FOREX PRO Weekly April 02-06, 2012

seedof

Corporal
Messages
99
hi Sive for so long i've been following your analysis and i see you make good use of fibo studies but i want to ask that after drawing a fibo line in a prevalent downtrend is it also okay or useful to draw a fibo within a minor uptrend reversal that exist within the prevalent down trend.
 

BeeKay8

Sergeant
Messages
208
Hey Sive,

I would like to know what you think about this.

I had a buy order @ 1.3230. SL 1.3190, TP 1.3480.

I watched as my buy order got executed. I was excited because of solid k-support at this area but do you think in this situation when we have a solid thrust down that we should wait for at least 1hr MACD to show bull or wait for stoch to show bull before entering to ensure that indeed k-support will hold?

Usually if you want to enter long you wait for a dip and then enter long and in this case, it did hit 1.3230 however if you just enter when that area is hit without waiting for confirmation would this be dangerous? Or would it be alright because we have evidence of k-support and based on k-support, market should respect it so we do not need to wait for MACD to show bull?

I just want to know what you think because when my buy order got executed, I was excited but also nervous at the same time because MACD was showing bear for 1hr, 4hr, and also daily.

Also, I recall you telling me that you only use the 3x3 for daily. However, on weekly TF, I see that RIGHT EXACTLY at the 25x5 MA, market has completely failed to break the 25x5. Would this add confidence to our short term perspective for bears? Or do you not really pay attention to the MAs below daily? I have noticed that there are rarely any whipsaws for the 25x5 weekly TF so I am just curious if this adds confidence to bears because right when market was about to go above 25x5, it rejected it and fell right down.

Thanks a lot Sive! Hope all is well with you and your family.

Cheers!
 

Sive Morten

Special Consultant to the FPA
Messages
13,536
Hey Sive,

I would like to know what you think about this.

I had a buy order @ 1.3230. SL 1.3190, TP 1.3480.

I watched as my buy order got executed. I was excited because of solid k-support at this area but do you think in this situation when we have a solid thrust down that we should wait for at least 1hr MACD to show bull or wait for stoch to show bull before entering to ensure that indeed k-support will hold?

Usually if you want to enter long you wait for a dip and then enter long and in this case, it did hit 1.3230 however if you just enter when that area is hit without waiting for confirmation would this be dangerous? Or would it be alright because we have evidence of k-support and based on k-support, market should respect it so we do not need to wait for MACD to show bull?

I just want to know what you think because when my buy order got executed, I was excited but also nervous at the same time because MACD was showing bear for 1hr, 4hr, and also daily.

Also, I recall you telling me that you only use the 3x3 for daily. However, on weekly TF, I see that RIGHT EXACTLY at the 25x5 MA, market has completely failed to break the 25x5. Would this add confidence to our short term perspective for bears? Or do you not really pay attention to the MAs below daily? I have noticed that there are rarely any whipsaws for the 25x5 weekly TF so I am just curious if this adds confidence to bears because right when market was about to go above 25x5, it rejected it and fell right down.

Thanks a lot Sive! Hope all is well with you and your family.

Cheers!
Hi Beekay,
Usually it works like this - trend (or directional pattern) is the first, Fib work is the second. The reason for that is that Fib levels do not show context. They just show where support or resistance could appear, but support/resistance tells nothing about market direction and overall context.
Hence, the direction to enter is shown by trend, but not by Fib levels. So, if you have bearish MACD on all time frame, but market stands at K-support - you should not enter long. You can enter, if, say, daily trend is bullish, while hourly bearish. But it will be better if you will get either bullish reversal pattern at 5-15 min chart there or wait for pullback from this level and then enter at retracement.

Second important moment - always monitor how market moves to this level. If you see something like yesterday - huge nasty black candle right to this level - you should not enter long despite the trend direction. You need "retracement way" move, gradual and smooth. Strong candles show emotion and we do not need them.
I also have entered long there, but by sleeping order. If I've seen this price action I will not enter there.

