Trading Corrective Move - a cristal clear setup

Since last week I have been visualizing the future price move to be intra-week bullish (YTC PAT teach how to visualize the future price move)


Please Notice that the link on these page would lead you to FMM, LST, YTC-PAT and Trend Collapse official page as asked by the author. Yet the systems are available free in Indo-investasi as well as other thread anyway. Legal or illegal depend on your respective stand.

On the last paragraph of the post:

http://trading-price-action.blogspot.com/2012/06/1671-pips-on-june-1st-creative.html

I've been expecting both GBPUSD and EURUSD to have an intra-week bullish move.

"But seeing the M15 chart I was thinking of a short term future price visualization for the next week. Base on the large pile of Buy at this demand area, next Monday i would expect an intra-week bullish move that preceded by a stop hunt low to test the low, straight long trade, or a gap-up price then fill the gap to test the low. Here is where LST and FMM (Klik the link if you aren't familiar with it) play their part but we already know what to expect. Lets see them prove themselves."

They were indeed bullish:

 EURUSD H1 (240 Pips Weekly Range):

 GBPUSD H1 (270 Pips Weekly Range):

   

And the bearish move on Thursday - Friday has also been pre-analyze. Look at the comment on the above mentioned post.

"Since the early week Both EURUSD and GBPUSD indeed move bullish as have been visualized (Monday up, Tuesday correction, Wednesday Up)

As of June 6th, end of US session EURUSD halted by Supply Area while GBPUSD has been halted before US session and made choppy topping formation.

On D1 EueUsd has seen a potential Bearish hidden divergence, means if tomorrow the price reverse down then it would be a bearish resume of a D1 bear.

Align with D1, both H4 and H1 has also showing a potential Bearish Regular divergence, means if the price reverse down then it would be a reversal for H4 and H1

While on M15, EurUsd made a last thrust and halted by a Supply area. If tomorrow M15 reverse down then it would validate the premises for H1, H4 and D1.

Price must turn Bearish around this point to validate the divergence state. Otherwise, if a sentiment occurred and pulled price up that also pulled the divergence away then the divergence setup would be invalidated since H1 H4 and D1 is just a potential divergence, not valid yet.

But seeing all aspect aligned I am strongly believe that my premises would be true.

Remember though, anything could happen. Lets see the market reveal it self." 

And:

"GbpUsd has also showing the same state but the sign on EurUsd were clearer. Tomorrow might be what Steve Mauro called a Mid - Week reversal"

They were indeed reversed down for 180 Pips (EURUSD) and 200 Pips (GBPUSD).

But even both pairs bullish it doesn't mean there would be no short opportunity. At least there were 2 short opportunity along the way when the price made corrective on both EURUSD and GBPUSD.

On June 5th EURUSD made sharp corrective:

Well, do not mind about the pips gain (but if you curious zoom the top right hand side to the real time pips gain indicator and count your self). I don't want anyone called me boasting my Pips gain anymore. I was thinking that the Pips gain shown by the indicator on the top right chart was enough.

The point here is, during a bullish move there would be a corrective and the corrective move will always steep like a falling rock, but it must be seek carefully. 

As I have always said, during a strong trend the price would diverge several time before actually reverse. The price were rejected by a SUPPLY area created on May 29. On MMM template it was two pins/shooting star to the blue/yesterday high and S1 at the same place. Yet I took the first short after the price broke down the Trend Line the back to test the broken trend line with the second pin (Hector's - Free Trend Collapse).

Steve Mauro might call this a CRYSTAL CLEAR SETUP but he failed to make it clear to his student. Newbie of MMM would try to catch all the M/W formation thinking that he/she caught the top/bottom. 

Vladimir would have probably did the same thing. He put less explanation on the confirmation required after a Divergence setup emerged. He only said that any familiar clarification would be required. Anything that the user familiar with such as Trend Line and Support/Resistance. He put less importance that this point is the difference between life and death.

See how many times divergence occurred yet no reversal. If trader rely the entry solely on divergence they would wipe their account. 

"Divergence should only be treated as SETUP while ENTRY should not be taken based on divergence but by the PRICE it self"

On the other hand Russ Horn's Forex Master Method did a better job to give teaching on divergence knowledge.

On EURUSD trade above, I was tighten my stop right above the ADR low (Thick red line) but as I see a second failed test to the DEMAND area I exit all position and wait for a retrace to have re entry.

It was a hidden bearish divergence by Stochastic so I enter 2 units, about 5 to 9 Pips of the high. The stop was above the swing high but as a see candle close with a hammer and a potential regular bullish divergence on Stoc I tightend the stop (see the red dashed line, the picture taken while the second stop haven't been moved). The stop was hit by -1 and -2 Pips.

SEE,,, Why still anyone accused me of hiding my loosing trade. I've shown some of the loosing trade. Just like the following trade:

As have been spotted, it was a Regular Bullish divergence so I enter 2 units on the second failed attempt to test the low that leave the second Hammer. New trader should have not done this unless understand the price action. 

