A/C – In One Breath

What market are you in?

Embedded oversold. Meaning, there has been at least 3 daily closes below the long term oversold neckline (20%) @ 1.1468.

What are the two market types that exist in an embedded market?

  1. Trending
  2. Counter trending

Why do you want to trade embedded markets?

The moves tend to be enlarged / long, for there is plenty of liquidity, lots of participation, you can trade in and out easily, the spread is at its lowest, you can stay in safely until the trending direction does not change.

What is required to make the market turn within embedding? Peak trending.

Peak trending is brought on by 1h 30 min – 2h having been spent opening above the local overbought or below the local oversold neckline.

An example of peak trending: 4 30-minute opens above the overbought neckline.

Visual signal for peak trending:

Calculation for the overbought / oversold levels (based on my modified fractals):

if (sdn[i+1]!=0) minus[i]=Low[i+1]-110*Point+FSize/2*10*Point;

if (sup[i+1]!=0) plus[i]=High[i+1]+100*Point-FSize/2*10*Point;

Where sdn and sup are arrays with Sychronized highs and lows

and the Fluctuation Size is 32 pips (EUR/USD)

To find a starting point for the oversold trend’s continuation, you would be looking for an ABC correction.

There are a couple at once.

At times you may be wrong, and the high of the C would be taken out unexpectedly, so that is where you would need to initiate a hedge temporarily.

The image below also shows the violation of the upper guard rail coinciding with this move:

Here’s the calculation I use for the A & C count:

int countback=4;
int countup=4;

 for(i = 188; i >= 0; i--){
      if (trianglehigh[i] && ExtMapBuffer3[i]!=85 && ExtMapBuffer3[i+1]!=85 && ExtMapBuffer3[i+2]!=85) countback = 1;  
      if (ExtMapBuffer3[i]==85) countback = 4; 
      if (tup[i]!=EMPTY_VALUE) countback = 4;
      if (trianglelow[i] && ExtMapBuffer2[i]!=15 && ExtMapBuffer2[i+1]!=15 && ExtMapBuffer2[i+2]!=15) countup = 3;  
      if (ExtMapBuffer2[i]==15) countup = 4; 
      if (tdn[i]!=EMPTY_VALUE) countup = 4;
       if (RSI2[i]<92 && RSI2[i+1]>94) {
           if (countup==1) {
                 countup=countup-1;}
      else if (countup==2) {
                 countup=countup-1;}
      else if (countup==3) {
                 countup=countup-1;}             
      else if (countup==4) {
                 countup=countup-1;}        
      else if (countup==5) {
                 countup=countup-1;}    
      }
      if (RSI2[i]>8 && RSI2[i+1]<7) {
           if (countback==1) {
                 countback=countback-1;}
      else if (countback==2) {
                countback=countback-1;}
      else if (countback==3) {
                countback=countback-1;}             
      else if (countback==4) {
                countback=countback-1;}        
      else if (countback==5) {
                countback=countback-1;}                         
   }
}

Where lays the dog buried… The triangle highs and lows.

I have been talking about the Slope of Nope and successful buys and successful sells. People tend to put me on ignore for this, oh, well…

    if (stoch2[i]<20 && Period()==30){   
        for (j=i+1; j<=i+11; j++)         
         if ( iHigh(symbol,30,iHighest(symbol,30,MODE_HIGH,j-i,i))-Low[i]<FSize*1.5*10*Point && stoch2[j]>80)
               trianglelow[i]=True;}
    
    if (stoch2[i]>80 && Period()==30){  
    for (j=i+1; j<=i+11; j++)         
         if ( High[i]-iLow(symbol,30,iLowest(symbol,30,MODE_LOW,j-i,i))<FSize*1.5*10*Point && stoch2[j]<20)
                 trianglehigh[i]=True;}
     } 

ExtMapBuffer2 and 3 are the Stochastic Bars Mixed’s High and Low arrays

As for ending, here is some visual practice to draw meaningful conclusions.

Look at the shaded zone between MR. Maroon and the Green River. That is what I call the Spark Zone, where moves come out from. In our case, it served as the igniter for at least 5 counter moves on the image below.

It does not take much the sync up these two images and see, that both A/C prints were S#1-S2 Sync pairs, furthermore they both had their ending points beyond the chartreuse upper guard rail. Ironically, it is the Bull Zone 1 where the bulls fail.

Sorry for the high density, I hope that things are starting to come together in your head.

Homework: knowing what you know now, how should the embedded oversold trading program look like?

  1. initiate a short holding after an ABC correction to the upside.
  2. Exit(s)?!

…another A/C from a little earlier…