26 Nov 10 - Bullish Bat Pattern on AUD/JPY - M15 Chart

As the week is coming to an end and that market will be closing in a few hours, I was more or less wrapped up for the week when a low risk, high probability trade came into play. With the former in mind, this trade was managed aggressively so as to ensure that I lock in some profits before the close of the market.


I was planning to take this trade on a H1 entry but then I decided to sneak an earlier entry with a M15 chart. I would seldom consider M15 entries but since it was already the end of the week, I decided to go in for a fast trade. Do note however that M15 chart signals will usually lack significance as compared to the H1 signals which are the ones which I will usually prefer.


I would say that this was a very nice setup where a relatively small risk was involved in this trade.


Signals which validated the Bullish Bat Pattern were:

1. A confluence of 3 Harmonic Ratios - 0.886 XA @ 80.644, 2.24 BC @ 80.667 and 1.618 AB=CD @ 80.814.
2. A Piercing Pattern which indicated a reversal at the lower band of the PRZ which prompted some close monitoring for this pair.

The setup to go long on this pair was when the price closed above the PRZ.

Trade Details

• Date: 26 Nov 10
• Time: GMT 12:45
• Entry Price: 80.922
• S/L: 80.40 (52.2 pips)
• T/P: 81.610 (68.8 pips) - 0.618 of AD swing.

Trade Progress


The 1st batch was closed on 26 Nov 10, GMT 14:54 at 81.236, netting a profit of 31.7 pips.


The 2nd batch was closed when the Protective Stop was triggered on 26 Nov 10, GMT 15:59 at 80.953, netting a small profit of 3.1 pips.


Trade Reflection


It was considered a nice trade done on this pair. However, it should be noted in this case that since the trade was managed aggressively, there will be a tendency for the Protective Stop to be triggered since very little room was given for the trade to move. Then again, if this was the middle of the week, I would have given this trade more room to work itself up as weekend gaps may happen and it might just take my trade out in a loss which is something which I am not willing to take. This ever happened in one of the trades on GBP/JPY when I was already in a profit and the trade was already put into break even. However, a weekend gap gapped down and resulted in a loss.

23 Nov 10 - Bearish Butterfly Pattern on USD/CAD - M15 Chart

In this trade posted, it can be seen that sometimes discretion is needed when it comes to pattern completion and in addition to it, the price action at the defined PRZ is crucial to confirm an entry.


For a Butterfly pattern completion, the defining limit for this pattern is its 1.27 XA leg and there was no doubt that this ratio is one of the most crucial ratios to validate this pattern.


However, in this case, I was initially caught between 2 sets of ratios where the price action at the PRZ helped me determined which set to respect.


As seen in the attached chart, I was caught between the first set of Harmonic ratios which were the AB=CD @ 1.02551 and 1.618 BC @ 1.02510 and the second set, 1.27 AB=CD @ 1.02811 and 2.0 BC @ 1.02728. Since I was not sure which set would be a more ideal set of ratios to follow, I left them on the chart and waited for the price action to tell me what to do.


Interestingly, once the price action tested the first set of Harmonic ratios and turned at the 1.27 XA coupled with a Dark Cloud Cover (which was the setup bar), it was my signal to go short on this pair.

Trade Details


Date: 23 Nov 10
Time: GMT 17:00
Entry Price: 1.02440
S/L: 1.02780 (34 pips)
T/P: 1.01742 (69.8 pips) - 0.618 retracement level of AD swing


Trade Progress


The 1st batch was closed on 24 Nov 10, GMT 00:28 at 1.02078, netting a profit of 36.2 pips while the 2nd batch was set to break even.


I have also attached a M15 chart showing that the 1st T/P was triggered and price was also nearing the 2nd T/P at the point of posting.

The 2nd batch was manually closed at 1.01940 on 24 Nov 10, GMT 07:14, netting a profit of 50.0 pips.

22 Nov 10 - Bearish Butterfly Pattern on NZD/JPY - H1 Chart

I have been monitoring this pair since late last week as it was showing a CD leg formation of a potential bearish Butterfly pattern.


I would consider this a very strong signal as a check on the D1 chart for this pair will show that it is currently in a primary down trend and it has been undergoing an upward retracement, i.e. correction.


Interestingly, 2 Fibonacci ratios were seen on this pair's D1 chart which indicated a possible resistance at 64.925 to 65.169 region and they are the 0.618 Fibonacci retracement level @ 65.169 and the AB=CD @ 64.925. (Refer to attached D1 chart)

With the above in mind, I was looking to short this pair.

