XO_Method REVISED - Page 51

ValeoFX · #**501** (**permalink**) 05-29-2008, 01:27 PM

When I opened my charts this morning, the price had already dropped by so many pips, that entering was a very tricky business for the short. For now I will show you the entry for the retracement and the next Post will show you what I have done on the H1-chart for the short and why.

The first siganl was @ 09h05 candle when the price broke the 15-EMA, but it also overheated the CCi-5 and therefore I do not take such an entry.

Second signal was when the price could not break the 34-EMA and short signal was @ 10h05 for a 15 - 20 pips short. (Keep in mind that the direction was still short, so it is legit to take this short.

Price now closes higher than the lowest Low @ 08h50 and started climbing back up, slowly.

Entry was @ 11h00 when the price broke the 34-EMA. (Just above there was the next best thing since sliced bread, the 60-EMA!! Idealy (with an 8-pip difference between price and the 60-EMA) one would not have traded that entry, but due to the performance of the longer TF charts, I decided to take that chance. It was predictable that the price got stuck against the 60-EMA for 6 candles, before it srinted through and we ended up with ±50 pips depending on how astute you were in reading the exit.

Best wishes.

ValeoFX · #**502** (**permalink**) 05-29-2008, 01:37 PM

First of all, the H4-chart. What you see here is a perfect entry for the H4-TF, but at the same time the H1 was clearly overheating badly as far as the RSis are concerned.

Taking the clue from what I wrote yesterday, there was an entirely new H4 candle to deal with and it showed enough scope to enter at the close of the 07h00 H1-candle for a short with a close stop @ 1.9737. The close of that candle had a considerable "retracement" (longish wick) and best to have closed the trade as the price started bouncing on the M5 for ±50 pips that you would otherwise not have had.

The Long entry was discussed in previous Post above.

So, first the H4 chart followed by the H1.

Best wishes.

suk1000k · #**503** (**permalink**) 05-31-2008, 02:03 AM

Here is the long I mentioned.I now realise my mistake in that The testing of th EMA that was concerning me might have been an inevitable forerunner to the breakout. The great early signal which made me jump in on the trade almost as soon as break above 8EMA on close was "old faithful" the XO MTF on M5 believe it or not.

suk1000k · #**504** (**permalink**) 06-02-2008, 03:32 PM

After the news we had a spike low from the higher than expected ISM - but did it break the crucial 1.9596 support. Not at all. Therefore we have a killer triple bottom on the H4 and entry at 1.9613 for a cool 40 pips in about 20 minutes of trading time.

Notice also how the RSI 2 bounced off 4 on the H1 chart and the H4 is crossing. Without flaunting my ego, I think this was a great trade and a great use of ValeoFX system.

Look at the CCI overheat "hook from extremes" too...(H4) in addition, the H1 turbo CCI was peeking over the zero line and the XO was showing change in direction (half red, half green).

Even if you got in BEFORE the news in the long a protective stop just below 1.9595 would not have been triggered. and the technical analysis of go long still validated.

I've marked the triple bottom in blue. It was a dead cert IMHO. You can see the other things I mention, too. Enjoy!

M5 - CCI zero line reject, RSI cross - notice H1 RSI 2 bounce off 4 (third window)

H4 - Overheated RSI 2 crossing RSI 4. Beautifully overheated CCI hooking from extremes, triple bottom formation and well below the EMAs.

H1 - Notice XO changing state, Turbo CCI cross zero, overheated RSIs, RSI 2 cross 4 and 4 cross 14, 4 and 14 cross 30 also.

Could also look at this as doji reversal pattern also.

ValeoFX · #**505** (**permalink**) 06-03-2008, 09:59 AM

I apologise for not posting yesterday, but for some strange reason I could not load my charts.

Suk, although you were successful with your trade (and I congratulate you for that), I do not agree with your reading of the triple bottom on the H4-chart. That is not a triple bottom according to the description given me and on the web for what a triple bottom is; but that is besides the point.

It was a very difficult entry for newbies and I will post my charts later. The chart following is my chart to show the short entry yesterday and I will also just briefly tell you why.

This morning's trade was not an easy one yet again, but that is the only way we can learn.

Wishing you well for today and always.

ValeoFX · #**506** (**permalink**) 06-03-2008, 10:05 AM

Here is the belated entry for yesterday, but I wish to point out some very imporatnt points. Trust you guys made loads of pips yesterday.

Firstly, the first signal was @ 07h30, BUT at the same time the CCi-5 overheated - so to me that is NO ENTRY. The next 2 candles also overheated and we were expecting the retrace to be imminent. The retrace hit the 34-EMA and bounced back off it, with the RSi-H1 showing you the entry @ 08h20 close @ 1.9718.

