Special Consultant to the FPA
January 13, 2010
January 13, 2010
You can follow my trading here.
Sive Morten Signals - Forex Trading Signals Test by Forex Peace Army
13-01-2010. Buy EUR/USD 1.4466 s/l 1.4430 (0.8 lot)
Result – “817.60$” (closed at 1.4568)
Stop Grabber Trade
This is a kind of trade that I’ve not described before. It’s a bit specific. This trade was made on the EUR/USD hourly chart. As you remember in my recent weekly research, I’ve made a forecast about the EUR/USD rising. The context for rising is beyond the scope of this description, but the source of the movement was an expectation of worse Payrolls data. So, this up move had happened, the market has reached Confluence resistance area 1.4550-1.4560 and hourly target XOP=1.4546 at 1-hour chart and entered consolidation:
This consolidation was very tight, market stayed above 1.4440 level with some attempts to break it down (Wash and Rinse) but it holds. The daily trend is up, so my position was to buy on retracement to 1.4460 with s/l just below 0.382 level at 1.4443. In the beginning my plan was exit at Confluence area at 1.4550. If the market suddenly breaks through 1.4460 then it definitely will go much lower and there was no need to place a farther stop. Besides, I can trade greater volume in this case. So, what are the inputs:
Daily trade is up, there is no overbought;
Market does not retrace deep – even not reaching 0.382 support at 1.4443.
Market has shown Wash and rinse of 1.4460 support level.
So, it means that it just consolidates for an additional up move.
EUR/USD Hourly #2
EUR/USD Hourly #3
So, where is a stop grabber? Here it is:
EUR/USD Hourly #4
To recognize it we need a MACD Predictor. MACD Predictor is a derivative from the ordinary MACD indicator and shows the price at which MACD lines will cross. (this crossing coincides with crossing of MACD Predictor and price lines). So, as you know, the crossing of MACD lines tells us about trend change, but we need to wait for a confirmation, i.e. close of current bar, to confirm MACD crossing and, hence, a trend change.
If we use MACD Predictor instead of MACD for trend change we need that price will close below MACD Predictor line (this is for down trend). And now look at the above graph – before the Stop grabber bar trend was bullish (price is above MACDP line), then price moved below MACDP line and gave an unconfirmed signal that trend has turned bearish. Then price has reversed back and closed above MACDP line showed up trend again. So, traders who have opened a short position based on unconfirmed signal were locked in a bad situation and start to buy for closing. Market-makers see that and add power to move the market higher to reach stops that are marked on the chart. The ordinary target for such kind of signals – previous highs that are surrounded with stop orders. When the stops were grabbed I closed the position. Besides, there were an Overbought on hourly and the market has reached a 0.382 major resistance from the whole down move. But it does not mean that market will not be able make another up move. It was a short-term trade.
In general it’s possible to use Stop grabber as a separate signal to trade, or as a confirmation. In my case it was a confirmation that the market intends to make an up move. Stop grabber just helps me to estimate my target – previous highs with stops around it.