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Four Brothers Set Up


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Four Brothers Set Up

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  #1 (permalink)
 pdhuey2000 
Atlanta, GA
 
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Hello Traders:

I am new to this forum and have greatly benefited from both the elite and general topics of discussion. I wanted to share a very basic setup for anyone who is interested in a very simple set up that occurs regularly and can prouduce nice winners. The best part is the stops are tight. Capital Preservation!!

I use it as a measure of confluence generally with longer term support and resistance levels.

In the attached picture of the Euro you can see a gold box around 4 individual (8Range) bars. It happens to be around a pivot level (S2) - the time is from about 11:15 to 11:30

My entry would have been around 2140 (yes i know it wasnt' complete yet but it had the look, i think you know what I mean. Also, since this is a countertrend trade (clearly) i would have had my stops around 33 for a seven pip risk.

ON the attachment you can also see a four brothers trade from earlier in the day around 10:30, this was a trade I passed on and am still cursing. It even gave me a pull back entry to big figure at the low of the four brothers. jees.

manage the trade as you see fit, but i like to split by taking half at 10 and then hopefully get some follow thru. I will almost always take a trade off if I see a 2 to 1 profit.

I should also note these setups at support and res. levels on a 20 range chart are very powerful. If i had the patience to trade a 20 pip chart I would use this setup almost exclusively. If anyone is interested I can post some examples.

Who am I? I am actually trader that gets paid to trade, so i guess that makes me a professional but (sometimes I wonder) - anyway I hope this helps at least one person see the market a little clearer.

(the tighter the four brothers are relative to consecutive bar highs and lows the better the setup. And the more brothers the better!

If this was overly simple for the forum I apologize, I am new to Mike's forum so please don't bash me to badly.

Please if you have any questions or feedback let me know. I am available most days (after trading)


All The Best.

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  #3 (permalink)
 pdhuey2000 
Atlanta, GA
 
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Some have expressed interest in knowing a little more or seeing more examples of the set up described in the first post so here are some more recent examples. In disclosure - I didn't take the swissy trades i'm talking about but the set ups are what I consider good examples of a winner and a loser.

8/1/2012 - Swissy, 10:15 to about 14:13 was the set-up. Normally I wouldn't trade past 12 or so (but you can don't neccessary buy into my belief system) - NY Time btw, but Big Ben was speaking its FOMC day so okay for me to trade thru the NY close. Escpecially with the World hanging on his every word seemingly. Also, the previous days price action really indicats to me the bigs are on the sidelines -

Anyway in this case we have just a mess as price ranges for really a couple of days - then at the above mentioned time the consolidation pattern (four brothers) starts taking shape, you can feel the tightening process. You'll notice the four to six bars took several hours to accumulate on the range charts but the break out bars literally took seconds, ( a drawback to Range charts) - order here would have been a bracket long at 9775 and short at 9760. You'll also notice that the four brothers (in this case six) formed literally on the pivot with the pivot being slighly above the middle of the range. This is something to watch, ideally it can clue to the break out side. But I have no stats to prove that. So - again not science. Price does break 75 if it were me im out 1 lot at 85 and probably fleeing on the reversal bar at 14:15. Two minutes it took to do that. Might have been hard to catch. If you couldn't get the trade on, don't berate yourself, it happens and is a pitfull of the range bar. To combat this bracket orders can work. I don't use metatrader btw for my orders. Unless Im going to do myfxbook which I haven't. (I pattern myself after my pet bulldog JOJO, only expend energy when absolutely neccessary .

An example of a losing 4 brothers is the second box on the swissy chart attached. Here we have a four bar consolidaton, nice reversal bar at previous days high, get a nice thorough break and then it turns around just like that not even getting the 10 pip out on 1 lot. "This is the businesses we have chosen" oh well. I would have my stop around 9808 i this case just above the body of the reversal candle and above previous days high. All told would have been a 10-13 pip loss. I most likely would have traded that trade had I been watching this pair, because i might have been thinking quick move up to draw buyers then slam, so would have outsmarted myself given the nice developing blue up wave on the Optimized MA system.

The second chart attached is the Euro$ from 7/26 using 12 tick mean renko. I almost exclusively trade the euro, so just an fyi. I do look at about 10 pairs, but habits are hard to break I guess. I really believe that mastering one pair (which i haven't) is better then scrambling around many pairs. Though I know alot of people disagree with that. Anway, we have a clear direction in this case as priced has moved firmly up - price pauses around the 2220 level and consolidated into the four brothers pattern. We have a nice break of R1 (daily) and price takes a nap from 6:37 until about 7:00 then continues on. A great continuation trade if you missed the breakout which I did. I did take this trade and took 10 on one lot and got spooked at 2260 and closed out, price continued up. Price continued up to the 2320 level. Does the 20 level sound familiar? It is a handle from the consolidation. I haven't studied this but on the great breaks handle moves (100pips) can and do happen. IF you have patience and discipline - I don't always thats for sure. Summertime price action spooks me because when I was first learning this business I bought into that limiting belief system. If i could burn that lesson from my head I would.

Anyway sorry for the length of this post please reply to the thread if you have any thoughts or questions. Or PM me if you are shy. thanks. Hope this helps someone.

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 wldman 
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very interesting. I love the approach to both trading and sharing to help others. All the best to you. DB

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 pdhuey2000 
Atlanta, GA
 
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I didn't know if this would be of any benefit, but here's how my chart looks at days end. I took a bad trade on the pound today which was a long at 5620. if anyone is keeping score, which is unlikely. lol...

hindsight is usually correct but some nice four brothers set ups the best one forming around 5560 to 5550 level for the four brothers. I had the pound chart open after my loss saw this forming but got distracted and didnt put on the order. it happened at around 9:30, which is another confluent indicater, NY open. Alot of traders sit open's out, I don't agree. Especially if price is at a decision level like the 50 level and 00 level. This trade would have most likely been 10 pips out on one lot, then had I moved my stops to break even been taken out subsequently, if i didn't move my stops, most likely would have because 90% of the time I do, then a nice follow through run to the figure could have been had. looking back the stop would have been placed at around 63 entry being 48ish, so the stop approached 15 pips. That tells me the price is moving rapidly - may have traded lower amount of lots on this one because the stop was 15.



thanks.