The bearish Butterfly pattern was validated by the following on the H1 chart:

1. A confluence of 3 Harmonic ratios - 1.27 XA @ 65.197, 2.0 BC @ 65.183 and AB=CD @ 65.033.
2. An evening star formation which completed at point D which was also the setup to go short.

Trade Details

• Date: 22 Nov 10
• Time: GMT 04:00
• Entry Price: 64.620
• S/L: 65.450 (83.0 pips)
• T/P: 63.304 (131.6 pips)

Trade Progress


The 1st batch of this trade was planned to be taken at 63.924 but I have decided to take partial profit earlier at 64.101, netting a profit 51.9 pips on 23 Nov 10, GMT 08:16 while the 2nd batch was set to break even to swing the trade.


The 2nd batch was closed when the T/P was hit on 23 Nov 10, GMT 16:20, netting a profit of 131.6 pips. (See attached screen shot)

16 Nov 10 - Bullish Deep Crab Pattern on AUD/USD - H1 Chart

As it was mentioned at the start of this week where 2 potential patterns were seen forming, a trade was taken on the EUR/USD on a bullish Bat pattern which resulted in a loss.


After the trade on EUR/USD was closed, the potential bullish Deep Crab pattern was validated and a signal to go was seen.
A recap of the screen capture of the AUD/USD at the start of the week is as seen in the attached.

The following validated the signal:

1. A confluence of 3 harmonic ratios - 1.618 XA @ 0.97452, 2.24 BC @ 0.97224 and 1.27 AB=CD @ 0.97586.
2. A Bullish Engulfing Pattern was the setup to go long in this case.

Trade Details

• Date: 16 Nov 10
• Time: GMT 19:00
• Entry Price: 0.97720
• S/L: 0.97050 (67 pips)
• T/P: 0.98964 (124.4 pips) - 0.886 of AD Swing

Trade Progress

The 1st Batch was closed on 17 Nov 10, GMT 15:15 at 0.98099, netting a profit of 37.9 pips while the 2nd batch was set to break even.


The 2nd Batch reached its profit objective on 18 Nov 10, GMT 09:00, netting a profit of 124.4 pips.

15 Nov 10 - Bullish Bat Pattern on EUR/USD - H1 Chart

A bullish Bat pattern was seen completing on this pair and the following validated the signal to go long:

1. A psychological support at 1.36000.
2. A confluence of 3 harmonic ratios - 0.886 XA @ 1.35962, 1.618 BC @ 1.36028 and 1.27 AB=CD @ 1.36017.
3. Setup to go long was the formation of a piercing pattern.

Trade Details

• Date: 15 Nov 10
• Time: GMT 17:00
• Entry Price: 1.36165
• S/L: 1.35650 (51.5 pips)
• T/P: 1.37014 (84.9 pips)

Trade Progress


The stop loss was triggered on 15 Nov 10, GMT 20:58 at 1.35650, resulting in a loss 51.5 pips for 2 batches.

Potential Patterns on EUR/USD and AUD/USD - 15 Nov 10

Maintaining my bullish perspective on the USD/CAD, I am looking to go long this week for this currency pair provided if there is a valid setup that comes into play. I was expecting a bullish Gartley pattern to complete initially but this pair gapped up this morning, covered the gap with a retracement and proceeded  to rally. Since the time projection has not been exceeded, this pair is currently put on the KIV list.

Moving forward, as I was doing my analysis, there are 2 pairs which might have a potential pattern forming.


The first will be the EUR/USD which might have a potential bullish Bat pattern forming.

As for the second pair, AUD/USD, there seems to be a potential bullish Deep Crab pattern forming.

Having identified these 2 pairs as the likely candidates to be traded, it will all voice down to the price action later which will determine if the trade signals are valid.

11 Nov 10 - Bearish Bat Pattern on NZD/JPY - H1 Chart - Learning Example

Having needed to be out for running an errand, I missed an opportunity to go short on this pair when a bearish Bat pattern completed.


As a testament to the frequent occurrence of harmonic patterns in the market, I have decided to post this learning example.


In this case, the signals which validated the setup were:

1. A confluence of 3 harmonic ratios - 0.886 XA @ 64.615, 1.618 BC @ 64.539 and 1.618 AB=CD @ 64.592.
2. An evening star formation which completed at the T-Bar.

In this case, this would have been a nice trade as the initial target objectives at 0.382 and 0.618 of AD swing were all hit.