See M1 chart for better Price Action reading. Additional 1 unit long when the price took off and broke the trend line (it is the safest entry). Later I did a stupid mistake breaking my own rule "Never chasing the price". The last green bar on M15 was a quick move. I jumped in with 1 unit long just later to see the price action on M1. 

Look at the three pins to the high. That told me that the move up is going to failed. I was aware that the bullish divergence was still valid and nothing to halt the price to move up. If only I hadn't enter the last Long I would still hold the stop under the swing low of M15 and I would not have adjusted my stop to the last swing low of M1.

The stop was to tight. The price just move lower than the swing low of M1 chart by 1 Pip, just to take out my stop then move up nicely, as Steve Mauro called "BACK INTO THE RANGE", for about 50 Pips.

I was stopped out for about 10, 9, 5 and -13 Pips. See that,,, it was a loosing trade but still small profit.

The same situation also on GBPUSD, June 5th but i didn't take any trade since GBPUSD was move wildly:

Another trading on Corrective move also spotted on June 6th, EURUSD and GBPUSD:

See that all the teaching material (Price action, YTC PAT, Al Brooks, Vladimir's LST, Sam Seiden Supply and Demand, Steve Mauro's MMM, Russ Horns's FMM, etc) work hand in hand in trading.

1,671 Pips on June 1st - Creative Accounting..???

This would be a long lesson about the Difference between "Scale - In" from "Creative Account" and broad market analysis that lead me to maximize the potential gain.

From the perspective of Money - Gained and Money - Risked, creative account and Scale - in technique is completely different. They are nearly opposite in my opinion.

Why...?  With creative account you multiply the PIPS and MONEY risked while with scale - in you multiply the MONEY and the PIPS gained. Creative account would split the initial entry to 10 or something  just to jack-up number of pips gain as well as pips risk at the same time, yet money risked and gained is just the same as if the initial entry were not split. This maybe done just to impress readers for pips gain.

On the other hand Scale in entry split the initial entry for Money Management to ensure a winning position if price later go against the trade while preparing to ride the move if price go in our trade (Please spend time learn and apply YTC-PAT's the importance of exit strategy  and Trading in the Zone for this point). The next scale in would be a safe trade at all. Look at my post on 203 Pips on May 30 Apr. The step explain clearly how the stop adjusted at every step of the scale in. A wrong trade/loosing trade might occur but no money would lost.

While scale in taught by Steve Mauro's MMM could be just nearly the same with the above Creative Account. It's like betting with all your money assuming that you know where exactly the market is heading while "Trading in The Zone" is totally correct "ANYTHING COULD HAPPEN". That's why I REFINED this Scale - in Scale - out incorporating the most powerful "entry-exit Money management" taught by YTC - PAT and Trading in the Zone (some still ask what YTC-PAT is, it is Your Trading Coach - Price Action Trading, by Lance Begs).

Followings are trade on June 1st, GBPJPY and GBPUSD. They are example of what so called "Creative Account". I could have just split my initial entry to 2 or 3 units instead of split to 7 units. The pips gain would surely impress you all. If only I scaled in along the way i would double that pips.

I could have gain more than 1.671 Pips trading back and forth if I were not exited too soon in some exit.

But the most important lesson in the above post is the PER-ANALYSIS of TREND STRUCTURE that lead us to the move that we exploited (a rally in to the bottom - a strong spike bounce then Re-test of the Low) that result 1.671 Pips gain.

I have explained this situation in the last 2 post that GBPUSD and EURUSD is heading toward a very strong DEMAND area.

GBPUSD, D1 May 31st:

The picture above is Daily chart of GBPUSD on May 31st, it was halted by a channel line. You'll notice the 3 thicker gray lines I drew. Look at the top lines. It was the situation that I explained in the comment of my post "The CALM before STORM" where GBPUSD was halted by a Demand area while EURUSD has been over shot its Demand area. So I was tent to believe that both GBPUSD and EURUSD would go for their next lower Demand area.

The middle and lowest lines is the demand area I drew manually. From this point there are no barriers to halt GBPUSD to test its Demand area. Sam Seiden would say it would be only Novice who's going to sell in to such strong Demand area. But Sam Seiden also say that, since professionals need novice to buy from,  a strong bearish move in to the Demand would often created to create believe that price is strongly falling.   

So I would expect a straight trade instead of a pullback/stop-hunt to the high. I noticed that there is still more than 150 Pips to be exploited.  But I also need to be extra careful to watch the reversal sign. Look to the left and apply odd enhancer. The price was leaving the area strongly strongly and leaving a pin. Samething is going to happen on June 1st. The price would aggressively penetrate and reject by this area leaving a pin. And if there would be a strong rejection I would wait for the price to test the low for a long opportunity. 

