EUR/USD Daily Video, November 10, 2011

Hello Sive,
I'd like to ask you how we could play this H1 DRPO buy, please. In lower time frames (such hourly time frame) is it ok to buy on close (confirmation bar) or drop to lower time frame, f.e. M15 and wait for retracement?
Hope I understand Joe's definition what is:
"The signal remains intact until either a major Logical Profit Objective is achieved or until the .618 retracement '*' from the furthermost extreme of the consolidation area (after the second penetration) to the furthermost extreme on the thrust, has been exceeded on close"
and I draw it correctly...
Now If I would wait for 0.38 retracement on H1 - it didn't hit.
When I switched to M15 and draw new Fibo - it didn't hit again.
I am just wondering if I understand correctly where is correct enter area for DRPO and when I switched to M15 if new Fibo was drawn correctly.
your help is more than appreciated
have a great day
ondrej

Hi Ondrej,
You've marked bars correctly. The major compromise with DRPO is to choose - enter at signal bar, or wait a retracement. Why is it compromise? Since DRPO is a directional signal, the move after its confirmation could be very explosive, so you have to decide - wait for better enter, but take a risk of miss potential move, or take worse enter but 100% take part in rally.
Personally, I've decided, that on intraday charts, as hourly or lower, it makes sense to enter at confirmation bar, since volatility is not so significant and targets relatively tight, or apply some more advanced analysis (read below). If you trade DRPO on daily or even Weekly chart - your stop will be far enough, so may be it's better to wait for retracement.
The golden decision, that Joe very often applies is to enter 50% at confirmation and 50% at sleeping "Buy" order.

Now about this DRPO. This is not very perfect example of it due to some reasons. Probably we can treat it as DRPO "Look-alike". First, because there is a bit extended difference between bottoms. Due to this moment, we can't apply ABC pattern to find LPO's since all of them have been hit by confirmation bar. Besides, this is not quite correct since C point stands below A.
Hence, the target of this DRPO is nearest Fib resistance level, as we've said in video - 1.3620-1.3630 level.
Still this DRPO LAL has a positive sign - new low at second bottom. This adds confidence to this pattern.

That's why it's better to drop time frame and watch closely. So, here as you can act. When market starts to form lower second bottom fo DRPO - drop your time frame to 15 min chart. Very often in such case market is forming Bullterfy "buy".
Here we see that this is not quite butterfly, but market has formed RRT or bullish engulfing (how you better like it) right at 1.618 extension of previous swing. Later it has returned above previous lows. This is also not quite W&R, but very close to it.
So you may try to enter at completing of this RRT. This will give you much better entry point and you can place tighter stop - right below it's low.
Usually reversal patterns never come along. If something on hourly chart, as DRPO - this could be combined with others patterns on lower time frame - butterflies, H&S, candlestick patterns or something...
Beside, entering in such manner will safe a lot of money if DRPO will fail. Probably you will be able to exit even with some profit.

I think you've got the point. Trading DRPO's on intraday charts demands some inventions.
 

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Hi Ondrej,
You've marked bars correctly. The major compromise with DRPO is to choose - enter at signal bar, or wait a retracement. Why is it compromise? Since DRPO is a directional signal, the move after its confirmation could be very explosive, so you have to decide - wait for better enter, but take a risk of miss potential move, or take worse enter but 100% take part in rally.
Personally, I've decided, that on intraday charts, as hourly or lower, it makes sense to enter at confirmation bar, since volatility is not so significant and targets relatively tight, or apply some more advanced analysis (read below). If you trade DRPO on daily or even Weekly chart - your stop will be far enough, so may be it's better to wait for retracement.
The golden decision, that Joe very often applies is to enter 50% at confirmation and 50% at sleeping "Buy" order.

Now about this DRPO. This is not very perfect example of it due to some reasons. Probably we can treat it as DRPO "Look-alike". First, because there is a bit extended difference between bottoms. Due to this moment, we can't apply ABC pattern to find LPO's since all of them have been hit by confirmation bar. Besides, this is not quite correct since C point stands below A.
Hence, the target of this DRPO is nearest Fib resistance level, as we've said in video - 1.3620-1.3630 level.
Still this DRPO LAL has a positive sign - new low at second bottom. This adds confidence to this pattern.

That's why it's better to drop time frame and watch closely. So, here as you can act. When market starts to form lower second bottom fo DRPO - drop your time frame to 15 min chart. Very often in such case market is forming Bullterfy "buy".
Here we see that this is not quite butterfly, but market has formed RRT or bullish engulfing (how you better like it) right at 1.618 extension of previous swing. Later it has returned above previous lows. This is also not quite W&R, but very close to it.
So you may try to enter at completing of this RRT. This will give you much better entry point and you can place tighter stop - right below it's low.
Usually reversal patterns never come along. If something on hourly chart, as DRPO - this could be combined with others patterns on lower time frame - butterflies, H&S, candlestick patterns or something...
Beside, entering in such manner will safe a lot of money if DRPO will fail. Probably you will be able to exit even with some profit.

I think you've got the point. Trading DRPO's on intraday charts demands some inventions.


Hello Sive,
thanks a lot for explanation. make sense as usual :)
thank you once again for this topic and for all your analysis!
ondrej
 
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