10 Nov 10 - Bullish Bat Pattern on USD/CAD - D1 Chart

A bullish Bat pattern was seen completing on the D1 chart. In addition, the bullish Bat pattern also resembled a double bottom formation and was also near a support at 0.99335 region seen on the W1 chart.


The following signals prompted a long on this trade:

1. A double bottom on D1 chart.
2. A support seen at 0.99335 region.
3. A confluence of 3 harmonic ratios - 0.886 XA @ 1.00239, 1.618 BC @ 1.00386 and 1.27 AB=CD @ 1.00593.

Trade Details:

• Date: 10 Nov 10
• Time: GMT 03:25
• Entry Price: 1.00745
• S/L: 0.99700 (104.5 pips)
• T/P: 1.02265 (152 pips)

Trade Progress:


The 1st batch was closed on 12 Nov 10, GMT 08:10 at 1.01351, netting a profit of 60.6 pips.


Then 2nd batch was closed when the protective stop was triggered, resulting in a break even.




Reflection


I would consider this trade a valid entry and it should be noted that while I shaded the low of the pattern by about 10 pips, the trade was almost triggered at its stop loss.


As I upsize to trade bigger contracts, I would consider this trade to be quite risky and after a post trade reflection, I would consider taking a long position in the future in a smaller time frame, i.e. H1 time frame if there was a valid setup on the smaller time frame which supports the setup on the D1 chart. In this case, it will minimise my risk exposure and reduce my stop loss placement which will limit my risks.

10 Nov 10 - Bullish Bat Pattern on USD/JPY - H1 Chart

A signal to go long was seen on this pair when a bullish Bat pattern was seen completing.


The following validated the signal to long on this pair:

1. A bullish engulfing pattern which was also the setup bar for the trade.
2. A 0.50 XA retracement which pointed to either a Bat or a Crab pattern but in this case, once the harmonic ratios were aligned, it could be seen that the completion was favouring a Bat pattern.
3. A confluence of 3 harmonic ratios - 0.886 XA @ 80.707, 2.24 BC @ 80.688 and 1.27 AB=CD @ 80.638.

Trade Details

• Date: 09 Nov 10
• Time: GMT 16:00
• Entry Price: 80.837
• S/L: 80.500 (33.7 pips)
• T/P: 81.358 (52.1 pips) - 0.886 AD Swing

Note: Some discretion was needed to place the T/P for this trade. Since in most trades, the 1st target is usually the 0.382 AD swing, in this case, this level was too close and thus the 0.618 AD was selected as the 1st target while the 0.886 AD swing was set as the 2nd target.


Trade Progress


The 1st batch was closed on 09 Nov 10, GMT 16:58 at 81.112, netting a profit of 27.5 pips while the 2nd batch was set to break even.


The 2nd Batch was closed on 09 Nov 10, GMT at 81.358 when the target objective was triggered, netting a profit of  52.1 pips.

03 Nov 10 - Bullish Butterfly Pattern on USD/CAD - H1 Chart

The start of Nov would be considered a choppy week as the market awaits the Feds interest rate release and it was one factor which I overlooked and entered on this trade on this pair which led to its failure.


Then again, in trading, we are always looking to trade and with each mistake made, it is always a step moved forward to further sharpen our trading skills and in this case, I have learnt that I will have to stay away on the days before the interest rate release.


Now, details on the signals of this trade which prompted me to go long:

1. A support was seen on the D1 chart @ 1.01072.
2. A confluence of 3 harmonic ratios - 1.27 XA @ 1.01030, AB=CD @ 1.00885 and 2.24 BC @ 1.00968.

Trade Details

• Date: 03 Nov 10
• Time: GMT 17:00
• Entry Price: 1.01072
• S/L: 1.00500 (57.2 pips)
• T/P: 1.02330 (125.8 pips)

Trade Update

Both batches in this trade was taken at the S/L as a result of the interest rate release due to a high volatility despite having made some moves before the news release. Loss taken in this case was 57.2 pips

Reflection

It is important to look ahead despite a loss as losses in trading are sometimes inevitable but it is just that we have to manage them and keep them to a minimum.

In this case, it is considered an avoidable loss since I overlooked the news release on Forex Factory.

Ever since I started this blog to track my performance, I have made a commitment to be very frank with myself as an honest review of my trading will then allow me to correct my mistakes and flaws and thus from there improve my trading performance.