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 wldman 
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around in a few minutes, I'd like to talk about your view.

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 pdhuey2000 
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sure no problem. whatever you want to discuss.

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 pdhuey2000 
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no message.

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 Big Mike 
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Congrats on starting your journal, looking forward to it.

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 wldman 
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describe what the four brothers is, what indies comprise the view here, and the basic interpretation? I have been around a long time and have never heard the term "four brothers".

I'm interested as the view is similar to a core method that I have used for years. It would be great to learn more or gain some new insight. Happy to share my view with you as well. I have not posted on it in a while but if you search "koy" you will find the thread.

It takes some courage to post like this so I applaud you for the courage to do so. I also love the humility and the interest in sharing to help. DB

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 creekboy 
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wow super job -well done

:when you cheat -you only cheat yourself
refer to post # 470 & 527 & 930
option traders refer to post 996 thru 1005
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 wldman 
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you can post charts inline if you find that easier to view.

If you have screencast by Jing

Error retrieving image, please check URL again (matched: "")
produces



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 pdhuey2000 
Atlanta, GA
 
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"Four Brothers" is just a name that I gave a consolidation area that stand out to me especially on range charts.
The name has no other signficance except to my own imagination. (trading can be lonely) Four is a period I choose because to me it represents a "healthy' period of price stalling. You can use three or six or ten, but I have seen four repeat over and over and over again, so for me it's four.

I look for at least 4 consecutive range bars that stand in a horizontal line hopefully at a defined support or resistance point. I use as s/r: pivot points, previous obvious swing points, and former four brother consolidation areas, anything you want really. Again, don't be overly rigorous about areas just be consistent. I want to find congestion and capatalize on the energy it takes to break that congestion. I rountinely trade on the 8R chart but have recently been trading the 12 tick mean Renko. So in a sense its (4) bars (brothers) standing to defend or let price pass. IF you like football its almost like the 4 in the 4/3 dline-linebacker scheme. 4 defensive lineman - they will either stuff the run (price) or the back (price) will sqeak thru for a small gain or break one to the end zone.

My chart. You are really going to see all sorts of histograms on the bottom of my charts, I don't pay a great deal of attention to them, because to me the action is the bars. I like the trix because its one of the first indi's I learned. But this is not a determing factor in entry or even exit. The greatest determing factor for my trading this pattern is where the bars are forming. I have no tie to direction UNLESS its really obvious, which it rarely is in my opinion. I found tying myself to direction causes anxiety. On the other hand garnering an opinion about direction can save you money because you aren't trading both ways. To me, i like to minimize the anxiety of "determining the trend" - in fact when I hear that from educators and you tube's and systems, I really just turn my speakers down and look for songs to buy on Itunes. SOME TRADERS are amazing at pinning direction, im not. and it works for me so - i hope that makes sense.

I manually draw the boxes and a really fantastic excercise to do is to find a Four Brothers pattern then just move the box as another sets up, its eerie how the boxes fit perfectly, not so much on Range charts because the bars should be nearly all the same size but pull up an hour chart, find a four bar consolidation area and then move the box to the next one, you'll be amazed at the fitting. Its not a coincidence either. Anyway you might notice some triangles on my charts as well these are drawn at the end of the day as I am trying to add this as a set up in my trading. I am looking at trading breakouts of triangles also at points of interest like the S/R levels mentioned above.

The Waving MA study is new to my charts since I joined Big Mike's - this is hands down the most interesting indi MA type study i've ever scene if not only for its esthetic beauty and its COOL! This or any of a number of MA's I would use for just a visual enhancement for price movement. To be honest I don't leave these up I only apply them every now and then for confirmation or maybe at the end of the day to review how badly I hurt my account, lol...

Although i really like the one you see on my charts i got it in the elite download section. The trix you see on my chart is also a downloand from Big MIkes. If not trix i'd have RSI on perhaps If I spot the elusive thing other traders call divergence. You have an advantage if you as a trader can spot divergence real time, its a real talent, and not mine.



Im posting an NQ chart. this is a primo set up that happend yesterday 8/1/2012 whilst Big Ben blathered. The blue line emerging from the left is a "trace" line i use to show where previous four brother set ups happened. if you want to check the four brothers was from 7/28 around 11am - Notcie how price bounced up from that level found no steam then fell back to the former trace line of the previous four bro's set up, then formed the four brothers from roughly 2:15 to 2:19then the trade went on as at roughly 2:19 Price broke up to 2637. In this case s/r was evident as the four brothers formed between S2 and the trace line from the previous 4b's set up and a recent swing low. Some of you may also have noted this is also a MOF trade - I think. Oh Nqoos. But it clearly was part of a harmonic pattern as we can tell from hindsight.



Can you let me know how to use screencast, im just attaching charts the old fashioned way.

Please let me know if this shed's light on my posts, and please don't hesitate to ask any questions. I don't mind critique's either its how we all improve. so blast away with respect and we can all get better.

cheers.

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 wldman 
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and love the way you communicate, but you are no novice. Screen cast is jingdotcom, I believe.

you use [] around the typed word screencast, then you paste your captured screen's url followed by[] around the word screencast with/ in front of the typed word.... that will post your chart inline in the text of your post.

Okay, IMO your trade logic is solid as a worst case scenario but I'm thinking much more optimistically than that....really good. This four brothers idea that you have created on your own is very compelling. I want to learn about your thought process and go over the trade logic and set up here in your journal.

I look forward to reading your posts and responding with both questions and ideas. Do not allow detractors to distract you or discourage you. This is a brilliant approach and I believe you will be very wise to pursue further refinement and development.

DB

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 pdhuey2000 
Atlanta, GA
 
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Thank You!

ill try to keep my posts interesting. Thanks for the support.

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 pdhuey2000 
Atlanta, GA
 
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A nice trade set up overnight that i missed because I was sleeping. Oops.

Anyway a very cool chart on the eur/usd 12 mean Renko bar. The setup occurred at yesterday's low and took 12 hours to develop from yesterday at around 2pm until it broke up thru at 2:19 AM. A nice move followed.

Im going to swith over to the YM and NQ for the morning session, if I see anything I will post a chart.

