Best Thread BBmac's Gbpusd thread

[smbtnt]

Hidden divergence - daily cable

Hi bbmac,

Would like your opinion on this setup please, abit premature but definite hidden divergence forming on cable.
On the attached daily chart where would you trigger entry and stop if you were trading this setup?

 

[bbmac]

Hi bbmac,

Would like your opinion on this setup please, abit premature but definite hidden divergence forming on cable.
On the attached daily chart where would you trigger entry and stop if you were trading this setup?

Hi, I would comment as under;

1. The daily candle has not closed yet,..this is important if using a candle as the trigger for entry in a set-up, a candle is not a candle until formed and closed.

2. The hidden div on your oscillator comes @ a L on that Daily t/f not an immediate HL in the Daily t/f uptrend, indeed the L comes below the last HL of that uptrend, so not optimum in respect of an uptrend for the hidden div on that t/f...that said the most important thing is that that same hidden divergence and entry candle comes at a HL on the next higher t/f-the weekly into whose uptrend you are considering a re-entry...so looking at the weekly it does come @ a HL position but arguably there is not a strong uptrend now on weekly after the LH and L

3. What is the potential RBS/support on the weekly t/f at which the set-up has develioped? I see nothing obvious?

4. What are the macd signal lines doing on the weekly and monthly t/f's ? ie for a Re-entry (to next higher t/f trend after a pullback) timed on the daily into the next higher t/f trend-in this case the weekly I would want to see the weekly macd at least crossed above it's zero axis (if not pointing up) and the next higher t/f to that-in this case the monthly, the macd signal line at least pointing in direction of the intended trade...indeed both weekly and monthly macd signal olines are ok in this respect.

So, all in all not a perfect confluence of factors particularly re points 2 and 3,...this said if the daily closes as a bullish engulfing or bullish thrust candle it looks more attractive? If I were trading it off the daily candle close at the trigger I would have stop below the last obvious near-term previous swing low under the set-up.

Hope this helps

G/L whatever you decide to do/have done.

 

[bbmac]

Hi bbmac,

Would like your opinion on this setup please, abit premature but definite hidden divergence forming on cable.
On the attached daily chart where would you trigger entry and stop if you were trading this setup?

The difference between your daily hidden div scenario and that similar 5min scenrio decsribed in post #315 above is that on the next higher t/f-the 30min into whose uptrend the 5min hidden-div set-up indicated a possible chance to get back with trend, was that on the 30min it came @ a HL that followed a HH not a H like in the weekly t/f. Both set-ups developed @ a L on the trigger t/f following a HH.

 

[smbtnt]

The fact we broke higher than the previous LH marked on your weekly chart, does that not qualify as a HH?
There is no obvious ppz or support on the weekly tf but this is a dynamic setup and hence nuanced in its nature.
What I actually see is an expanding triangle formation, which is either prelude to a volatile move or an end to a trend.
Too many things against this setup I would agree and the R:R does not support swing trade. However worth keeping an eye on that daily setup for further development.

Thanks for your comments and time on this.

 

[bbmac]

....The fact we broke higher than the previous LH marked on your weekly chart, does that not qualify as a HH?...

It is significant I agree but in terms of overall price action-peak/valley analysis still does not constitute a strong uptrend, ie a L followed by a H does not constitute an uptrend , more an upmove that may develop into an uptrend. A HH comes after a H of HH not just beacuse it broke a previous HL in a different price action phase. I agree with you and for the same reasons that it didn't really represent a high-probability trading opportunity.

 

[smbtnt]

A HH comes after a H of HH not just beacuse it broke a previous HL in a different price action phase.

Can you expand on this please? a very interesting discussion if you care to elaborate.
Thanks

 

[bbmac]

A HH comes after a H of HH not just beacuse it broke a previous HL in a different price action phase.

Can you expand on this please? a very interesting discussion if you care to elaborate.
Thanks

Yeh, and with advanced apologies if this comes across as wordy or complicated..

On the weekly t/f price was not in a strong uptrend-this would have been comprised of a series of HH and HL, but on this t/f, and after the last HL we had seen a LH followwed by a L then a H...so although the H came above the last LH it was not the strongest uptrend per peak/valley analysis. Compare this to the uptrend on this weekly chart that started at the first HL on that screenshot, then a H above the last LH of the previous downtrend then a HL, and a HH, 2nd HL, another HH, then another HL ..this is a strong uptrend....of course then came the LH discussed above.

More generally, I assess the trend on the time frames of interest to me by classic peak/valley analysis, ie a series of HH/HL is an uptrend, a series of LL/LH is a downtrend. Of course it is not always that 'neat' and sometimes, using an uptrend example a t/f can print a L or even LL and then still go on to see a new HH above the last HH of the uptrend. This is what I call a 'general trend' Sometimes it does not and that example in post #315 was a good example...where this is the case I look to ensure that this does not occur on the t/f into whose trend a re-entry after a pullback (timed on the t/f below) but will still go with it if it occurs on this lower t/f upon which a re-entry set-up develops.