It has been a long journey when it comes to Forex trading for me and it was never a smooth ride initially until now which I have gotten some breakthrough. Then again, the road to success is always under construction.

02 Nov 10 - Bearish Bat Pattern on GBP/USD - H4 Chart

A bearish Bat pattern was seen completing on this pair which triggered a entry to go short.


Signals observed were:

1. A daily resistance at 1.61048
2. A confluence of 3 harmonic ratios - 0.886 XA @ 1.60535, 1.618 BC @ 1.60139 and 1.618 AB=CD @ 1.60193.

Trade Details:

• Date: 02 Nov 10
• Time: GMT 14:55
• Entry Price: 1.60146
• S/L: 1.61100 (95.4 pips)
• T/P: 1.58200 (194.6 pips)

Trade Update:


The trade was closed when the stop loss was triggered on 03 Nov 10, GMT 09:32 resulting in a loss of 96.9 pips. There was a slight difference in the stop loss as there was some slippage when the stop loss was triggered.


Reflection:


The trade was unable to move in my favour and I was unable to protect the trade. A more in depth analysis that would have stopped me in entering this trade could have been that the Fibonacci Time Projection would have been overstretched and that this could have signaled a less ideal trade.


Having said this, it is important to learn from this trade's mistake and look forward.

01 Nov 10 - Bearish Butterfly Pattern on USD/CHF - H1 Chart

A nice bearish Butterfly pattern was completed during the early hours of the US session which prompted an entry to go short on this pair.

Signals validating the pattern were the following:

1. Primary trend of this pair was down but for the past 2 weeks, there was a upward retracement.
2. Confluence of 2 harmonic ratios - 1.27 XA @ 0.99616, 1.618 BC @ 0.99697 and 1.27 AB=CD @ 0.99466.

Trade Details:

• Date: 01 Nov 10
• Time: GMT 16:07
• Entry Price: 0.99439
• S/L: 0.99850 (41.1 pips)
• T/P: 0.98666 (77.3 pips) - 0.618 AD Swing

Trade Progress:

1st batch was closed on 01 Nov 10, GMT 22:01 at 0.99213, netting a profit of 22.6 pips while the 2nd batch was set to break even.


Update - 03 Nov 10, SGT 00:42


The 2nd batch was closed on 02 Nov 10, GMT 08:59 when the target objective was hit at 0.98666, netting a profit of 77.3 pips.

01 Nov 10 - Bearish Gartley Pattern on EUR/JPY - H1 Chart; M15 Entry

A note for this trade is that some discretion were made prior to this trade entry as the early hour spike was not taken much into consideration as the move failed to hold above the PRZ.


Having ignored the spike and since price action was still in support of a short, a short entry was triggered when price closed below the PRZ.


Signals validating the short entry were:

1. Primary trend on this pair was a down trend.
2. A confluence of 3 harmonic ratios were observed - 0.618 XA @ 112.410, 1.27 BC @ 112.607 and AB=CD @ 112.593.

Trade Details:

• Date: 01 Nov 10
• Time: GMT 05:30
• Entry Price: 112.507 (on M15 chart)
• S/L: 113.00 (49.3 pips)
• T/P: 111.714 (79.3 pips) - 0.886 AD Swing

Trade Update:


The 1st batch was manually closed on 01 Nov 10, GMT 08:23 at 112.255, netting a profit of 25.2 pips while setting the 2nd batch to break even.


The 2nd batch was closed on 01 Nov 10, GMT 08:59 when the protective stop was triggered, resulting in a break even.

28 Oct 10 - Bullish Crab Pattern on AUD/JPY - H1 Chart - Learning Example Follow Up

As it turns out, this trade turned out to be a very profitable after the Bullish Gartley Pattern failed to bring a nice reversal. This posting is just another example to show that how proper trade management for Harmonic Trading will reap nice results so long as we follow and stick strictly to the rules.


Attached is the screen capture for this pair which shows how the reversal worked out. Do note that since the market was closed over the weekend, the gap up this morning was a nice signal to indicate that there might be some bullish move seen on this pair and following this gap, price moved upwards very quickly.

Trading Performance for Oct 2010

As it turns out, it was a great month in Oct 2010!


The profit netted for this month is 307 pips.


Below is the breakdown for the trades done:

Of the 18 trades done, 12 were profitable, 1 a break even and 5 were losses. In this case, the success rate for this month is 72%, which I would consider it to be decent. Then again, I will still say that there is still room for improvement.