- The lesson here is maybe quickly look at the chart before you go to bed, I should have done that and I could have set some type of chart alert, but and more importantly getting over missing trades is important and If I carry that into my trading right now I will make a revenge trade lose money - thats a part of developing imo. Im proud of myself for not getting to down about missing a sweet trade - but taking a lesson from it. So now, ill light a candle, kiss my wife, and try to catch the next one, lol.

thanks.

PS if you see the blue trace arrow its pointing at a harmonic pattern that is forming near at the level of a previous four brothers pattern. pretty cool.

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 pdhuey2000 
Atlanta, GA
 
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if you have a 12 mean renko chart check out the pound yen and pound dollar chart to follow.

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 pdhuey2000 
Atlanta, GA
 
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Both trades would have worked out. because its after the fact it doesn't matter whether I took the trades or not. What is important is that the trade set up was recognized and execution could have followed. To kill the suspense I did take the pound/usd trade got 10 on one lot and got stopped out on the second for +1. You'll see it could have been a homerun. I've put a trace arrow on the chart that shows where the entry was for the trade. i did post the setups while they formed. Next week I will start posting the trades when I enter, sometimes its hard because of the concentration on the actual trading to post entries but after a while it should get easier. So for today we will be contented with proper identification of the set up.

On the Pound/Jpy. In my opinion was the lessor of the two choices because of the overhead resistance at the 122.61 level.

Any comments please post these are good trades to discuss.

I am also posting a trade from the 8r Euro/ Usd chart. I did not take this trade because i was late to the desk today. I've been scattered today - alot of times I will only take one or two or maybe no trades on Friday. But that is changing because Friday afternoon is really the sit out time Friday morning has proven to be pretty decent over the past three quarters. The afternoon however is consistently poor.

Anyway- for the Euro / USd set up 8R chart, you see a really tight Four Brother's formation from 5:30 to about 6:15 Am (EST). The market was moving in a bullish direction the bands on the study were supporting price, the pattern was "tight" The only caution was the 50 level overhead. But since this literally formed across the daily central pivot- thats a lock and load go IMO. Enrty around the 47 level, stop below central pivot around 32 - 15 pip stop is more then enough to let this trade work or fail. Plus 10 easy. Trailer who knows I probably would have jumped ship at 79 which was a previous FBs level (noted by the trace arrow emerging from the left.


Please give me feedback if you are following that's the only way this exercise adds value to you or me.

Cheers Traders.

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 pdhuey2000 
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I posted a chart in the previous message of the EurJpy but failed to discuss it so here goes.

Do you see the traingle pattern in the up move? Look at where it formed? If you said the 50 level you are right. I am noticing occuring more and more. To trade it, I look to trade the the stragiht edge of the triangle as my entry, working on it as a continuation pattern. Nothing earth shattering here, but wanted to look 1,2,3, and ABC, a little differently.

cheers.

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 pdhuey2000 
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Okay, I have a schoolboy crush on Mean Renko charts that show the wicks to give trader clear picture of price action/range. so if you are inclined might want to investigate. I'm probably late to the game on mean Renko, as my original schoolboy crush is still hot and heavy with range bars. Seems techno guys are creating adaptive range charts that even re-size bar to market conditions. So that's pretty cool.

Anyway on to the ES review for today. CL and Ym to follow.

Pleas know I am analyzing this chart in with hindsight - but recognizing the set up even after the market is a good exercise for traders- I think subconsciously the brain records the infinite patterns we see everyday so like an athlete gaining muscle memory we advance our skills with study and review. Right?

The ES was straight up today ever since really 1pm yesterday. So as a trader what do we do, the chart I've posted lends us some clues. If we look left we see a four brothers pattern at 10:30am yesterday - I've drawn a trace pink arrow from that pattern to a pattern that formed around the London Open 4am EST today. It took over two hours to form and we finally broke around 7am EST time. (sorry i am using an Eight Tick mean Renko just to be clear) I would trading the ES by taking half probably at 4 to 5 ticks then see what happens. In this case, could have had a homerun day. Funny week this week, the first three days were widow-makers and the last too were just get aboard days. I got weary around Wednesday morning so the last two days I did not capitalize as much as possible. Lesson Learned keep the faith.

We can see in the purple box 4 bars that lined up right on the previous days open And R1 pierced the center of the 4B pattern. Perhaps we could interpret this as traders pausing - buyers gathered, price accelerated. You can't tell me that the jobs report wasn't leaked considering the overnight price action. but maybe not. It doesn't help my trading to speculate on conspiracy. The four brothers pattern that we are talking about really did form in an expected area of indecision considering all of the simple defined S/R lines that occurred in that area yesterday.

If you have any thoughts or questions please let me know. thank you.

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 pdhuey2000 
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ON the mean Renko 12 tick chart we see a Four Brother's pattern starting around 5am and lasting until the move up around 6:30 Am EST or so. Nice Resistance area from a previous swing plus the previous day's open and R1. Take break of 12915, take ten and hold. Nice!

Price found another range quickly thereafter and lasted from 7am to 8:30 am. Price headed further North but ultimately retraced to the top of the most recent range, really making an nice and clear flagging pattern. I like those as entries because price give you a clear stop - below the range, a clear entry at the top of the range and a 1st target being where the retracement started. The drawback of this trade is the sizable stop, so one tactic we can do is measure the range 12950 to 12919 or roughly 31 ticks, lets say 30 - add 15 to the bottom of the range and we have 12935. Our Entry is 50 our stop is 35, much more comfortable for me. Trading only retracements to the previous CLEAR consolidation/range areas has kept me in trading. I still consider it my best tool/ because the trade set up inherently forces patience. If you are new to trading print or save this chart (not because I made it) but because on this chart is all you have to know to have a consistent profit in trading, I really believe that.

I should clarify the logic in where I placed my stop on the second trade - I figure if i have identified a range properly, that if price travels below what I perceive as the midpoint of that range, then I want to get out. Why hold on. If price is mean and zips thru my stop then reverses up to where I entered then I have the option to re- enter. But Im only down 15 ticks not 30. Trade to trade tomorrow -

There is another way to trade this scenario. BTW I am spending alot of time on this chart because this scenario is such a fine example of how I really like to trade, clean and simple. The other way to trade this is if you missed the initial break of the FB pattern because you got distracted or weren't at your chart, because there were two levels of s/r there, the previous day's open and the R1 you would have been taken a good set up with the retest of the FB pattern. In a sense its the same trade as the second trade we explored on this chart right. Break out, retract to top of range, enter. Target, top of where price started to retrace, stop below the FB pattern, or even half of the FB pattern, and boom you gotta nice winner. If you are really new take that trade and quit for the day. Or maybe your in a draw down, a losing streak. Take it and quit. You just finished the day ahead with a well defined, well executed trade that you know darn well will probably happen again tomorrow. Kiss the wife, light a candle and watch the sunset. (if 15 ticks is still to big of a stop, you can trade smaller sized charts, like look at 6 range or minute charts, i can go over one if you tell me what you trade.)

