Tagged "signals"

Introduction

I had planned on releasing the Support/Resistance article this week (as per the Training Schedule for October 1st), but I have a surprise for you that is well-worth the wait: a new strategy BUILT-IN to CandlePro AND this article on how to use that feature in your trading! It is a 2-for-1 :).

What is the Double/Triple Strategy?

The Double/Triple strategy is a confluence-based strategy that looks for multiple candles in the same timeframe that all point in the same direction. For example if there is a BULLISH Doji on the 15m EUR/USD and a BULLISH Hammer on the 15 AUD/USD. A triple is when the EUR/USD, AUD/USD and GBP/USD all line up together and are considered stronger than a double.

How do I detect new Double/Triple signals with CandlePro?

Great question! Detecting new double/triple signals with CandlePro is easy – just search for new candles like you normally would and any double or triple signal will be noted with this symbol:

Here we can see an example of a double EUR/USD and GBP/USD symbol:

What are the entry and exit rules for this strategy?

These are basic rules. Adapt as you see fit for your trading strategy and other factors such as trend, quality of signal, etc.

1) Enter trade in the direction of the signals

2) Place stops at least as far away as the CandlePro recommend Min SL found on the Performance Report

3) Have tiers of targets with the 1st target equal distance with the SL or at the Max recommend TP level (in Performance Report) – whichever is closer. At this level you can either take profit if you are scalping OR move SL to break-even to eliminate risk in the trade. Place 2 more targets at appropriate S/R levels, and at each target move your SL up to the previous target level (so for example at T2 I would move my SL to T1).

Note: The best results always come from looking at the charts and using support/resistance levels that make sense, but for those that want a more cookie-cutter approach these are the steps I recommend.

Three Tips for Better Performance

1) EU+GU doubles are better performers. The system is setup to detect a double on EU+GU, EU+AU or AU+GU, BUT not all of these combinations are created equally. By far and away the EU+GU signals are the most powerful, representing much more volume than any AU combination. That doesn’t mean you can’t trade an AU double – it just means the setup (including trend, price action, etc) has to be cleaner than an EU+GU setup.

2) A triple should be viewed as an EU+GU with a AU as a kicker (in poker a ‘kicker’ is a side card that breaks ties between competing hands). That means trade the EU+GU as the primary, AU is extra confirmation and an AU trade should be taken based on the chart.

3) As with everything in forex looking for more confluence – rejection or breakouts of support/resistance, trade with the trend, look at different timeframes, look for signals with good RR ratios. In the FX markets every little drop helps. Remember, it is all about stacking the odds in your favor.

Trade Examples

Rather than re-invent the wheel here with trade examples I’m going to point you to Neil’s (@ukfitness) CP blog where he has been successfully using this strategy for almost 2 months now. Great job to Neil for keeping such a good trade journal and for identifying a winning strategy.

Click here to go to the journal.

Conclusion

Doubles and triples are powerful cross-pair signals that work because they reflect underlying shifts in currencies. Combining them with forex fundamentals such as money management and trend trading are yet another way CandlePro will help you improve your trading.

12-10-09

5:14a GMT – Shooting stars on the 30m chart have really been providing solid sell signals for me the past few weeks – have you all noticed the same thing? In general if the star is near resistance and is higher than the 10 or so preceding candles (meaning that it qualifies as an ‘extinction’ candle) it has been a very reliable sell signal. Take a look at the 30m chart below with shooting stars circled in blue:

Of course nearly anything has been a good sell signal this week – the EURUSD has dropped almost 500 pips since December 3rd! That includes our signal from yesterday too – we had a near picture perfect pierce of our resistance at 1.4775 with the tip of a shooting star (10:30 GMT on the 30m charts) that was quickly followed by a nice drop. If you missed the first entry the markets were kind enough to provide a second opportunity to enter above 1.4770 a few hours later on a 13:00 GMT rally. I ended up covering at 1.4700 after my third target at 1.4670 was not reached for +75 pips profit.

On to today – you can view the forex calendar here but we have the GBP and CHF announcing rate decisions (12:00 and 8:30 GMT, respectively), trade balances for the USD and CAD (13:30 GMT) and initial jobless claims for USD (13:30 GMT). The news I’m watching closely is the US initial jobless claims. It was a jobs report last week that sent the USD on its major rally and I believe it will be this report that defines the direction of the pair for the coming days.

Daily Outlook: On the 4-hour chart below we can clearly see that after the strong rising trend support was broken the pair has entered into what appears to be a bearish continuation pattern -(aka a “death spiral”). Technical outlook is therefore extremely bearish in the short-term however we have the big news events mentioned above that could thin out markets and make for some aimless ranging in the morning hours.

Trading Idea: I will stay out of the EURUSD until the news has been announced at 13:30 GMT. Until then there might be some (very short-term) trades worth taking at the top of the 30m channel  (shown above) where the last shooting star just touched off of. Also a break below 1.4700 will most likely open way to another challenge of 1.4670 for a quick 30 pips. After news events I will look for a shorting opportunity off of 1.4750 with targets at 1.4715, 1.4675 and 1.4640.

(click to enlarge)

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No signals for the EUR/USD pair today as US Banks are closed for Thanksgiving holiday. From wikipedia:

“Thanksgiving Day is a harvest festival celebrated primarily in Canada and the United States. Traditionally, it is a time to give thanks for the harvest and express gratitude in general.”

No need to be from the US to celebrate this holiday – take a little time out to say “thanks” to the people who are important in your life and for all that you have!

Of course PipHut’s Forex Candlestick Signal Service is still running so feel free to check in there for candlestick alerts. Also you can catch up on some of the Learn Forex articles, post in the forums or feel free to discuss your day’s trades in the comments below as usual!

Best,

Mark