It is important to note that when it comes to trading, we should be putting more emphasis on our trading performance and not the monetary aspects. Once we are consistent in our performance, we will start to see the money rolling in as the secondary product of our trading performance.


In my instance, it was the draw of the money which first started me in trading. But, as a result of the focus on money, I had previously suffered a lot of losses. Having done some reflections and sort of had enough of a bad trading performance, I has since sought to improve my trading performance and I am glad to say that Harmonic Trading has offered me such a great opportunity and a great improvement in my trading. The performance tracking has shown this vast improvement which gave me a pleasant surprise too! :)


Note: As the trades are entered in 2 batches, profits are shown in 2 batches. Similarly, if a trade has its stop loss triggered before any trade protection can be done, the loss will also be reflected in 2 batches to reflect a more accurate trading performance.


                          

28 Oct 10 - Bullish Gartley Pattern on AUD/JPY - H1 Chart

This is an interesting trade to note and it is a nice example to show that harmonic patterns offer very nice trading opportunities if the trade is managed properly and even if the pattern does not offer a profitable trade, another opportunity will come again to present us another chance.

In this case, I entered this pair on 2 different lots where one trade was done on the M15 chart and the other on a H1 chart. It turned out that I was able to take a small profit on the 1st batch done on the M15 chart while I took a loss on the 2nd batch and the rest of the 2nd lot as a result of a" loosely employed" trade management. This turned out to be a nice learning experience as it served to remind me that if a trade is not as profitable, there will be another opportunity and it is not for us to decide what Mr Market wants to give us.

Interestingly though, the bullish Gartley pattern did reverse, but weakly and later presented another bullish move in the form of a bullish Crab pattern. It should noted that for a 0.618 retracement at point B, the completion of point D could be at 0.786 (Gartley) retracement of XA or at 1.618 (Crab) extension of XA. In this case the market present 2 opportunities!

Having said these, this is definitely one of those trades which enforces the maxim that strict trade management should never be overlook!

Attached are 2 charts which show the bullish Gartley pattern and the bullish Crab pattern.

Trade Details (M15 Chart Entry)

• Date: 28 Oct 10
• Time: GMT 14:45
• Entry Price: 79.158
• S/L: 78.800 (35.8 pips)
• T/P: 79.650 (49.2 pips)

The 1st Batch was closed on 28 Oct 10, GMT 15:44 at 79.322, netting a profit of 16.4 pips while the 2nd Batch was close when the stop loss was triggered on 29 Oct 10, GMT 01:14, losing 35.8 pips.

Trade Details (H1 Chart Entry)

• Date: 28 Oct 10
• Time: GMT 16:02
• Entry Price: 79.257
• S/L: 78.800 (45.7 pips)
• T/P: 79.650 (39.3 pips)

The whole lot of this trade was stop out at a loss of 45.7 pips on 29 Oct 10, GMT 01:14.

Reflection

It is definitely a great learning experience as I realised some mistakes and faults committed in this trade:

1. Price has broke and closed below the rising trend line after the reversal, whic could have prompted me to take the small profits and be happy with them.
2. The risk/reward for the H1 entry was not a promising one and one which is not very profitable and thus it should have been avoided in the first place.

Therefore, trading is a long term journey where we have to space out and limit our risk exposure. It was once mentioned by Warren Buffett that if we want to trade well, a loss got to taken in perspective in terms of a percentage of what we are willing to risk in a given trade. In the event if a loss is sustained, it should be viewed as a percentage and not in monetary terms and this is where we stay emotionally detached and unassociated and begin to look forward and move on cos in the world of trading, there will never a 100% win rate.

28 Oct 10 - Bullish Bat Pattern on EUR/USD - H1 Chart (Learning Example)

A nice bullish Bat pattern was seen completed on this pair, but I have missed out on the move.


Having observed such a nice pattern, I have decided to put it up for learning purposes to show the mechanics of Harmonic Trading.

The following validated the signal to go long for this pair:

• The primary trend for this pair is currently still an up trend.
• A confluence of 3 harmonic ratios - 0.886 XA @  1.37406 (defining limit for a Bat pattern), 1.27 AB=CD @ 1.37609 and 2.618 BC @ 1.37878 (max BC projection allowed for a Bat pattern).

Update - 30 Oct 10, SGT 01:45 am

As it turned out, this was a very nice trade which hit both the target objectives at 0.382 and 0.618 AD. In comparison, this is a great trade as compared to the other trade which I have done on the AUD/JPY.

Attached is the chart which shows how this trade turned out.