I hope this helps and please if you are new this is a wonderful way to trade. Notice no histogram, not wavy lines just common sense, s/r with the market telling you where to place your stop where to take profit etc.

I hope this helps at least one person, hope all is well and thank you if you have read this far.

(PS - another way and very clever way to enter the second trade we discussed was at the completion of the bull candle that pierced the trend line topping the retracement - thats the cheesecake baby.

cheers.

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 pdhuey2000 
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Please see chart.

Any questions please don't hesitate. thank you.

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 pdhuey2000 
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Please ask any questions if you have them.

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 pdhuey2000 
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I don't trade it, but I know some people do so here you go.

Please ask any questions. I'm assuming this chart is fairly basic but I may be assuming wrong please don't hesitate to ask questions.

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 creekboy 
phl pa. usa
 
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keep up the good work cant wait to see your results over time ---time will tell

:when you cheat -you only cheat yourself
refer to post # 470 & 527 & 930
option traders refer to post 996 thru 1005
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 pdhuey2000 
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I like to pick a Random chart to analyze on Saturdays and I typically will look at a pair / instrument I may overlook during the hectic week. Often times, I can find some levels or some ideas for longer term trades during these reviews. I hope this makes sens.

I looked at the aud/usd today going back to 7/25/2012 - I found a really good example of a reversal with good obvious clues and would like to share with the followers of this thread.. BTW Thanks all who have offered kind words to my progress and thanks.

On 7/24 we have a failure to cleanly break a swing high demarked but the first "superman" sheild triangle. A trade here could be the first poke thru the crossing ma's. Why? Well first sign is the failure to move higher. Secondly because the failure happened around the 1.0300 level we can add confluence. Lastly, It makes sense that if the market fails a key level, breaks dynamic resistance like the ma's then its likely to travel to the next "event point" in the market, for me this would be the previous swing point, which is the tip of the superman sheild triangle. I would consider this a scalp - with little patience for any drawdown- I want to see this happen right away or I flee. This trade did travel nearly straight down to the 60 level before starting to pullback. The next potential trade in this series is the actual break of the triangle tip - or swing low, whatever you want to call it, What's really pretty about this move is the nice guiding ma study looks like a waterslide - great visible comfort. This trade was good for 50+ points if you had the nutsack to stay in. Now the stop placement on this trade can be scary/tricky, so here are my thoughts. One obvious place is at a previous swing high, ever hear that before? lol. In this case we are looking at 56 points. Yikes. Okay so what can we do. An option I use alot is cutting my normal postion size to half and using the stop. If I make this trade, I will need 100 pips to satisfy my RR, well that can be a tall order. Another way to do it is go in normal size and use the decending MAs as stop mechanisms. Since I don't always have these on my charts, I may not do this either. I would use the last psychological level as my stop which in this case is 1.0300 entry at 1.0258ish. And then hold my breath. I'm taking half at ten. And Follwing the hooks down, most likely i'm bailing if I got towards the 1.0200 level. This price action pulled back to the 50 level after it shredded it - that for a healthy minded trader is a wonderful add position, even the shaping of the pull back is picture perfect IMO> if we consult our old friend Fibonnaci we'd be looking at the 38.20 level and the 50 level - good confluence. Another way to enter at the pullback would be to place your entry at the bottom of the green candles and follow them up - otherwise known as the traders trick (a time honored tradtion, lol)

The first significant sign of the reversal is the bullish engulfing pattern. I wont trade this pattern alone unless it concides with 2 or 3 levels Im looking at. but you can trade this pattern by itself - but there will be alot these forming all over the place. The second sign of a reversal is the trendline break of the down move. I will and do trade these especially because priced has produced 1. a bullish reversal candle pattern and two has "held" the 00 level. In this case its a high risk trade because of the close and signifcant resistance (the two thick red dotted lines) which in this case are prior day's low and prior day's close. A nice "heavy" trade would be for me to enter at the poke thru of the MA study, if it was on my charts at that time, because the odd are after we see the reversal signs price will travel to the next "event point" in the market for my money its the tip of the triangle at our old friend the 50 level. its going after the orders short placed at the obvious pullback area we previously discussed. Its even a nice number 1.0225 target 1.0250 stop 1.0210 it can be a comforting thing when your trade paramaters are outlined by the half and whole numbers.

Last but not lease we have an nice Four Brothers Pattern forming on the Prior Day's open, with the 50 level dividing the bars, in a nice up moving market, the breakout of the pattern happens shortly after the London open and represents an Asian Consolidation after some good movement. I like having price in a nice contained box at the London Open, because it will typically leave the box with some spunk. I this case it does and travels fairly paced to the next 00 level. Interestingly price finds sellers at the 00 level and retraces back down to where the FB pattern brokeout, thats 1.0260 if you are keeping score. Interestingly thats also the same level the tip of the triangle (swing low) from the failure reversal pattern we began this discussion talking about. nice confuluence for sure, referencing our old friend Fibonnacci we are also at the 38.20 level. Lots of great lessons for traders of all ilk in reviewing price action, I think. I hope this has helped and if you have any questions please don't hesitate to ask.

Cheers. chart posted.

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 gtotrader 
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I really like the way you have your charts set up, pretty darn clean... One question, on the bottom of your first post on the lowest panel there is an indicator I can't make it out on my computer screen, can you go explain what it is and how it helps?

p.s. I am digging the mean renko's also. 20 range with 200% reverse for pivots... good stuff

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 pdhuey2000 
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Hi,

Thanks.

The histogram indicator in my first post is a TRIX indicator I downloaded from the elite section. Trix is one of the first indicators I used so I like to reference it for info. but its not primary in my trading.
I utilize the trix when I am in a position to help me decide when it maybe time to get out. When the histogram is heading back to zero for me its probably past the time I should've exited.

