Cycle Trading

I've been away from trading for about 6 months. Just got back into it about 2 weeks ago armed with some new techniques and philosophies.

Normally, I keep a journal at moneytec, but I thought I'd try one here instead. I"ve found that keeping a journal keeps me on my toes and provides an opportunity to get feedback and advise from others. The generosity of those I've met through my journals and forums accounts for the majority of what I know. Studs like Akuma, soso, Stoxx, Xtsunami, Bear, and some others I'm probably offending by forgetting.

First up is short term trade on the GBP pair. I've attached a 15 min chart of what I'm looking at for this trade. I've been shorting it heavily the last week or so and now I think it's time for some steady retracement and consolidation. I see some range for going against the down trend, but I'm treading carefully. I"ve already taken profit once. I waitied for a cycle of time to come up and now I'm long again at 2.0217. I see the posibility of a tight range downward, so I'm watching very very carefully. But if the cycle of time proves to be significant one, I think 2.2032 is highly likely in another 6 hours or so. The end of the magenta forecast line is at a subdivision cycle point.

My overall look is a dollar rally for at least another 20 some odd trading days, so most of my trades will be to the short side on the GBP and EUR. Occaionally I'll throw in some Gold when the setup is there.

I also keep a blog at http://4xcycletrader.blogspot.com/ that will probably go into more details on the actual techniques.

Glad to see you here in FF JR97. It is good to see you work on a subject matter not many look into like this Cycles Trading.

Have been checking your posts at akuma's site in beginnertrader. Have found soso's and your work very interesting.

EG

Akuma and soso are very good with the esoteric stuff. They amaze me. And considering what Akuma just went through, it amazes me he even bothered coming back to trading at all. And training for triathalons of all things. That puts him 2 activities above Lance A.! Anywho, I'm hoping some of the other cycle and time traders post in this journal as well. I know they're out there. The beginnertrader forum is kinda slow, but hopefully with some exposure, the activity will pick up.

BTW, feel free to chime in whenever and often. I want to see other people's analysis and ideas.

I got out with profit on a trailing stop at 2.0230. I got the price target wrong, but the time target right. Price spiked up and broke intermediate resistince at that bar. I also missed a great opportunity to short and trade with the trend. I'm on the sidelines until I get a short opportunity.

Attached is an updated 15 min. chart. notice the spike up and break through support on the time target. Also attached is a 1h chart showing one of the reasons why and where I originally went long. Price squared up 315* of price and time. This last move down puts price at 360* of price. Price will likely go up a bit and drop back down to fully complete the square of 360* of price and time. If I get a signal to short, then the end of the square is the price and time target.

After putting up some forecast lines, I a found reason to short, so I did at 2.0150.

The yellow and aqua forecast lines are mirrored cycles from certain points in the past. Because cycles invert, these don't always show direction, but they do show time. When they turn, it's not uncommon for price to turn. Sometimes just a little, but many times drastically. Both of these look like they inverted at last night's top. I don't use them often, but they can be good for finding turning points. I've marked off some of the more visible forecast turning points.

Thumbnail is clickable.
http://img261.imageshack.us/img261/2...ug13br5.th.gif

Price turned on the first time line. Since I'm at the office right now, I can't really be watching these short term trades. I closed the short for some small profit and now I'm long. I think there's going to be a reversal on that last pink vert based on a geometric pattern of price containment I penciled in that I'll show later if it comes to fruition. For there to be a revesal, price needs to move up or down first and I"m putting on a small trade saying long now. I'm talking small small. Then go bigger on the time line for a short. Or if my long gets stopped out, go bigger on a long on the time line.

Long at 2.035
http://img523.imageshack.us/my.php?i...01aug13ge3.gif

Needless to say, my little long didn't last long at all. However, everything else turned out as I thought it might. But I missed my window to short and was left on the sidelines. Below are two clickable thumbnails of the ellipse I had drawn out. The termination was dead on price and time, although price did breakout out of the bottom a little early. This fast drop effects my other cycle forecasts in that my 32 daily bar projection is still there, but it is now a target to the upside.

http://img408.imageshack.us/img408/8...ug19ig8.th.gif
http://img408.imageshack.us/img408/8...ug19te0.th.gif

I'm getting a lot of hits on a fib bar count down to 8/22. I think it'll be a top and a solid short opportunity. So I'm going to sit back and wait.

http://img463.imageshack.us/img463/9...ug19mh5.th.gif

Wow, I have to say, you are one of the most knowledgeable Gann enthusiasts I have ever seen in FX... I will pay close attention and see what I can learn from you... Thanks for posting this journal.

Thanks Scott. I've got a long way to go compared to the Gann enthusiasts I cavort with, but thank you. It's a long hard road, that's for sure. Hardest thing I've done in trading by far. And that includes designing and developing a full blown system in Excel with live charting and flashing lights.

I don't do straight up Gann stuff. I infuse a lot of other stuff like Fib counts, geometric patterns, and some other "natural" cycles. Anything that helps unfold the 4 dimensional space.

