It would seem that you have already identified the technicals of such a trend. So if there is sufficient room to make a good risk/reward ratio with proper position sizing and stoploss, it would be like any other real estate on the chart. You would also then want the busride in the other direction at the area of the reclaimed trend, no?
An approach to knowing what to expect in this area would involve observing the breakdown of the trend. This "spike" thing is a strong move and happens because the breakdown was tested and has been confirmed in the eyes of traders who are now pulling trend-following orders and reversing. My only point here is that the spike is a result of something else.
For this you may try using a setup like this:
EMA 466, 356, 108, 13
SMA 68, 52
Williams %R 89
Select a timeframe in which the following is seen:
Significant pullback spikes will usually come when these moving averages are aligned in their period relative positions (uptrend has price above shortest period MA and next shortest MA period below that, continuing on to the longest; the opposite for downtrend).
There is little if any recent crossovers of these MAs. Price has recently recovered from a move off of the 52 SMA and new ground has been made in the trend.
Now more recent is a similar break and recovery at the 13 EMA. Following this will be the confirming breakdown. The 13 EMA will be breached again and a retry to break new ground fails.
This is the sign that will create a systematic unwinding of enough trend following positions to get a pullback. The actual spike is after even more have spotted it.
The use of the Williams%R for help in picking a spot to Stop-And-Reverse:
Set it to 89. It will work at 0 and 100 and can of course only be counted on for major reversals at the correct timeframe to match trend on a pullback. Try 356 and 466 ema pairs for that. 356 can at times be a bounce and at others just passing thru to a violation at a zone beyond the 466.
Or you can try going to a smaller timeframe to look for these same setups at a smaller scale and in reverse.
There are other spikey trend-pullback setups and so caution as always.
Interesting choice of EMA and SMA periods only one of which is a Fibonacci sequence number (13) Can you give any clue as to why those particular numbers?
I am reminded of the MA cross technique by Mark McRae where you use two long and two short pairs of MAs separated by a few periods only eg 400, 395 and 12, 13. He sometimes threw in a mid pair too. (which I also note from your SMA 68, 52) The mail problem here is to keep abreast of which MA is which on the chart
Interesting use of long Williams, I will try that, my normal period is set at 21.
Do you use long Bollys? Since FX pairs often oscillate between the 200 or 400 Bolly and an MA
Again I am very interested that you mention Elliot both in your text and signature. Obviously in theory the fluidity of FX is an ideal application for Elliot.rpaco you are right about 13 being a fibbo but they are ALL related by factors to fibbo but not in any obvious way. In fact the 13 is not derived from the fibbo series but by factoring others. Which, if I discuss, y'all would certify me to the looneybin.
Actually doing so would unravel the secret mysteries of the king and queen of trend, the elliott wave key built by each wave to identify timeframe and internals, the factors by which to multiply stock (unleveraged) technicals to get commodity (leveraged) technicals, the new elliott rule, and the erroneous elliott wave rule.
I could tell ya but
then I'd have ta kill ya....
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