I click it on and off my charts I like to focus more on the bars. I literally might pull up three or four histograms just to check what they are saying.

I hope this helps.

I posted a chart hopefully to help clarify what I mean -

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 pdhuey2000 
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see chart.

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 pdhuey2000 
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clearly after the fact, but this was a set up on the usd/cad - price has now retracted back to the break of the pattern - also at the 00 level (1.000) happens to be parity as well.

Not a pair I trade alot but I am long at 1.000 with half a postion off. I left my stop at .0990 so it would be a break even trade if price comes back.

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 hadamkov 
Prague Czech Republic
 
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pdhuey2000,

I love your setup.
I am not a live trader, just a chronic observer of the market...
I have observed this behavior on my favorite instrument, too. I usually watch it form and then check GomCD reading to know what is happening inside the whole range, especially the last forming bar/bars. I use GomCD but I think that is unimportant, I think you can check other indicators' reading to find out where the market can go afterwards. Have you ever tried it?

Anyway, thanks for sharing your style.

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 pdhuey2000 
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I'm a little sluggish right now so can't write a manifesto about this, but here's a classic break of a FB (consolidation) then a retrace to bottom of the pattern (retest) - almost to the tick price stop and reverses.

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 creekboy 
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very good so far -but your model is missing a few things as fo yet - the forcasting of future magnet zones and also real live entries -
now you realize with this system calling entries even 5 min ahaead of time can be certain death -

so when you have time can you or 1 of your 3 brothers do some live calling for us -or maybe a webinar -

also i still cant wait to see this tested with real money and size - you cant spend verbage -

keep up the good work

:when you cheat -you only cheat yourself
refer to post # 470 & 527 & 930
option traders refer to post 996 thru 1005
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 pdhuey2000 
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Hi creekboy,

yes thanks for the feedback, I am working on adding posting into my searching for entries I am not in a hurry so as this progresses more posts will be geared to calling my entries / patterns in advance. The simple task of even posting is new to my process so its adaptation as part of my routine is a variable in my trading right now. That's a fancy way of saying I still need to get the hang of it.

I appreciate the feedback alot, thanks!

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NYstateofmind
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1 min chart es . The importants of knowing the magnet areas .

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 pdhuey2000 
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How do you determine where the magnet area's are in your trading? Are those fractal lines?

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 pdhuey2000 
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Please see chart:

My entry will be 1.5622 which is 78% ret. according to our old friend Fib.
Stop below pivot around 5597. I will trade half a position size with a target back to the swing at 5680 ish.

I like the confluence - I like retests of 4 b's, I like that price seems to be flowing up today on the pound.
I like the lower level support that is resting above my stop.

I don't like that I am trading against a market where both fractals trendlines are above me.
I don't like that the Euor is being such a fu''k''g pain today.
I don't like how far the market is from my entry right now, that's alot of thinking time which is never a good thing.

Big Ben will be speaking later always a concern.

Anyway hope this helps an questions please post.

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 pdhuey2000 
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One of the first things we learn as traders is how to read the market with support/resistance - or supply demand, this is very basic, but almost like the Bible as a metaphor very complicated and the lessons seem to be never ending - and evolve as you evolve as a trader. A severe problem that I have in my own trading is trusting what I see. Which is one reason why I take my chart reviews seriously because I am constantly trying to evolve as a trader.

In this chart we can revisit the lesson we all have learned, that valid support becomes valid resistance.

IF we start from left to right on the chart, we have a nice four b's pattern emerging overnight price continues down,
then we get a retest of the bottom of that very same 4b's pattern. we can now say that this congestion level is valid.

Price finds a bottom and rises through the congestion zone we have validated that being our 4b's pattern, price fails to reach the 00 level then falls back into our congestion area, reversing (twice) at are validated level and makes a healthy move up towards the 2430 level. We now have a swing in my opinion and our old friend fib may help us build confluence.

Price begins the decent yestersday morning into the overnight session and finds support (again) at our validated level which also is around the 61% retrace level. Nice confluence!

Interestingly price shreds a retest of another 4b's pattern on its way back up, but this level holds (relatively speaking) when price returns from its test of the swing at 1.2428. In reality if i traded that retest i most likely would be stopped out. And re-entering would have been not clear. I probably would've been pouting.

I hope this helps and please follow with any questions.

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 pdhuey2000 
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there's a FB pattern setting up that I will trade in either direction. I prefer the up side break but oh well.

I like the tight pattern, I like the resistance area with prior day's open and prior high. This area pushed the market down once before, if we break higher this will be a good support area for a retest entry.

Ill be trading full size with half off at 10 if I get it.

hope this helps.

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 pdhuey2000 
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Pound holding on but not looking great.

Audjpy - I got plus 10 on half and got stopped out on a spike. Too bad because the trade moved down nicely after.

thanks

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 mokodo 
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Hi pdhuey2000,

Very much enjoying your thread. I trade forex (10 pairs) and it's good to find someone else that does actively, most here on futures.io (formerly BMT) are in futures.

I have a (channel) breakout setup that has similarities with your four brothers. Do you have a time exit rule/guideline for holding a trade, or, as with your charts, is price the only determinate?

Thanks in advance.

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 pdhuey2000 
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Pound stopped out.

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 pdhuey2000 
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I thought I'd post this chart I was just looking at of the CADJPY.
Going left to right.
The first FB pattern is somewhat scattered, not tight across as much as I like, but it formed with 78.00 being the divider of the price action. The break came literally instantaneously at 8:30 - meaning those 10 green candles following the break happened in like 10 seconds and I am unfortunately not exaggerating. This is a big drawback to both range and renko. But even if we missed that breakout, and pouted, we can wipe the tears away and look for a retest, because surely if the rise is so sudden the sellers will come in eventually and usually harshly. (what we want) Well in this case it took several days but price did retest the FB pattern with the 00 level being apart of the pattern. The retest panned out, and even if you hadn't traded it as a retest a new FB pattern developed and was tradeable (speed wise) as it took about 18hours to develop. oh god. Price did retrace within a couple bars to the break out level of 78.30 sevel bars later and quickly made its wat to test the swing at 84. Price failed to reach the 79 level retracing back to 78.50 and now again is challenging at the 78.90 level. My thoughts are to trade the 50 level if we get back there hoping for a sustained move to and thru 79.00. I will trade half size at 50 with stops below 21, unitl further notice.

