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Form a Trade Idea then fit in your trigger – illustrating USDJPY

Received quite some emails from recent intakes and find that their analysis tend to skip the broad conditions with boxes but to skip to identifying trigger and 1234.

In this posting, I would like to share a step by step analysis on USDJPY illustrating how to approach a chart.

1. Big Picture Planning – always start with a clean chart in higher timeframe

Although our prescribed timeframe is H4 to start analysis, most of the time, I like to have a glance on the big picture.

Key to chart below:

1. A lower low is first sign to suggest reversal, however in USDJPY case, this is still unclear. So we need to see a lower high to confirm a reversal.

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Daily timeframe Trend analysis using highs and lows

 

2. The second step is always to check H4 timeframe and what the boxes are saying. Do not look for a 1234 here yet (if you can find, then that’s also good)

H4 boxes show price is somewhat flat. The most recent bullish expansion will be erased if we see a bearish expansion, otherwise, we will still assume shorting it has limited downside and that support will stay supported

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H4 boxes show price is flat

 

Next is to check h1 timeframe. Note that any 1234 spotted must have a flow. This is common mistake made by students. They are more keen to find 1234 and not to fit the 1234 with a flow.  Check why that’s a good point 4. Don’t forget this step.

We will be looking for a trigger. Not only that price must WR pt 2, we can use boxes to see there are few boxes high in h1 acting as support which price must WR too.

Great practice to draw a Fibonacci Retracement from pt 1 to 4 to find F6 as a confirmation level.

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Probably under H1 timeframe, we are somewhat counter or on a sell high trade

Below 9980 has support 9900 and 9850. Again we will have to assume that these supports will hold unless broken.

 

Updated 22 Jul 2.39pm

Students asked questions about this statement: Great practice to draw a Fibonacci Retracement from pt 1 to 4 to find F6 as a confirmation level.

Below chart illustrate how to do it and a close below F6 in H1 will surely register a close below 13TL. This is an unbiased way to make sure that price has triggers (both WR and 13TL)

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Update 26 Jul 11.30am

The USDJPY has brought up many of my concerns and fears. Where too early planning has been given, seems like some students jumped in the trade too fast. Where stop loss has been clearly taught (pt 4 + 15 pips) and where students nodded their heads when they first received this rule, it seems that some has modified and broke the rule, resulting in unwarranted losses.

Therefore, I change the style of tweeting, to provide broader strokes only to address certain students’ concerns of over- reliance on my tweets. Another change is to impart my experience and how I tackle a trade by posting in protected blog section.

The USDJPY trade from my posting took about 5 days to happen. 5 days is like the ‘contra’ period of SIngapore Stock market. But many don’t have the patience. So should my tweet/blog posting be early or on the spot. Too early, you waited too long. On the spot, some of you miss it.

I will share with you how I managed the USDJPY trade so you can learn from it and apply it next time. I think this is a better solution.

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My first posting had this remark:

Below 9980 has support 9900 and 9850. Again we will have to assume that these supports will hold unless broken.

My first short on USDJPY was around 9950. Warned about the need to break F6:

Great practice to draw a Fibonacci Retracement from pt 1 to 4 to find F6 as a confirmation level.

When price didn’t close below F6 and instead went up above F3, I was stopped out on 45 pips loss. That was when I warned in twitter about the feasibility of this trade.

 

When price again retraced to form 1234 (red numbers on chart) and with pt 4 symmetry to pt 2 (blue number), I suspected it was a Head and Shoulder. Again I went short when price closed below 9980 again (my entry price this time was 9970 on H1 close). Stop loss adjusted for new trade to red pt 4 +15 pips.

And I waited patiently for price to happen to what was said in blog posting

Below 9980 has support 9900 and 9850. Again we will have to assume that these supports will hold unless broken.

First Target Profit was 9900, which gave me a +70 pips and now I’m waiting patiently for 9850, which will give me a 120 pips profit. At the moment, the +70 pips profit will knock off the previous losses and my the other winning leg now is going to give me that profit. 

I did nothing much, just executing the rules and knowledge being taught in Tflow®. I hope that this posting reinforce the need to follow rules. Well, sadly, the fact that this trade was ‘wrong once’ before and therefore, might have been forgotten by you. Is that true?

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20 thoughts on “Form a Trade Idea then fit in your trigger – illustrating USDJPY”

  1. Daniel Ku Guet Liang says:

    Thanks for showing the planning process. Couple of questions:
    1) in the H4 chart, does the bearish H1 box (purple) subsequent to H4 bullish box negate the bullish-ness? (my understanding was such)
    2) was the HS in D1 chart a “big pattern”? is it ‘cos it was just below the critical SAR (101.65) that was tested a few times seen in the month chart? is it also ‘cos it was a HS reversal pattern that span across 3~4mths?
    Appreciate your thought. Thank you.

    1. Binni Ong says:

      1. to negate h4 bullish box needs h4 bearish box. however h1 bearish box is the fastest clue to a potential weakness,although weak
      2. a big pattern, but still it’s not much confirm yet, so i’m waiting to see if price can close below the so called left shoulder

  2. Sewo Jeannette Ming Li says:

    thanks Binni for sharing your thoughts, I’m just wondering if you take into account the Japanese elections this weekend, possibly causing a gap up on Monday’s opening?