G/L

 

[bbmac]

eg

Look at the 1hr t/f from yesterday's 6645 hi, the fisrt L came below the last HL of the previous uptrend, this was significant, the pullback off the L saw a LH and then a LL, so that the next LH that came at the previous swing lo=previous support=potential sbr zone became a hi-probability Re-entry to this t/f trend after the pullback (timed on the t/f's below)

 

[bbmac]

further explanation

I suppose what I am saying is that a Re-entry (to next higher t/f trend after a pullback) using an uptrend example is higher in probability over an extended sample when the Hl followes a pullback from a HH. When it follows a pullback from a H that has breeched the last LH of the previous downtrend this is more risky as an uptrend has not yet been established with an effective LL followed by a H (above last LH of prev downtrend) and a first HL.) Effectively it is the 2nd HL in an uptrend (conversely 2nd LH in a downtrend) that I look for and at the risk of complicating things I would still consider the first HL of an uptrend, given the price action scenario outlined, if there is say a strong data/news reaction, or indeed (in the case of a developing uptrend) where there is strong support at the LL and regular bullish divergence reversal set-ups extending through the t/f's and on the t/f's higher than those that I use for my trading plan.

 

[bbmac]

5min eg today

5min on cable now is a good example...price made a LL then a H above last LH of the downtrend, then a first HL followed by a HH and a 2nd HL at the previous swing hi=prev res=potential rbs zone at which point a 1min hidden-divergence based Re-entry (to 5min uptrend after a pullback) set-up developed.

So not the strongest 5min uptrend but the set-up came @ the 2nd HL., and 5min macd was crossed above it's zero axis and 30min was pointing up...Will it achieve anorther HH? I have no idea as onlly took +10 from the set-up as the trade is against the main sentiment so far today and no real follow through/momentum to such a new HH, but it is indicative of the points I was making in posts above.

G/L

 

[bbmac]

update to post #325

Update to post #325 above,...well it was messy but price did go higher than the last HH of the 5min uptrend as shown in screenshot above...the HL was followed by a LH then a 3rd HL before a H above that HH shown on that screenshot above.

G/L

 

[bbmac]

U.s data due 1330pm

3rd qtr U.s Gdp # due in 5mins, I'll be looking to

a. get involved with any momentum created
b. buy first low/sell first pullback hi or conversely sell first high/buy first pullback low
or
c. stay flat

depending on market reaction.



G/L

 

[bbmac]

3rd qtr U.s Gdp # due in 5mins, I'll be looking to

a. get involved with any momentum created
b. buy first low/sell first pullback hi or conversely sell first high/buy first pullback low
or
c. stay flat

depending on market reaction.



G/L

5mins after and no discernable reaction so option c resulted, lol.

 

[bbmac]

Backk to the technicals

The pullback from the 1hr prev sw lo zone/descending pot res t/line and 61.8% 6647-6495 res shown below:

Produced a 5min hidden-divergence based Re-entry (to next higher t/f trend after a pullback) set-up, that set-up coming at a L on 5min coinciding with a HL on 30min into whose upomove (not a trend by peak/valley analysis) the set-up indicated a 'with trend' trading opportunity after the pullback...There was no 1min trigger t/f set-up so had to go in on close of 5min bullish candle and I have just moved stop to b/e and hoping that price will push through the potential resistance (actually have just booked +15 from the set-up as price pushes up to top of that potential sbr/res zone on 1hr,I write this.)

The 5min set-up is here:

The other reason for booking profit is that there wasn't really a 30min uptrend to re-enter per peak/valley analysis and as discussed above and I could not identify the potential rbs at which the set-up developed but as macd signal lines were pointing up on 1hr (and 4hr.)



G/L

 

[bbmac]

Other reason for exiting

You can see the regular immediate bearish divergence set-ups on 1 and supporting 5min that developed at the top of that prev 1hr swing lo = prev supp = potential sbr zone...mni also touting offers there...

the zone was here

and the 1 and 5min reversal set-ups here

I didn't trade this set-up as finishing here the day. (extended session beacuse of u.s data)

G/L

 

[bbmac]

Weds 25th Nov 09

What price an upward revision in Q3 gdp (-0.4%) @ 0930am ?

 

[bbmac]

Re: Weds 25th Nov 09

What price an upward revision in Q3 gdp (-0.4%) @ 0930am ?

Another case of buy the rumour-sell the fact as # came in at -0.3% [Q3 Uk Gdp] and onll a small upward revision from -0.4% prev estimate...market dissapointed and sells £ on knee-jerk after being whipped into expecting a -0.1% print or better, lol.

G/L

 

[bbmac]

with volatilty comes opportunity

Price reacts to dissapointingly small upward revision to Uk Q3 Gdp # and sells £ down to the previous 1hr sw hi=prev res=potential rbs zone (also a minor prev sw hi on 4hr) and the 23.6% of the 6495-6726 (today's current Hi) move...

at which point a 5min Hidden-divergence based Re-entry set-up (to next higher t/f trend after a pullback) develops:

and the entry is timed on the lower 1min trigger t/f as a repeating reversal set-up;

The 5min set-up came @ a L, this co-existing with a HLposition on the 30min into whose uptrend the Re-entry set-up indicated a hi-probability trading opp to get ' with trend. ' Have already booked profit, not waiting to see a ' with 30min+ trend follow thru to a new HH on that t/f, it may happen, it may not, but just aware of the reaction to the data.

G/L

 

[bbmac]

1hr/4hr

1hr is in an uptrend, 4hr has broken the last LH of it's previous downtrend after a HL. Macd signal line is currently flat on 1hr, pointing up on 4hr/daily. The post data dip found support at that 23.6% of the 6494-6726 and that was also the 200hr sma.

G/L

 

[bbmac]

running into supply again at current daily Hi zone

Price runs into the prev 1hr sw hi zone created around today's current i/day hi and again finds supply with the same 1min Reversal set-up that indicated the post data dip buy described in a post above, setting-up again to indicate the short at the potential res zone

G/L