Please let me know if you have any questions.

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 mokodo 
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Hi pdhuey2000,

Thanks for the PM convesation earlier, thought I would post this to the thread as it may be of benefit to others? I mentioned that I have a similar set-up and thought it may be good to compare to see if anything is useful to us or others.



Here's one from today. Charts show a set-up from USDCAD this afternoon. It is a breakout. Red lines 1,2,3 show stop, entry and target for a 1:1 risk:reward.

I use volatilty as well as price for this. The yellow block in panel 3 indicates ADX on the 30 minute timeseries is <12. Entry is on a break of the Swing 10 long or short within 20 bars (5 hours) of the yellow paint. I also look at the MACD hostrgram to confirm that price is really gone to sleep and is not too twitchy.

I wondered if you would see a four brother set-up at the same/similar time on this pair?

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 pdhuey2000 
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Thanks for posting your chart, great trade.

I didn't see a four brothers per se, but clearly a fractal break on the 12renko. I haven't talked much about that yet but will in the future, I think. I stared at that trade for along time, but didn't pull the trigger, you did way to go!

I will post a chart later when I get back to my trading war room. lol.

thanks ! your contribution is much appreciated.

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  #46 (permalink)
 websouth 
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nice methodology...I don't use ninja anymore but when I did there was an indie called ADXVMA trade zones which would show the consolidation you are looking for pretty well. You might like it. It would probably be an elite section indie...




see picture here.




This version in the post would be for ninja 6.5

good luck.

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 pdhuey2000 
Atlanta, GA
 
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Finally I get my some pips this week - Price did not respond the way I had hoped with a pullback into the the 50 level, but there was a nice confluent support zone with computer identified Hidden Divergence. Clearly not a FB pattern as defined, but a nice congestion zone nontheless. This post is well after entry so haven't earned my chops yet with the board yet, so im trying to get better at posting as I enter, but truely Im trying to-



In around 06 on the cadjpy with 10 off and the second half off at 32

more posts to come today I hope.

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 pdhuey2000 
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Here's a nice four bro's pattern.

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 pdhuey2000 
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Here's a clear short on EJ, i am posting this chart as self punishment because this was a clear trade - don't need any brothers for this one.

My god. I need to wake up. I wish i didn't trade thru August thinking all the dyer warning about August trading would come true on every decision I made. baggage baggage baggage. Im a little hot at myself so im done trading today.

I will be looking at my charts tonight for any overnigjt 0 setups.

so heres the chart of the easy pickens trade on EJ. No excuses just missed it.

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 pdhuey2000 
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This is an interesting chart for sure.

Strarting left to right. Market declines from 9830 to 9650 abouts. Market retraces, bear flag clear, divergence, market resumes downward but doesent challenge the 50 level. Instead retests 9730-40 which is very close to our old friend 50% fib marker. Price again dives and this time does challenge the 50 level and is soundly rebuked. Overnight on 8/7 to 8/8 a Four Brothers pattern emerges and breaks out, but not without some pain/anxiety if you took it. Price again shoots for 9740 and is repelled again. It falls back to our 4b pattern which happens to be at the 9700 level, we get a nice immediate reaction to the upside and price finally crack 9740. IMO this price action has given the currency a recognizable structure that we can derive some logical points of entry. I am in favor of shorting the top of the structure at .9830 which is a handle above where price had trouble breaking thru. It's a previous swing point yet to be tested and makes for a nice butterfly. I will want to see a 4b pattern here and favor a break thru the low of the 4b, make sure we have another point of s/r like a previous h/l/o/c or a pivot, (weekly or daily)

What we have here I think is just a big old range. This level at 9830 would be pretty darn close to the weekly ATR as well.
unless this move has just been a devious way to run stops that were sitting above 9740. In that case perhaps we can look at shorting under 9750 hoping for a run down to 9700 and ultimately 9650.

chart posted. please post any comments or questions. Your support is much appreciated.

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 pdhuey2000 
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There's a FB pattern settin up on the EJ, if this candle breaks thru the white box, the pattern is not completed IMO.

I also dont like that its within a triangle formed by the fractal trend lines. That could be a whippy place to trade.

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 Fu510n 
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pdhuey2000 View Post
There's a FB pattern settin up on the EJ, if this candle breaks thru the white box, the pattern is not completed IMO.

I also dont like that its within a triangle formed by the fractal trend lines. That could be a whippy place to trade.

Good point, especially to the downside with the previous lower pivot just a few ticks beneath; I'd wait for it to drop below that first if shorting. Going long though, there might be enough room for scalping but I guess it depends on what you're looking for tick-wise .

My .02

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 pdhuey2000 
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Four Bro's Pattern setup, your guess is as good as mine.

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 pdhuey2000 
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Four Brothers - I am looking to trade breakout either way.

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 pdhuey2000 
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Trade broke nicely. +10 second half off at 1.0525. Entry was 57 pretty slow entry.

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 pdhuey2000 
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its friday so Ill pass but its a legit pattern.

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  #57 (permalink)
 pdhuey2000 
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Despits the dismal range this week, I watched the Ym today and saw some nice tradeable patterns. Ill be adding this index to the journal as I do trade it.

Left to right.

We see a nice swing up in price coming out of the NY open heading to yesterdays open. Price stalls short of it. Makes a bearish reversal pattern (not enough to trade alone but a clue) Makes a LOWER SWING high - this hooking pattern is a great tradeable common pattern and easier to spot on renko charts IMO. So we would look for this to happen around major supply / demand areas, of course. The move down on my Renko chart would have been untradeable had the order not been placed ahead of time. Because price fell 30 points in 60 seconds. Makes you sick doesn't it. You can trade this a couple of ways, trade the ledge of the lower swing high. Another way to trade it is to take the bearish reversal pattern that forms on the Lower swing high. vice versa for the up moves. Make Sense?

Second trade was the FB pattern at around 11:15 wher price broke the pattern cleanly move up to the 00 level (13100) and then retested the break of the Fb pattern. Second entry if you wanted it. Price ultimately challenged the previous swing where we were looking at the hooking pattern, and has since drifted back down.

