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Harmonic Patterns

January 12th, 2010 @ 2:45 pm by Chris Hall

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Update ::

Youtube Video Explaining Trade Plan:  [youtube]http://www.youtube.com/watch?v=KDJUc1gVN9Y[/youtube]

Blog Article: EUR/CAD Trade Plan off a Harmonic Butterfly

Start moving positions to breakeven… at this point you should be up about +232 pips on the first lot and possibly if your second got hit around +351 …  we were a few pips off from getting our second lot triggered but heard some of you took it a bit early so would advise you move both at this point to breakeven and lets see where this euro/cad can take us…

From now on its all about money management since the “risk” management was executed.  Now its all up to you on if you want to use trailing stops or manual stops or targets.

Good work guys!

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January 7th, 2010 @ 10:51 am by Chris Hall

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Here’s a decent little harmonic play for those not wanting to stare at the charts every day to watch this move.  Its on a daily chart and it took pretty much 6 months to be formed.  The good thing is that the more candle sticks it takes to form, typically you get better structure out of the pattern which can lead to a more probable trade.  So lets get right down to it an analyze this trade:

EUR/CAD Daily Butterfly Pattern

Stop: 1.4420

Entry:  1.4813, 1.4713, 1.4555  (avg, 1.4706)

Targets:  1.5206, 1.5974, 1.6069

Risk vs Reward:  1:2

Holding Period:  ~3 months

So we have this nice little butterfly with a pretty long prz.  Be sure to adjust your risk based on the height of this prz.  We are currently moving around just outside of the area of highest probability of a reversal so we’ll have to see at this point if we can get some sort of indication that we will be reversing.  But with that being said, ivar (hurst exponent) has tanked and were now seeing some anti-persistence in price.  We are also seeing this potential reversal zone line up with support and resistance which gives us added confidence that we have a statistically higher probability of this trade working out then it not working out.

The only thing you have control over in the forex are your losses, and every trade you place you should assume that its a losing trade before you place it.  Reason being, you need to accept that trade mentally as a loss so that you don’t get so emotionally caught up.  This trade plan are for people who don’t care if they see about -200 pips on their statement to see an expected payout of over +800 … but it will take some time to get there and we’ll have to let it work itself out.  At the point that it would hit our stop would also give us valuable information which is why our stop will go there to start.  But this pattern also agree’s on the weekly time frame which we are still within the boundaries of the prz.  You could try to time this buy looking for harmonics on 1H and 4H timeframes as well to try to increase your chances of a reversal.

Over all, not a bad trade setup for a daily timeframe!  Want to get alerted to more of these patterns, you can join us in the trading room here: http://www.fxinstructor.com/eng/rooms/fxgroundworks.php

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November 18th, 2009 @ 3:58 pm by Chris Hall

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Good day!  So I thought I’d post an update to some of the trade calls and discussions that we do here on the blog.  We had managed to get filled on the USD/CAD (green line)  pair and hit our target (yellow line) before hitting our stop (red line).  This was outlined on our previous post:

Can You Expect The Unexpected?

We had successful turned out of the PRZ zone and headed up to our first target in which we took our first lot off … we then continued to hold a lot hoping to reach the higher targets but we got stopped out at break even on our last lot.  So total pips taken from this trade was 182 pips.

Now, lets get a few things straight.  I didn’t know this was going to happen… but, the odds, and the probability of us being right was higher then being wrong.  So with that in mind, we take the trade knowing that over time we are going to be more right then wrong.  And isn’t that the whole point?  So congrats for those of you who play harmonics and took this trade… you did well.

182 pips secured from the USD/CAD trade

182 pips secured from the USD/CAD trade

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