    1. Binni Ong says:

      well, possible :)
      however the intention of this post is really to serve as a guide to analysis, not really much of other things. my guess that nothing will happen from now till election. however once news out, then the market will let us know by staying at or breaching below the said level.

  3. Randy Conway Oliveiro says:

    Thanx Binni for the remedial lesson.
    Appreciate it.

  4. Shao Guoyong says:

    Hi Shifu,

    Thx for another insightful post on MTF analysis again.

    “Received quite some emails from recent intakes and find that their analysis tend to skip the broad conditions with boxes but to skip to identifying trigger and 1234.”

    Read this paragraph and will like to share my own experience on boxes usage.
    Basically h4 boxes are used to show the way; to provide market direction,
    while 1234s on lower timeframe are trigger which gives us the market timing.

    Without following h4 boxes, traders may feel lost in intra-inter/day price movement. Therefore it may be hard to ride big trends , or uneasiness may be felt while being in a trade.

    Thus, I find nbox being underrated most of the time, so I have summarized my personal list of uses for nbox.

    1) h4 boxes are representation of w1 candlesticks , captures obvious trends by showing ” the staircase”. H4 Box up I up. h4 Box down I down.
    2) h4 boxes expansion show current price momentum and give conviction to my direction bias.
    3) h4 boxes can also show potential reversal by painting boxes with either red/blue. Especially when color ding-dongs between blue/red/blue/red it shows uncertainty, and probably a chart pattern in progress.
    Neckline completion on HTF are sometimes accompanied by h4 boxes expansion.
    horizontal necklines are sometimes represented by flat h4 boxes.
    I noticed that breakouts from necklines are sometimes manifested as BM phenonmenon.

    4) w1 boxes shows w1 S&R easily, and captures big pivots as well.
    5) It is fractal in nature so boxes not only capture the overall trend but also show the intraweek consolidation via h1 boxes which most of the time good 1234s can be found.
    6) If i am interested in CTT trades I will look for a flow to map a 1234.
    One way to define a possible CTT flow is to include h1 expansion as a criteria for X to 1, as seen in Shifu’s 3rd chart on the h1 1234.
    I also prefer a single/two candle to close the clustered h1 highs to give a feeling of ‘decisive’ WR over many days high.

    That is all for me. Friends do let me know if there are more ways of using boxes.

    Thank you TH n Shifu for inventing a simple yet effective concept.

    1. jeanlhwong says:

      Thanks Binni for the post and Guoyong for this insightful sharing on boxes – very useful!

  5. Desmond Zhi Wei Goh says:

    Thanks Binni for the post!

  6. Keith says:

    Hi Binni,
    Do TS store past analysis in your blog. I tried to copy each useful tip over to my laptop currenyly snd am trying to do away.

  7. Daniel Thien says:

    Thank you Binni for the post. Guoyong14 your sharing is excitingly enlightening.

  8. Chow Wing Sun says:

    Thank you Binni for your Updated 22 Jul 2.39pm and email reply (for GBPCAD, same as this update)

  9. Ryan Lee says:

    Hi Binni,
    Can you tell what you did at First Target Profit +70 pips – take partial profit or shift stop loss to a particular price level only?
    Also, what do you intend to do at Second Target Profit – close all positon or shift stop loss and let profit run?

    I am a bit unclear regarding the trade management part, and hope you can explain a bit with this example. Thanks.

    1. Binni Ong says:

      again as of what we teach in tflow course, take partial at first TP, take remaining at next TP. I said in blog post, we will have to assume this supports stay true as usdjpy might still be up trend.

  10. Chen Junguo says:

    Binni I also have similar concern when it comes to tp. Why do u sometime take confluence zone as tp zone n y sometimes u take fib e tp1 as tp? Is it because this is still counter trend so its safer to take confluence zone and smaller tp interval and not be greedy. And how do u know if the trade is wrong sometimes its too early to conclude by close of h1 candle e.g silver yesterday got a bearish expansion so I shorted I though its wr4b but end up I forget that there is a fib 6 level there and it bounce up from there. :(

    1. Binni Ong says:

      counter trend so has to be careful.
      also what i’ve listed are support zones, not TP levels and as seen in usdjpy price stayed temporary at 9850 (a support) and then head lower towards TP2

  11. Desmond Zhi Wei Goh says:

    Dear Binni, thank you very much for this post, to allow us to see the trade through your eyes.

    From a student perspective, I would prefer your tweet to be early. This gives us the time to get ready and understand what we are doing, rather than “blindly jumping into the trade just because Binni says so”.

    I would like to ask regarding the -45pips SL for your first trade. Could I ask how did you decide on that level (F3 on Pt 1 to Pt 4 Fib-R) vs say the blue pt4 +15 pips?

    1. Binni Ong says:

      it is taught in class. if price is below F6 and then went above F3, then there is not much energy to move lower. so above f3 will be SL

  12. Andrew Teo says:

    Thank you Binni, a very detailed and structured tweet indeed
    A clear process from planning to trigger, I have learn a lot in the trade setup, however not quite understand about the 45 pips on the trade management part.

    1. Binni Ong says:

      see my reply to Desmond

  13. Desmond Zhi Wei Goh says:

    Thanks Binni for your reply & clarification :)

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