04/27/2010
04/25/2010
04/24/2010
Ichomoku Example
The following is still Ichomoku system. However, I have modified it so I can see Kijun-sen from different time frames in one chart.
The thick Blue Horizontal line is 4H kijun-sen. The Thin blue line is 1H Kijun-sen.
The thick red line is 4H Tenkan-sen. The thin red line is 1H Tenkan-sen.
As you can see from following 1H chart, it bounced off the 4H kujun-sen nicely on Friday Morning after 9am.
Our rule of thumb for Forex market is:
1. Use 4h to find the bounce/trend
2. Use 1h to confirm.
3. Use 15m to enter.
The aggressive play would be Short Usd/Cad between 9am to 10am. The price is clearly bounce off 1h 200SMA line + 4h Kijun-sen line.
However, because it was Friday and I didn’t want to hold anything through weekend, I missed the first chance.
Now I am preparing to Short at the second wave next week.
See this 15m Chart using the same setting. 3 groups of stochastic indicators are used, they are 15m/1h/4h in order. As you can see, 4h stochastic is ready to cross which 1h/15m already too late to enter. I would prefer to wait until 1h to have another bounce. But I will definitely wait for 15m stochastic to have one more bounce and short at 15m cross at the top.
04/21/2010
Ichimoku System Trigger 2: Divergence
This is the a different setup on the same Ichimoku template.
Simply put, in Ichimoku system, when Kijun-sen is over Tenkan-sen, it is supposed to be short. But what about price breaking up and cross Kijun-sen line?
That’s what I call divergence in Ichimoku.
Set up check list:
1. Divergence: Kijun-sen line and Tekan-sen line and price action shows opposite direction.
2. Price break Kijun-sen: Price going up and 4h bar has confirmed breaking Kijun-sen line.
3. Kijun-sen then become support. (This is the most important bar in this system). We need to make sure Kijun-sen line then become a support and continue to show the price movement trend.
Stop Loss: If a reverse candle confirmed to re-break the Kijun-sen line, we cut loss.
Take Profit: Use pivot or MA lines to take profit. Lock free trades as usual.
04/20/2010
Ichimoku System Trigger System 1: attack the second wave
I like Ichimoku system template. At least it gives me a peaceful and colorful screen.
Kijun-sen Line is calculated based on (HIGHEST HIGH + LOWEST LOW)/2 for the past 26 periods.
I can see it to represent a nice 50% fib line on 4h or 1h chart. (Yes, it is a cheat but I try to keep it simply/lazy so I don’t have to draw it myself. )
However, default triggers from Kijun-sen systems are many times too late. I have combined the fib-line system with Ichimoku Chart and comes up with my own triggers.
This blog will introduce set #1: Attack the second wave
Check list for the entry based on 4h chart only:
1. Tenkan has already crossed Kijun to confirm the trend.
2. Price has trended beyond Tenkan and retrace back to test Kijun.
3. Price has confirmed to have Kijun Support.
Use Kijun-sen as s/l, we enter the trade to attack the second wave.
See following chart for example,
In this chart 4 hour Gbp/Usd, there are there check signs to represent each of the conditions of this trigger.
Note 1: In this chart, there is also a hidden purple dotted line, which is the Gann Indicator. It’s important to monitor that indicator and make sure it didn’t flip to against our trade too close to the Kijun-sen line.
Note 2: Make sure the previous high/low on the same chart do not show MACD divergence.
Note 3: In my trading, I would prefer to have the support of Gann or Ma cross in 4h chart to confirm the bounce.
Here is another example,
04/18/2010
GS let the dust settle ? – or more fire works ?
Will GS lead the market this week like it did Friday? In the chart below I have applied a Fibonacci Extension tool illustrating the fact that Fridays move already achieved the 100% “measured move” of the previous short term decline. In the second chart below I have applied a set of Median Lines to help frame potential price moves going forward. Also added some fibo extension levels to keep an eye on. I think I will give some time to let the dust settle a bit here and let price decide which way it wants to go, prior to initiating any trades. See the bottom chart for some suggestions on price triggers and targets.