So, as taught by YTC-PAT, I would visualize the movement tomorrow would be  a strong bearish move - bullish rejection - retest of the low. Anyway, as Trading in the Zone taught, ANYTHING COULD HAPPEN. So I would evaluate the sign in every step whether my premises are validated or in-validated.

GBPJPY, D1 May 31st:

This is the Daily chart of GBPJPY on May 31st. Price was halt by a Demand area but it was not a strong Demand area. Besides, we have two long low close bear candle. Both Al brooks and YTC-PAT would suggest a break through. Additionally, I would target the trend line as well. GBPJPY has more than 200 Pips to be exploited. Having this pre-trading analysis, I was ready for the trade next day. So, tomorrow I would expect a Short trade that could be preceded by a stop hunt to the high or just a Straight Short Trade.

Look how I exploited the market based on my future price visualization. Following are trade that I took. Just to remind, yellow lines are entry lines while red lines are Stop loss.

GBPJPY, June 1st:

I placed 3 units short after Asian box. Price was reluctant to go up. There were no divergence line by LST as it was not an extreme area but  it was a hidden divergence following by a stoc cross. I got no time to scaled in since the shorts were placed while at office then rushed home while the price made a strong bearish move.

Look how I neglected the Bullish Divergence line drew by LST as I realized that we are on a strong bearish move. I have stated many times that during a strong move the price might diverge several times before reverse. Thus we need price action confirmation to take the trade. Look how price action are over all of any indicator. Though, I anticipated any possibility by adjust my stop right under the lowest entry line which was  never been touched.

The trade exited after the chart made a hammer for 126, 121, 112 Pips.

GBPUSD, June 1st

Something was wrong, I could not place further entry on GBPUSD. I was being rejected all the time and finally managed to place 2 shorts on GBPUSD. The trade exited for 31 and 26 Pips.

Image3a.jpg

GBPJPY made a retrace. There were a divergence line by LST. I took long trades after a failed test low but  it wasn't looks like a strong pullback. The trades were scratch for small profit when the chart showing a bearish hidden divergence. I was reluctant to go short anticipating the move has over. I didn't take the short at the pins as usual but I waited for  confirmations. I didn't even take short after the stoc cross down until the yellow MA crossed down. I witnessed that the price still away from its channel lines and there were no "Last Thrust/Volume climax" yet. I also realise that news is coming. The big move is imminent, I was aggressively place 5 shorts on GBPJPY and 2 Shorts on GBPUSD. I was excited to know this situation (Russ Horn would say: I feel like I am cheating). This is the emotional situation that I would not recommend. Price indeed made I spike low fueled by the news. See, Steve Mauro said that Market makers use News to complete the MM pattern.  I knew that this move will create a pin so I exited at the first pause for 75, 75, 75, 78, 78 Pips.

GBPUSD.

Same situation on GBPUSD. Exited at Demand area for 26 and 28 Pips. This bar is a news bar that later turn to long pins.

Image5a.jpg

As I have visualized, the price were wild around the Demand area. The Market Maker indeed create this move. Professional were buying at this area that create such massive moves. We'll compare this picture behavior with the picture from previous  Demand area and asses if this is going to be trend reversal. GBPJPY was moving wilder that gave me no time to make decision. I was able to take a decision after GBPUSD made two pins to the low. I placed 7 Long trades aimed for the above Supply area. This is a mistake that made me exit too soon. I should only tighten my Stop in this situation. The price made more that 130 Pips while I exited around 70 (68, 68, 67, 67, 67, 68, 68)

Image9a.jpg

Image9b.jpg

 

Price indeed reach its upper channel. Look at Daily Chart. I have said several times that Pins on S/R or SupDem would 80% of the time being tested so I place 7 units Short when the price action told. Look at the price behavior on M1 and M5 where I place the short and stoc divergence and cros on M15.

Again the trade exited too soon for 50, 48, 48, 47, 50, 51, 48 while price still reach the aqua line. 

GBPUSD-D1

Now look st this GBPUSD - D1 chart. Its a pin to Demand area. Lets visualize the future movement.  The price was strongly rejected in this area compare to the upper Demand area. See it in M15 chart. This strong rejection could be a start of a bullish trend.

But Look it in Weekly chart:

GU-W1:

It was a low close bear candle.  Look to the left, this demand area have rejected GBPUSD up four times. Yet the price took process to reverse, learn the candle form. The price might reverses up from this point but could also just a retrace for a larger bear move (could take 1 week to develop).  If price would broke the Demand area then there would be more than 10.000 Pips to the next Demand area.

Which one would happen...??? we don't know anything yet. We'll see the price developed and act accordingly. Remember, this is what we call: THINK GLOBALLY, ACT LOCALLY.

But seeing the M15 chart I was thinking of a short term future price visualization for the next week. Base on the large pile of Buy at this demand area, next Monday i would expect an intra-week  bullish move that preceded by a stop hunt low to test the low, straight long trade, or a gap-up price then fill the gap to test the low. Here is where LST and FMM play their part but we already know what to expect. Lets see them prove themselves.