Speaking about 25x5 - I usually use it on long-term charts after strong collapses as indicator of possible reversal. I rare apply it on daily time frame. Usually on monthly chart.
 

Sive Morten

Special Consultant to the FPA
Messages
13,536
hi Sive for so long i've been following your analysis and i see you make good use of fibo studies but i want to ask that after drawing a fibo line in a prevalent downtrend is it also okay or useful to draw a fibo within a minor uptrend reversal that exist within the prevalent down trend.
Hi Seedof,
well it depends on what the trader you are. To use this counter trend levels, you have to trade on lower time frame. Otherwise, you do not need them. For instance, you have strong downward trend on houlry chart (as now, for example), and market turns to retracement. So, you can have upward trend on 5 min chart. So, if you're tick-chart trader - you will need this support levels on retracement move, but if you trade on hourly chart - you don't need them.
 

seedof

Corporal
Messages
99
Thanks Sive, actually i would not really know how to classify the type of trader i'm because i trade with pending orders on the 1hr chart while i monitor trend on the 4hrs and daily chart from which i draw my fibo.i used to be an intraday trader before but i dropped all my indicators for fibo not too long ago to trade. perhaps you have some few words for me
 

BeeKay8

Sergeant
Messages
208
Hey Sive,

Thanks for your reply. What do you think about the formation on daily? It looks like a butterfly BUY to me. Would you agree? With current market price right now I would say for this pattern to work it should not break below 1.3000 which is about an 80 pip SL.

Cheers

btrflydaily.gif
 

Sive Morten

Special Consultant to the FPA
Messages
13,536
Thanks Sive, actually i would not really know how to classify the type of trader i'm because i trade with pending orders on the 1hr chart while i monitor trend on the 4hrs and daily chart from which i draw my fibo.i used to be an intraday trader before but i dropped all my indicators for fibo not too long ago to trade. perhaps you have some few words for me
Well, based on timing that you've specified you do not need much to draw counter trend Fib levels on hourly retracements. If you will start to trade on 5-min/hourly chart combination, then it will be another tune.

Hey Sive,

Thanks for your reply. What do you think about the formation on daily? It looks like a butterfly BUY to me. Would you agree? With current market price right now I would say for this pattern to work it should not break below 1.3000 which is about an 80 pip SL.

Cheers
Hi Beekay, nice pattern that has chances to happen - but this will be Butterfly "Sell".
 

cheater

Private, 1st Class
Messages
47
Well, based on timing that you've specified you do not need much to draw counter trend Fib levels on hourly retracements. If you will start to trade on 5-min/hourly chart combination, then it will be another tune.


Hi Beekay, nice pattern that has chances to happen - but this will be Butterfly "Sell".
Hi Sive, can explain why is it butterfly sell since we are looking at a rebound in the butterfly pattern?
 

Damian1987

Corporal
Messages
149
Hi Sive, can explain why is it butterfly sell since we are looking at a rebound in the butterfly pattern?
Ill pop in with all due respect.

Why is it butterfly sell? cheater, You've drawned a "W" allright? Made of four segments. XA- AB -BC- CD from left to right when watchin in the screen. So the last three segments form a Bullish ABCD pattern, WICH...if will expand over 100% from XA (fib ratio 1)
it has chances of doing a complete reversal (market moving below point A after completition at D). On this forum all views are accepted since it's an educational review of the forex market, but normally we look forward to act upon 127% or 168% extension of that ABCD move (even if on the book "trade what you see", where butterfly is explained in detail and with graphics, youll find that 200% and 268% extensions are also taken into account).
Your butterfly has a bullish ABCD move...and the "butterfly" being a reversal pattern, we look forward to SELL so...its a butterfly sell.
If u got the truly butterfly pattern on daily time frame that its going to work then you should expect a move that targets 127% from D to A. This means target is to the downside on this particular example wich stands below A point of the "W" you've drawned in blue. good luck.
 
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