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EUR/USD Daily Video, November 22, 2011

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Nov 22, 2011.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning, although market has shown attempt to the downside - it has failed to break previous low. Still, downward context still holds and there are couple of patterns that are worthy of our attention:




    The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
     
    #1 Sive Morten, Nov 22, 2011
    Lasted edited by : Aug 15, 2015
  2. samfx

    samfx Private, 1st Class

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    Hi Sive,

    I have a question regarding Butterfly buy that happened couple month ago in September...
    As you can see in the attachment file the 4 hour chart, I did draw the left and right wing.

    The market reached 1.272 level first then bounced up 310 pips or so but did not pass
    the C point/level and then reversed back down and reached little below 1.618 Fib retracement
    and reversed to the upside with a nice move up over 1000 pips or so...

    The market reversed 310 pips first at the 1.272 Fib retracement, at that point does the Butterfly Buy still
    valid if it's bound back down like it did? Does the butterfly buy setup stay valid until market pass through
    C point?

    I am guessing that both D point's are valid first at 1.272 and the second at 1.618 Fib retracement levels
    since market did not go though C point of the butterfly, am I right?

    Thank you for your help...

    Sam
     

    Attached Files:

  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Sam,
    How it's better to say... Buttefly is treated as worked out properly if even retracement from 1.27 target point or from 1.618 point reaches some retracement level, even 0.382.
    But according to trading rules, if you want to trade 1.27 butterfly you have to place stop below 1.618. Form that perspective you were able to make profit twice. Or at least one trade finish with no loss and earn profit on second.
    IF you trade butterfly you should not focus on inner AB-CD, since first of all you trade butterfly that has a bit different approach as well as failure point.
     
  4. samfx

    samfx Private, 1st Class

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    Thank you Sive for the reply,

    You said if I want to trade 1.272 butterfly I have to place stop below 1.618 level.
    How about If market reached 1.618 retracement, where to place stop?

    On that trade market went down over 70 pips below 1.618 and reversed back up for a nice move.

    When you said the inner AB-CD you ment CD leg that reached the 1.272 level? But at this point we
    don't know if market going to go down to the 1.618 level!! We should be watching the 1.272 first for
    a reversal and buy opportunity (Butterfly Buy) @ 1.272, right?

    Thank you again, your experience and comments is very respected.

    Sam
     
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Usually, depending on time frame, you should place stop beyond 1.618 at some harmonic number. I suggest you to read FM School, dedicated to harmonic patterns...
    Forex Military School | Complete Forex Education by a Pro Banker - Forex Peace Army Forum

    Also way of placing stop depends on how you enter the trade. If you enter just at the point of completion without any confirmation - then usually you will act as I just said above.
    If you drop your time frame at completion point and search for some patterns on lower time frames - then you can place stop a bit different - tighter and more precise. Also you will not take drawdown for 70 pips. But there is no rule of thumb how to do it. This depends on personality and experience.

    On second question -should we take signal at 1.272, depends on price action. Read harmonic chapter. There are some issues that will help you to understand and assess probability of reversal at 1.272 - long bars, steepness of legs, gaps and so on... If you see something of that right before 1.27 point, then Buttefly has solid chances to proceed to 1.618.
    Also it depends on overall context. If batterfy agrees with it, then 1.618 is more probable.
     

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