Technical Templates

[Hermes-x-3]

Hi Spot:

This is what i do so far, just as Navajo original stratgey i follow his guide to the letter except for a few things i do diferently and the only reason for this
being i am not yet able to identify a distinct area of Supply / Demand, as soon as i get that figured out then its going to be exactly as he does, here goes:

I look at the daily charts and check off highs and lows of the previous day with horizontal lines, observing where the price is relative to the 5sma and 5rsi
this give me a biased direction that the market price seem to be headed for this day.

I then go to 1H timeframe and draw trendline in the direction of my daily bias, i wait for the break of that trendline then i go to a 15m or a 5m to initiate
a trade from that same trend line drawn from the 1H time frame.

My intention is to take 25 to 35 points for the day and i am done for that day. I take a profit and exit at the first 00-25-50-75 area that give my intended
points. My protecctive stop is someplace above the most rescent high or low on the 15m time frame. If i can consistently take 25 to 35 points daily i will
be just fine. If i get stop out then i observe and wait for the next potential opportunity.

Keep in mind that i do not initiate a trade every day, some days i cant seem to understand whats going on then i just observe. This could be for any reason
say like global news and the like, if things just seem muddy then i just dont want to be in, period.

I welcome any and all comments and suggestions. Am not very savvy at attaching files, however am going to attach a few charts.

Regards,

McLemmond

[Hermes-x-3]

Hey Spot,

I only watch these pairs : EUR-USD, EUR-JPY, GBP-USD.

[Joe Whitehorse]

Some nice volatility upkick the past week or so to get stuck into
That's one of the benefits of trading to a model like this, it offers & throws up plenty of tradeable opportunity regardless of the conditions!

I won't disagree with that comment!
Obviously if you're using the daily range averages as scale out & profit guides you'll need to adjust those accordingly to account for the (temporary) ramp up in volatility, but apart from that it's business as usual.

I look at the daily charts and check off highs and lows of the previous day with horizontal lines, observing where the price is relative to the 5sma and 5rsi
This give me a biased direction that the market price seem to be headed for this day.

I then go to 1H timeframe and draw trendline in the direction of my daily bias
I wait for the break of that trendline then i go to a 15m or a 5m to initiate a trade from that same trend line drawn from the 1H time frame.

My intention is to take 25 to 35 points for the day and i am done for that day.
I take a profit and exit at the first 00-25-50-75 area that give my intended points.

Sounds like the foundation for a good plan to me

You shouldn't get into too much trouble obeying those type of technical rules!
Look forward to more of your contributions as you become more familiar & confident with your strategy!

[Hermes-x-3]

You shouldn't get into too much trouble (obeying) those type of technical rules!

This is where i demand of myself a generous servings of self-discipline. It is a challenge at times however, the knowledge
and thought that my improvement at this rest on my shoulders, that is the fuel that steams the neophyte engine into action and in-action.

Good to know that this is workable from your view, (your view is highly valued it comes with brilliance and experience)
Do you or any of those smart minds on this thread have any pointers / crutches that can identify areas of S and D
I can see them clearly on my 2020 hindsight but rather difficult from the initial probabilities. Or what would be a good tool beside my eyes.
and experience

Regards

[JimmyMac]

Do you or any of those smart minds on this thread have any pointers / crutches that can identify areas of S and D

Supply & demand are just another term for support & resistance, or buy/sell pressure levels. They can be observed on any timeframe.

Players are more inclined to step in & take action at these prior levels of price reaction partly due to a build up of stop orders that usually begin congregating at these highly visible zones as the price action moves towards them.

You'll often find that in a good percentage of times they also coincide with big figures & round numbers – common psychological magnets on the technical chart.

Whenever you witness price moving aggressively away from a particular level (which then reveals itself as a swing high or low), or attracting good participation out of an area of basing or consolidation (fair value), that tells you the order book is being influenced by a strong momentum shift & will only balance out (base or consolidate) again when fair value is agreed.