04/16/2010
Market Profile – longer term
This Market Profile chart is a bit unusual. Most people will show you the Day session only. This representation of Market Profile is showing 24 hour session. So it is much different than the day session only charts. Also this is a mix of some weekly charts and ending with todays one day session on the far right. The reason I did it this way is to represent the power in todays move in respect to the previoius 4 days as well as a measure against the previous 2 weeks price action. please note that today we took out the NPOC and VPOC of this week AND last week. all in one day ! In that respect, todays price action was a truly powerful move.
SPY – hardly a dent
Even though we had a ‘major’ sell off today we did not even dent the uptrend. Applying drawing tools such as Andrews PitchFork provide us a visual structure around price with which we can gauge price action. Notice that in the Daily chart of SPY below price is still in the upper quartile of the drawn Median Line set. I have highlighted on the chart a few of the Fibonacci levels and Fork levels of major interest. Your thoughts and comments are welcome. Please use the comment tab just under the chart. Have a GREAT weekend.
04/14/2010
Sometimes Never
When is it time to throw away a set of median lines ? We draw, and re-draw, test and fail, adjust the points and redraw again, but when do we throw away a set of median lines? When is it time to throw in the towel? Well earlier tonight we discussed in detail in the chat room why this set of median lines deserves to live. At least for now. To sum it up here are a few of the reasons outlined: First of all this set is counter trend. OEX is obviously in a strong up trend. So the obvious first question is “why even bother with a down trending set ? ” Because we need to be prepared for a reversal or at least a pull back. We need to know where and when to take profits on a long, and / or where and when to consider a counter- trend position. Now, lets get back to why this set needs more time to be considered as valid >>>> In several locations price has respected this set. See chart below highlighted ovals. Secondly, What other pivots could we use with which to draw a set of downward sloping Median Lines from ? In a market as strong as this with little to no pull back, this is the best most valid set of pivots I can find. So until something better comes along I will use this set and its duplicated slope in an attempt to identify the pullback or reversal. Duplicated Slope ???? whats this you say ? See pic number 2. below. Duplicate the slope and a set of action /reation lines can be drawn and used for time going forward… sometimes ad infinitum / When can a set of median lines be thrown away ? …. Sometimes Never.
04/13/2010
Forks as Trump ?
Todays Median line update is to introduce the concept of multiple time frame charts in conjunction with Median Line work. I am posting 3 charts here. One is labeled 15 min which shows a Median Line set that is somewhat ‘mature’. This is posted just so that you get a feel from where the median line sets are originating from. The next chart is labeled 15 min zoomed. This one zooms in on the latest price action still on the 15 min chart. The 15 min charts are day session only. Ignoring overnight (globex) session data. The last chart is a 3200 tick chart, 24 hr session, which may be similar to a 5 min chart during trading hours. The time of any one bar during regular trading hours is often 3 mins to 7 mins. Just to give you the idea that I am dialing in to a shorter “time” frame when using the 3200 tick as compared to the larger time frame of the 15 min. NOW . having given the back ground here, let me finally get into the reason for this post: That is to use multiple time frame charts with Median Line sets developed from different Pivot points, and then finding price at critical areas on both time frame charts simultaneously gives credibility to an anticipated reaction. In this example illustrated with the 15 min / 3200 tick charts lets start by looking at the longer time frame chart (15 min). Big blue is the dominant Median set. Its yellow signal line was tested several times and then breached but price quickly recovered. Possible change in trend ? Lets zoom in on the 15 min now…. Price came back into big blue Median set but could not make it to the Median Line as of yet. A new possible down fork is drawn (in green) . Even though the upper tine of the down fork has been violated, the back test of the underside of blues lower tine has proven to be resistance. The resistance level is at 1195.50 on this chart. There is an obvious tug of war between the opposing forks here at this level. Lets move on to the 3200 tick chart now. The upward sloping blue set of Median Lines has reached its target at 1195.50 . having said all that…..I did not take the short at 1195.50 // This late in the day amongst some other conditions prevented me from getting short the market. However, I am beginning to see that Fork work may have to take a trump role in my rule set.