So even, with not great daily ranges we can still find trades if we think clearly. I do about 10percent of the time. lol.

If you have any questions please don't hesitate to ask.

Thanks.

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 pdhuey2000 
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ym - second retest of four brothers pattern.

Wow

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 pdhuey2000 
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Most of the trades I posted had a positive result on Friday which brought my week positive. Overall im up roughly 100 pips for August. not great, but not negative so Ill light a candle today and enter the week hopeful.

Its Sunday afternoon for me and my favorite part of the week- chart review. My attention was drawn to the euro 20 Renko.

I have on the chart 20 Mean Renko Bars, and jsTsibblines which is an indicator I found here on BM elite section downloads. The best 50 dollars i've spent, truthfully.

Starting with the coral dividing line we see this weeks price action. I want to point out several things. We essentially see three pushes down, what's interesting to me is that all the pushes down are roughly 100 pips. I have the fibs drawn on the first push down, then label the other pushes down with "100 pips in white text" Concerning the relevance of the FB consolidation pattern we see price fall into the previous FB range and basically fiddle around "loosely" in that area, i would consider that area the 2250 level to the 2300 level. Hardly tradeable but interesting how an area of consolidation can be a precursor to another area of consolidation. Taking this into a tradeable / analytical metric will we see a final push down from 2312 into the 2212 level which happens to be a consolidation zone dating back to the 2nd of August????

The way this chart sits certainly gives the "look" of another hooking pattern down. This of course is highly speculative. But what I love is the symmetry of this price movement and the very easy identifaction of consolidation zones, like the FB pattern where price seems to come back to and bounce or start a new fresh move in the other direction.

The most fascinating thing on this chart to me anyways concerns the fib level I drew on the indicator. If you look closely, the fibs on the indicator mirror the fibs drawn on price action. So that - price retraced on the indicator to the 78percent level - and on the matching candle of price action hits the 78% level at the exact same time. Pretty cool.

To me the Euro is really directionless over the last two weeks - so I am up to trading both ways.

I hope some of you have found this interesting all the best.

I have also attached a gbpchf chart that shows a nice harmony. I will short the top of the pattern hopefully at a psych level - fib ext - or pivot.

Cheers.

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 pdhuey2000 
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Hi Guys

I noticed this FB pattern on the eur/usd. I am favoring a break to the upside for me that would mean closing above the 50 level. Price action pretty slow today so im going to be trading half size, and holding to the 2400 level.

If the break is down, Im a little concerned about the resistance below especially the pp, recent swing and trendline in the way.

To the down side Im trading 1/4 position size.

I managed to catch a nice trade on the gbpchf earlier in the week so im playing defense.

thanks guys.

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 pdhuey2000 
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i did short at 22. only a 1/4 position. holding target open stops above 38

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 pdhuey2000 
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If we get a push down on euro perhaps the better more patient trade will be a retest of the trend swing area, thought behind this is if we are moving down price action may get slutty around the 2300 level.

If we see price movement similar to how my arrows are drawn I will be trading heavy short around the retest of that trendline, i would really like to see a bearish reversal candle there.

For now holding 1/4 short.

The ej just made a decent push short, so we will see.

hope this helps someone.

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 pdhuey2000 
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Hindsight, take with grain of salt.

But we had some great set ups on the 8R today for EJ.

Chart posted.

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 pdhuey2000 
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trendline / swingpoint held. perhaps the bounce will get me long above 50. Im glad i traded only a quarter position.

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 BenG 
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Thanks for all of these great posts. This looks like a straight forwards system, with lots of potential to earn us traders a decent profit. I put the 8 range bars on MT4, doesn't always look as nice, but they're clearly there. A good example is the EUR/USD yesterday between 5:30pm and 6:20pm GMT. It looks as if the EUR/USD tries t push back up, but we'll see. Great to find some more currency traders, as thats what I do. Although reading about future trading it def sparks interest. But currently still using MT4, looking to upgrade to NT at some point soon. Either way keep posting, its been of great help.

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 pdhuey2000 
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Thanks BenG for the support.


I am looking at an extended slop between s1 and s2 on the Euro 8R chart. I will take a shot at a breakout trade.

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 BenG 
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eurusd has been a very choppy market so we'll see where it wants to go today.
It was down earlier after a bit of indecision. keep posting them charts.

I managed to get the 8 range bar on mt4, so this set up should be easy to follow for me.

earlier we had the usdchf forming a FB, and currenty the eurgbp is also forming a FB..

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 pdhuey2000 
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BenG nice find.

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 pdhuey2000 
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I just made that name up right now, but doesn't it look like a dinasour?

Anyway, i guess the texts would call that a flag pattern. If we break down i will go heavy long at 97.50. If we break to the upside i will put a normal trade size on.

thanks beng, wouldn't have looked at the swissy without your contribution.

much appreciated, i hope you make some pips today.

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 BenG 
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Also that level where the EURGBP is at is also been a great support level if you look at a higher time or just zoom out.
I be inclined to think this will continue down as well, but we'll just have to wait an see..time will tell.

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 BenG 
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pdhuey2000 View Post
I just made that name up right now, but doesn't it look like a dinasour?

Anyway, i guess the texts would call that a flag pattern. If we break down i will go heavy long at 97.50. If we break to the upside i will put a normal trade size on.

thanks beng, wouldn't have looked at the swissy without your contribution.

much appreciated, i hope you make some pips today.

it does a little now you're mentioning it. you're welcome, I generally look at most majors, I'm not to fussed which is going to move and when as long as I can take some pips out of it.

This is business, we need to make pips. pips equal profit.

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 BenG 
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the 97.50 is that based upon the daily pivot point?

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 BenG 
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where would you take the eurgbp? at 0.7823

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 pdhuey2000 
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beng referencing good support area, i agree with him. we could see sharp buying here as well if the pattern breaks to the downside - look out for a quick bite back, so good stops and no worries, light a candle and enjoy the day.



cheers.

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 pdhuey2000 
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order in at 22 on eurgpb

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 BenG 
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pdhuey2000 View Post
order in at 22 on eurgpb

so when trading the FB, you wouldnt trade straight off the bottom of the lowest point, but you'll give it a few more to make sure it breaks through that area properly??

