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I've been using this style of trading for a while now but needed something that could confirm whether a fib was going to provide support or resistance or not - see chart below.
I use the 4HR chart for signals then go to the lower timeframes for entry/exit.
For confirmation of a fib ratio becoming support or resistance I use a T3 RSI set to 9 and the curve set to 0.382. As you can see from the pic at the (green) B and (blue) X, RSI breaking through the curve is an early warning that the 0.707 is holding, there's also the 144EMA for support too. An RSI trend line break is further confirmation tha the move may be over and a long should be initiated.
The rise up to C (A) is 0.782 with a potential entry short or at least cover longs. I tend to stay away from the first signal and see what unfolds in terms of a retrace, occasionally price will rocket away in the intended direction and I may enter a partial amount or miss it entirely, 9 times out of 10 though there's a retrace. In this case it took about 44 hours, so patience is required. The big fish and hedge funds pretty much all take their signals off the daily, 240 and 120 charts, I want to be on the same side as these guys so day trading for me now is strictly an entry and exit thing.
Excellent work Kamyar!
and thanks for the pattern ratios pic, I can chuck away my scruffy hand written sheet now!
For any others not sure of what Kamyar is saying or don't understand it all yet, these patterns work and improve profitability, however they take a while to get to know. I think they make trading a little more enjoyable too!
T3 RSI is attached.
Last edited by magpie; 02-25-2006 at 07:24 AM.
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