The spike down last week was the last piece of the puzzle for my 1h chart ellipse. I was off a little and the spike gives 3 points of contact to finalize the ellipse. Triangulating a point in 3D space so to speak. If it plays out as I hope, it will also provide the root for growth and decomposition cycles going forward.

Right now there seems to be a triangle forming. I haven't checked a news calendar in ages, so I have no idea what is waiting at the point. I'm almost expecting a Ross Hook out of it. (A fake breakout.) That would be in line with my current daily chart analysis.

clickable thumbnail
http://img53.imageshack.us/img53/556...ug20jt3.th.gif

I happen to be up because my kid woke up, so I checked on the triangle and got a good confirmed breakout entry and an ok exit for a quick 40 pips. The breakout of the triangle was right ona division of time.

The target was determined by using the distance of the base of the triangle and it hit to the pip. I let my trailing stop determine my exit.

I also noticed a couple of ellipses. The base of the triangle was the root and the breakout formed an identicle mate.

I just entered short at 1.9848 on a division of time targeting 1.9815 and 1.9780 with a very tight stop at 1.9858.

http://img513.imageshack.us/img513/6...ug21qd0.th.gif

My 1h Euro chart squared up near 270 degrees of price and time and price reacted shortly thereafter going up. But my yellow forecast says to look for a change in direction, so I've got a sell stop at 1.3510 just below a division of price and another at 1.3485 just below another division. Target is the 1.3400 area based on a trendline and a square. I normally don't like trading in the triangle formation, but there's some good range there.

http://img522.imageshack.us/img522/2...ug21ti0.th.gif

Here's a better image of that 1h chart. The apex of the triangle coincides with a forecast change of direction.

http://img522.imageshack.us/img522/7...ug21ud6.th.gif

All 4 trades were profitable. I got out of the pound on both positions at 1.9812 right after a division of time. In hindsight, that would have been a good long entry, but I wanted to see how price reacted at the outer circle. When price runs into the out circle, sometimes it'll run up until it's too steep and then drop hard. I'm still waiting on the curren triangle to play out and pick a direction.

http://beginnertrader.com/forum2/img...1187788691.gif


For the euro, I got out after price bounced off a trendline and then ran into a timeline. Again, a good time to go long, but being in a tight range, I didn't think the upside had as good a potential. Price peaked at the upper trendline and turned around on a timeline on a different chart. I'm short at 1.3475. Also notice how the forecast has a huge disturbance coinciding with the next division of time. Could be nothing major since magnitude on the forecast doesn't always mean a whole lot. But it's interesting to see it line up with a time line.

http://beginnertrader.com/forum2/img...1187788737.gif

Euro stopped out. I should have had a tighter trailing stop.

Anywho, today is the day I've been watching for all week on the pound as mentioned in the fib bar count post above. Price has busted out of the triangle and running up to time on the intraday charts. As soon as I see a top, I'm going to setup a net and try let price trigger the shorts on the way down. If I"m wrong, hopefully only 1 gets triggered for a loss.

I think the signs are there that I'm right. divergence on the square of nine oscillator, elliptical containment, etc. I think the bust out of the triangle is the ross hook i mentioned before as well. I could be wrong, but that's why I"m waiting and going to use sell stops to get in.

hi JR97, I have always wanted to one delve into Gann, but refuse to spend the poutlandish sums offered by so many companies. Can you point me in the direction of any free stuff on the net to learn about squares etc?

http://beginnertrader.com/forum2/index.php

I"ve also been putting some of my methods in detail in my blog. It's the url in my signature.

You don't need any pricey software. I started out using a gann wheel, but it sucks for forex because the numbers can be so big to work with. So I did most of my research in Excel. My blog goes over the details on how to create a Gann type grid in MT4 using the stock mt4 chart tools.

You don't even need Excel if you can learn to work around the wheel. Here is a free online calculator that works pretty well.

http://xmlworks.com/gann/javascript/

Pip net is set. If this works out, I'll be holding for 3 days min. However, there is still some management involved. If a later entry looks like it might go into the red, I may close it and wait to re-enter.

http://img49.imageshack.us/img49/769...ug22kh4.th.gif

This next one is a compressed 15 min. chart showing a division of time coming up and divergence against the oscillator.

http://img523.imageshack.us/img523/9...ug22im2.th.gif

The Pound Ellipse failed. That rarely happens. Especially with that many points of contact. However, when the pattern does fail the time mark usually holds which it looks like it might. Going back to a natural cycle wave count method, I should have seen that there was a conflicting signal with the ellipse. Ironically, a Euro ellipse I had drawn going to the upside that I thought would fail is playing out. Again, I should have acted on the conflicting signal and the 2-1 vote against the pound. Luckily, only one of the orders triggered for a loss. That's the good thing about using stop and limit orders.

On further analysis the fib bar count did work. I just missed the sign to look upward. I was too caught up in the ellipse pattern to think otherwise. 7 of the 8 previous bars were down and the last bar was down, so why I was looking to go short, is beyond me. The reversal was clearly going to be to the upside.

If I get time, I'll post some charts that all seem to be on the same side this time. squares of 144, more ellipses, and the dollar index.

Anywho, I've got some short orders waiting on the down side. On both pound and euro.