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 pdhuey2000 
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i try to give two pips from the bottom of the pattern, but you'll see me enter somtimes in the pattern as well but that's only occasionally.

If I were writing rules, which I guess I am, I would say the best way to trade is to give two on the bottom and 1 + spread on the top.

I'll try to do a better job of explaining my entries as we go on. thanks for the question its an important one.

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 BenG 
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pdhuey2000 View Post
i try to give two pips from the bottom of the pattern, but you'll see me enter somtimes in the pattern as well but that's only occasionally.

If I were writing rules, which I guess I am, I would say the best way to trade is to give two on the bottom and 1 + spread on the top.

I'll try to do a better job of explaining my entries as we go on. thanks for the question its an important one.

thanks for the info. I'm sure that will be of help when trading.

it seems very quiet this afternoon, probs all them traders that are on holiday. since US session started it's been sitting still which is very unusual for forex

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 pdhuey2000 
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the 97.50 is that based upon the daily pivot point?


97.50 is on top of the breakout of the previous extended range on the swissy. And we have the green dottedn line which is the prior day's high. Also I like the support underneath consisting of the red and yellow dotted lines which are prior days open and close. the 50 level is a strong psychological level that tends to hold alot of orders. In this case im watching at as support for the longs.

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 BenG 
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So you wouldnt trade that congestion short till 97.50, you would wait for that point to reach and then go long. or just go long it it breaks about the congestion.

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 BenG 
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looks like eurusd is going down some more.

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 pdhuey2000 
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I would take a lighter trade short if the swissy broke short. maybe 1/2 or quarter. but would really be waiting fro the long at 97.50 area. however as time goes on conditions can change.

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 BenG 
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you know when you look at the FB or a specific congested area, when considering the +1 pip for up or the -2 pip for down, is that form where the end of the tail is, and not the body? i'm probs answering my own question here as it would make sense it would be from the tail as that is either the highest or lowest point.

so just to clearify, when trading FB's you would still take into account the general trend? would you consider just the daily, or also weekly etc? or are you just focused on s/r levels?

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 BenG 
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so considering the eurusd, that would now be a short trade? and the usdchf an up?

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 pdhuey2000 
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entry at 9790 stop 77

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 BenG 
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still very slow movements, hope it goes somewhere

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 pdhuey2000 
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Hey,

On a small range chart like the 8r, i will usually take the tail as the hightes/lowest point for the congestion area/ FB pattern.

I will on a minute based chart use the bodies on longer time frames like 4hr or 1hr maybe even 15min.

As far as what to trade and the direction, i use my entry size to dictate how I am feeling about direction.

IF i have an opinion about a direction I will usually chop my order in half if the range breaks the other direction, does that make sense? I am ignoring the euro short right now because of the close of London is coming and as you say the market is sleepy. IF it were pre London right now I would be going short heavy right now. Hope that helps.

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 pdhuey2000 
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Okay so the swissy got me, but i used proper MM and followed rules. thats what goes. Im still green on the week.

cheers.

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 pdhuey2000 
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i am leaving the order on for euro pound and will have my stop at 44. I am going to take about 3/4 of a position here and I am leaving the desk. The set up is still strong so I will give it some room and hopefully when I check back it will have made a move.

though the market is still sleepy. I will take 10 pips and then secondary target will be 7800

thanks

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 BenG 
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ya I saw that happen, its unfortunate but thats trading, you win some you loose some. Do you use any other indicator to determine whether its the optimal entry point? or just trade about that specific area once it passes that point?

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 pdhuey2000 
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my favorite set ups are when the break of the FB pattern or box coincides with a break of a s/r level like a pivot or prior day number or swing point.

I use a host of histograms that have never worked for me so i use them sparingly.

I'd say though that the trix on the elite downloads section and some others on that section are spot on usually.

hope this helps.

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 BenG 
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pdhuey2000 View Post
i am leaving the order on for euro pound and will have my stop at 44. I am going to take about 3/4 of a position here and I am leaving the desk. The set up is still strong so I will give it some room and hopefully when I check back it will have made a move.

though the market is still sleepy. I will take 10 pips and then secondary target will be 7800

thanks

my entry hasn't triggered yet for that one. Did you enter early? or just the difference between our brokers/exchange

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 pdhuey2000 
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sorry, no my entry hasn't triggered yet either. that post was just to say the order is still on and how it will be traded should it be triggered.

ill be back later this afternoon thanks!

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 BenG 
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ok that makes sense, thanks for your input, have a good afternoon..its nearly diner time here yay!!!

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 BenG 
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EURUSD FB yesterday moved slightly up, and is now forming another just above the previous one.

With pound news coming up soon we'll have to wait and see how things will go

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 BenG 
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another on the GBPUSD has formed but again with GBP news in an hour I will wait

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 pdhuey2000 
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Hi Beng:

You are catching good patterns.

I wil be around today in the NYC session, nothing for me yesterday wasnt near my screen.

IF there are any questions I missed please PM me or post - thanks,

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 pdhuey2000 
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thanks

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 BenG 
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Its fairly easy to see patterns, but I think in order to make this a more successful strategy some things might need to be tweaked. Sometimes it happens that it goes either slightly up or down, and then heads the other way. So lets say I had entered 2 pip under, it could then be triggered leaving me with a loss as it would pull up and hit my sl.

I think as you said this is mainly a reversal entry, but could be used either way.

I wont be here the whole of NY session but will be around for a bit.

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 pdhuey2000 
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Tweaks should be made by the trader / that's the only way to trade either a pattern set up or level set up. And make yourself comfortable with it. I can always tell you what I do, but what your do is actually more important. And I say that with alot of respect. I will almost certainly guarantee how I see the market and how you see the market is very different. Even though we are talking about the same setup.

When in doubt, lower your position size and put the stop on the other side of the pattern. That's a reasonable solution to an age old pattern.

With any "break from consolidation" pattern certainly the age old problem is when to enter. Here's a couple of items that might help should you trade this or any other pattern.

Do you want to trade the immediate break or wait until price pulls back into the zone then enter at some designated point? I trade the inital break accepting most times price will pull back into the zone, i try to pull 10 points out of the market before that happens.

You are identifying the pattern well - we'll keep working on the rest. I have alot more to share with everyone.

Thank you so much for your efforts and support.

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