If you think about it logically, the primary reason that price moves north or south in any type of passive or aggressive movement is due to a temporary imbalance of supply or demand. When prices are moving sideways with fairly equal highs & lows (on whatever timeframe it's visible), players are in agreement about that level & are happy to trade-off the value.

Essentially, what you're seeking to take advantage of when trading support & resistance are the occasions when these area's or zones begin displaying imbalance, or visibly highlight where the balance is out of sync.
These are your highest odds/lowest risk opportunities & reveal themselves via your technical charts, across varied timeframes.

That's what you see on the many chart examples here inside this thread.

I'll try offer a specific example of what I mean relating to the current action.
30 minute chart of this weeks Cable action highlights an upper, & potential lower zone of supply/demand imbalance.
You can see that price moved up to the 1.5020-50 level on Monday & attracted supply.
That supply was tested on Wednesday where it met with similar results.

The overall bias remains bearish on this instrument & traders are happy to absorb the demand that gets pumped back up to a level that previously acted as strong supply in the market.
You can also see where a temporary lull in proceedings (which also acted as a temporsry balance/basing/consolidation phase) eventually resumed the dominant bias the following day.


If you scroll back to the previous week & extend your horizontal lines to the left, you'll notice this area resulted in quite an aggressive shift down in momentum, & was revisited on Monday of this week for the 1st time?

Prior to falling off a cliff there was a period where it was being bargained as a fair value zone (red circle). In other words price was in balance.
Those are the typical zones to focus on when attempting to take advantage of this common behavior where imbalances of supply & demand consistently occur.


The next potential level to keep an eye on will be the current major swing low at 1.4470 where price was aggressively repelled the last time it touched that level.
You want to watch for a similar reaction or a basing structure (consolidation/fair value/balance) playing out where the next wave of stop orders will likely be congregating.

[jjay]

Here's another example to add to Jimmy's contribution that was actually posted up on another forum earlier this week by one of our colleagues, to help illustrate a similar query.

I sent this weekly timeframe of the Dollar Index out to clients last weekend as part of a simplified technical summary for the week ahead.
I marked up the relevant upper & lower likely supply/demand zones indicating probable activity on any gap up/down in early week momentum.

The clear momentum bias on the buck is visibly bullish.
Look at how aggressively it shot it out of that prior zone of fair value (the 82-83 grid).
Chances are that the 1st revisit to a level that caused that kind of reaction would harbour a lot of stop order activity, including decent sized bids if the original move was based on solid reasoning.

So, a gap down at the beginning of the week, or a slow (profit taking) pullback in price would have me alert to the possibility of re-engaging a long bias on the Dollar if it entered that 82-83 bid zone.

Consequently, a sudden impulse move up would have me looking out for the signs (price set ups) of a reversal on any hint of supply into the 86-87 zone where it experienced previous sell activity around this time last year.

Basically, I covered both my bases.

So, clients were prepared well in advance of any 2-way activity & also prompted to mark those levels out & watch for their usual signals/set ups/triggers to assist them in gauging the potential to execute a decent risk/high odds entry.


If we then drill into a 60 & 15 minute timeframe combo of the Dollar Index chart on Monday morning you can see that price did indeed gap down & probe the demand potential into the previously identified box zone I highlighted over the weekend.

As the current bias & momentum is clearly bullish on the Dollar, I was looking for signs to re-engage shorts on either Cable or eur/usd at the appropriate mirror levels.

You can see from the price behavior (psychology) on these smaller timeframe charts that the dollar was attracting bids, clearly evidenced by the rejection candles (doji’s) at the 83 level on the 60 minute chart to the right.
The 15min chart (to the left) was printing a common reversal signal (1-2-3), again with classic rejection behavior.


So, if you then turn to your Cable & eur/usd charts of the same persuasion, you can identify whether either of those candidates offer you a suitable (favorite) set up/trigger combo to get you back aboard a continuation short order & leg into the early week bias & momentum.

These are the typical price action observations that consistently signal & identify tradeable supply & demand opportunities.
Once you establish your template & plot your likely area's of conflict you can drill into any timeframe of your choice & use any indicator (if you prefer to use them) combinations to assist in determining your ideal risk & trade management criteria.

[jjay]

…..and here we are a week later easing into the New York closing prices with players paring off & booking their long dollar profits into the previously annotated supply zone up here at the 86 figure.


Flip your charts across & you'll see where they're booking those profits via short euro (long dollar) orders as it flirts with a strong area of demand across a 100 odd pip channel from back at 3rd quarter 08 to 1st quarter 09.


Jimmy mentioned earlier this morning that the next downside leg for Cable was last weeks low at circa 1.4470.
He also noted that as price approaches these significant zones of supply & demand you can generally expect a basing or consolidation phase to unfold as 2-way orders begin the process of absorption & readjustment.

The low today on that instrument has fallen right into that channel & has spent the last 8 hours basing & consolidating – where the usual profit booking & position adjustments are playing out!

[Hermes-x-3]

Jimmy & JJ,

Thank you both so very much, now I must absorb and assimilate.



Best regards.

[jack mason]

Hey guys,
I'm not sure if many of you browse any of the other mainline trading forums, but the common theme that appears to run through most of them is the fact that the further down the timeframe scale one goes, the more difficult or inefficient trading becomes?

Fortunately, I'm finally managing to experience an acceptable degree of consistency with my trading endeavors, thanks in no small part to the information on this thread & private encouragement from a few individuals here (you know who you are!!). But I seem to be finding this outlook contradictory, because virtually all of my preparation & execution takes place on these apparently "inefficient" timeframes.

The impression I continually get from the posts on here is that supply & demand can be viewed & traded successfully from whatever timeframe you witness it.
Obviously the potential returns (or target expectations) will initially differ on a 5 minute timeframe to maybe a 4 hour timeframe, but I've had trades run for a couple days duration when triggered from a 15 minute chart view, so it doesn't always matter where your trade starts from?!

Here's an example of what I mean.
This is a 15 minute chart of the recent 1.4850 demand level on Cable from Friday. This is typical of the types of trades I'm seeking out.
Wherever possible I trigger in line with the dominant bias.
I then look for levels that have harboured previous supply or demand activity & wait prepare to take a trade when my set up signals me in, just as long as I can obtain acceptable risk for the potential return.

Surely this outlook stands up as efficiently as a trade being considered from a 60 or 240 minute view??
The only difference being there's likely to be slightly more potential opportunities from a 15 minute view than from a higher timeframe chart.
Am I missing something here, or does this inefficiency thing simply not hold water?

[jjay]

I'm not sure if many of you browse any of the other mainline trading forums, but the common theme that appears to run through most of them is the fact that the further down the timeframe scale one goes, the more difficult or inefficient trading becomes?

If you take a little time to trawl through a small selection of their many posts on the threads, you'll quickly discover that most of them haven't got a damned clue about anything, let alone the supposed inefficiencies of a trading strategy.

They couldn't spot (or trade) a decent set up if it crawled up their ass whistling Dixie.

The impression I continually get from the posts on here is that supply & demand can be viewed & traded successfully from whatever timeframe you witness it.
Obviously the potential returns (or target expectations) will initially differ on a 5 minute timeframe to maybe a 4 hour timeframe...

Correct. It's perfectly transparent across the complete timeframe cycle.

As long as the area or zone you're looking to engage from has history, such as the one you identified on the above chart example, & you can compute acceptable risk in tandem with decent value, then you're covering your bases & playing the positive odds.
I wouldn't change a damn thing if I were you.
You're following the structure & concept laid down on here & you don't appear to have a problem identifying the appropriate zones from which to set your triggers & play your odds.

Surely this outlook stands up as efficiently as a trade being considered from a 60 or 240 minute view??

Yes it does.
Supply & demand exists across the timeframe spectrum. A hot zone is a hot zone, regardless of the timeframe it appears on.
As long as the risk justifies the potential profit objective, & your set up falls into line, then play your odds & get to work on it.