Had you decided to Bank the first time, the second entry was @ 09h05 @ 1.9705, when yet again the H1-RSi gave the entry.

ValeoFX · #**507** (**permalink**) 06-03-2008, 10:17 AM

The first signal was @ 08h05 for a short and if you were quick enough it was good enough for ±15 pips.

However, what we should have seen is the DIVERGENCE on the RSi-M5 window marked in Yellow TL.

Also, there is a significant Fib-level @ 1.9610 (162%) which held the price in check, while the RSi keeps on climbing higher. First attempt at breaking out Long, was @ 09h15 when the price broke the 34-EMA and 60-EMA at the same time, BUT because the 100-EMA is so close to these 2 EMAs, I waited for the 100-EMA to be broken and as you can see it took a rejection first before it broke through @ 09h35 with a price of 1.9639 (Stop @ -15 = 1.9624) The retrace @ 09h50 only reached 1.9630 (6 pips clear of our stop) and when the price overheated on the 10h20 candle you closed the trade @ 1.9678 for +39 pips.

It was NOT an easy trade this morning - make no mistake about it; but that is how we learn and continue to become better traders.

I will post yesterday afternoon's entry after this post as it was yet another difficult (in my opinion) entry with loads of patience.

Best wishes.

ValeoFX · #**508** (**permalink**) 06-03-2008, 10:27 AM

After such a major run, I tend to wait for confirmation of the price breaking at least the 60-EMA and with enough evidence from the RSis to show either divergence or the H1 and H4-RSi-setups, giving the clue.

I waited for the announcement unlike Suk as that announcement could have taken you deep "south" and you would have been in serious trouble. So I err on the caution side and took the opportunity when the candle @ 16h05 turned Long and closed above the 34-EMA. (regretably my UPS crashed during the night and my charts do not show the correct reading of the H1-RSi cross, but believe me. it was correct although the H4-RSi-setup was NOT Long yet. Made +18 pips here when the price bounced off the Fiblevel.

Next entry was @ 16h55 candle @ 1.9637 and exit on overheating CCi-5 @ 1.9671 @ 17h35 candle for +34 pips.

A lot more "messy" perhaps than Suk's trade, but "save enough" for newbies to trade and not feel "anxious".

Any comments? Please???

suk1000k · #**509** (**permalink**) 06-03-2008, 11:29 AM

Quote:

Originally Posted by ValeoFX

I do not agree with your reading of the triple bottom on the H4-chart. That is not a triple bottom according to the description given me and on the web for what a triple bottom is; but that is besides the point.

For me it is a triple bottom but not the kind you see in text books. It is the testing of a same bottom that can be seen on 3 consequetive candlesticks, just as since the retrace I would call a double bottom (1.9614/1.9609 on H4)

On my diagram I am showing the M30 chart which gets rid of some noise. The reason I use H4 to show is it gets rid of all noise and shows a clear testing of the same bottom 3 times.

Without the ISM news it was a double bottom, but since the price rushed up after the ISM spike tested the bottom again, I call this a triple bottom. This spike was to take out stops and also to get traders to go short, but there was a stronger pattern in place (in my opinion) which is the double bottom/triple bottom. I see institutional traders as trading this pattern more than they would sell emotionally on the ISM above average figure in this instance.

The textbook double/triple bottom looks like the following:
Followed by my M30 which shows more clearly the H4 I highlighted blue above. Hope it helps explain my reasoning.

I would also say that these are more accurate for the higher timeframes (eg H4, Daily, Weekly) but I stand by them.

I agree completely with ValeoFX that best policy is NO TRADE during news. However if in this instance you traded it as a pure technical analyst trader with no notice of news, and traded the double bottom, with protective stop at about 1.9690 (a few points below the previous bottoms) it would have kept you in through the news.

suk1000k · #**510** (**permalink**) 06-03-2008, 01:04 PM

1.9613 was therefore a good buy point (if a tad early) on the way up after the news. I sometimes wait until the candle body starts forming in the direction when I decide to trade these.

If you can explain why it is not valid in your books, ValeoFX, please do explain, because I have by no means mastered these trades. Thank you.

Today, similarly was a double bottom - nice long wick, nice test of similar bottom (where the : of 20:23 is on my chart below) ---however I traded long at 1.9670. I did not make many pips on it, because of the ambiguity I was seeing - RSI2 seemed overheated on H1 - This was a tough trade because I found severe ambiguity across timeframes, but long won out technically now and price is at 1.9611.

It is also a broader double bottom if you take the 3 candles I interpreted as triple bottom yesterday plus the double bottom today as 2 separate bottoms and now we have break above 1.9700 and I'm looking as to whether close will be above or below the magenta EMA on the H4 candle.

I noted also divergence on both RSI windows and CCI are moving in direction of the higher lows.

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