmoon, thanks for the encouragement and for the detailed response. I hope to deliver content that's relevant & qualitatively interesting to you all.

Regarding yesterday's trade, maybe my chart wasn't too clear. Let me explain better:



1) I watch the 4H chart for the dominant bias from a structural point of view (hh/hl) for the longer term bias
2) I plot the prior day & week high/low to add "tactical plays" to my arsenal (i.e. if price makes a 15min pin at yesterday's high, i will try a fade counter trend with half a position; if price makes a 15min pin at yesterday's low I will try a long in line with trend risking full amt)
3) I switch to the 15min chart with the 1H 20SMA (80sma on the 15min chart) to give me a dynamic sup/res + cue as to what the market is doing and...

Entry: after a hold above/below a prior high/low on the 15min chart, I will wait for the pullback and enter with a stop sometimes just below the pin, sometimes below the prior swing point.

I usually look for early London action to get me in, because the action during NY is usually more volatile and less trendy...

So going back to the trade we're looking at, you would prefer to enter upon the 15min close above the asian high rather than wait for the pullback...

In the past, playing breakouts had driven me nuts with all the stops I would get...so i married the Dealer's motto "always be fading" and I wait for the pullback
to signal that the break was not a fake. Unfortunately, I need to get a lot better on zooming in on the right pullback zones becuase many times I get "fooled" like yesterday.

I think it just boils down to the fact that:
a) entries can be almost anything as long as price structure is clearly up/down and you're entering on a break of a momentum high/low on just about any time frame
b) the best times to enter on a pullback are at 4h or higher zones of relevant price action (my 4H support area evidenced in yellow) while playing pullbacks on shorter time frames is risky?

Thanks again for the feedback!

[hawkmoon]

Regarding yesterday's trade, maybe my chart wasn't too clear.

Ah, I see your entry now.
I was assuming that because you usually prefer to execute intraday bets, the entry was during the european/london opening period, hence my comments.
Given the time of day of your highlighted entry (US shift), that would most definitely rule out my participation & probably most of the other intraday players on here too.

Experience tells me/us the highest probability momentum set ups based on the type of approach presented here, successfully conclude when triggering at or near the european opening prices.
That entry i mentioned (3240) was ahead of the breakout level.
The hook trigger will generally return better odds when executed on pullbacks in line with the bias as the stochs are turning off an extreme reading.
As you rightly observed, trading blind breakouts out of tokyo highs/lows is a lower probability play & doesn't offer any margin for error whatsoever.

The rest of your criteria is fine & makes perfect sense.

[Eidriel]

Unfortunately, I need to get a lot better on zooming in on the right pullback zones becuase many times I get "fooled" like yesterday.

Hi jcpfx

I kinda agree with you on this point. I am unsure if you are referring to the same thing as me, but quite often, I too experience this kinda scenario.

I have attached a chart showing USDCHF. As I have pointed out on the chart, sometimes price pulls back to area (1), and then continue going down in line with the bias, however sometimes price will go into a HH HL cycle and pullback all the way to area (2) marked on the chart, before going down, or it might not go down at all.

My question is, and I think jcpfx may be experiencing the same issue here, is there somewhat a pattern or sign to show where price is likely going to pullback? Is it area (1) or area (2) before going back down? For this trade, I entered when price pullback to area (1), but then it pulled all the way back to area (2), and I will see if price goes down from here, otherwise I will stop loss, and close the trade.

Is the only way to deal with this kind of problem is to put a large stop loss above area (2) when entering short at area (1)?

[goldtop]

My question is, and I think jcpfx may be experiencing the same issue here, is there somewhat a pattern or sign to show where price is likely going to pullback?

No.
You're playing a game of probabilities pure & simple.
Sometimes the bet will adhere perfectly to the levels & cycles identified on your technical charts & when those opportunities present themselves you maximize the bets by managing them according to the aims & objectives laid out in your plan for that specific event.

Other times the bet will simply wash out & won't play ball according to the technical (entry) levels.
On those occasions your stop-loss will kick in & take you safely out of the deal.

For this trade, I entered when price pullback to area (1), but then it pulled all the way back to area (2), and I will see if price goes down from here, otherwise I will stop loss, and close the trade.

And that's all you can do.
There are no crystal balls, failsafe defaults or guaranteed set ups that play out to our desired or perfectly identified scenarios - the market simply doesn't operate that way.
You will experience consistent runs where everything clicks into place like clockwork & you will also experience periods of drawdown when nothing you touch goes to plan.

There will be plenty of very annoying & frustrating scenarios when your stop will get snapped by 2 or 3 pips only for price to reverse & continue on in the direction of your the original entry & there will plenty of times you don't get the desired exit due to a limit order failing to connect or slippage or simply "no-price available" etc etc.

We all encounter these frustrating obstacles no matter how experienced or which sector (retail or institutional) of the market we're trading within.

Is the only way to deal with this kind of problem is to put a large stop loss above area (2) when entering short at area (1)?

No.
Larger stops & incrementally smaller bet sizes won't always solve the problem.
If the market is done trending down & uncovers sufficient size (bids & reverse stops) at a particular level, then price will trek up until the order book nets off again. That might equal 20 pips, or 200 pips. It will depend on what's driving & influencing the price action at the time & how out of balance the order book is.

The reason we use these logical, price based templates is to offer us a framework in which to continually assess the current momentum based on whatever is driving the price action each & every day.
The tools are there to try to establish fulcrums & instil disciplines.
They’re based on the markets propensity to work off repeatable, cyclical behavior traits that are the result of reactions to events & technical levels that inspire & influence humans to take action & leave repetitive footprints.

It's the best you can do given the available information you have access to.
When the odds line up you take action.
But there are never any guarantees.

The more experienced you become working a particular angle, the more awareness you'll develop.
Trading is no different to any other skill in as much as it requires time, effort & dedication.

[Eidriel]

Thanks for the reply goldtop

Happy holidays everyone. May the pips be with us in 2013!

[jcpfx]

Unfortunately, I need to get a lot better on zooming in on the right pullback zones becuase many times I get "fooled" like yesterday.

Hi jcpfx

I kinda agree with you on this point. I am unsure if you are referring to the same thing as me, but quite often, I too experience this kinda scenario.

I have attached a chart showing USDCHF. As I have pointed out on the chart, sometimes price pulls back to area (1), and then continue going down in line with the bias, however sometimes price will go into a HH HL cycle and pullback all the way to area (2) marked on the chart, before going down, or it might not go down at all.

My question is, and I think jcpfx may be experiencing the same issue here, is there somewhat a pattern or sign to show where price is likely going to pullback? Is it area (1) or area (2) before going back down? For this trade, I entered when price pullback to area (1), but then it pulled all the way back to area (2), and I will see if price goes down from here, otherwise I will stop loss, and close the trade.

Is the only way to deal with this kind of problem is to put a large stop loss above area (2) when entering short at area (1)?

Hey Eidriel,

GoldTop has given both of us an extensive reply

Have a great holiday break!

[jcpfx]

Happy Holidays with our Gingerbread men adventures: