TA Isn't Enuf

Discussion in 'Technical Analysis' started by hcour, Dec 17, 2007.

  1. hcour

    hcour Guest

    I've studied and experimented for yrs w/the Wyckoff methodology (though I no longer use vol, just price action) and let's just assume, for the sake of this post, that I've gotten pretty darn good at that kind of TA. I have specific setups, such as apexes, upthrusts/springs, pullbacks in trend, that I read quite well. I have a market (FX) and a timeframe (4 Hr chart) that is good for me and that I'm comfortable with and works well w/my style of TA. I use a kind of triple screen, looking at the daily timeframe for the longer trend, w/the one-hour chart for the timeframe below my trading timeframe. Again, all this seems to work well for me.

    Of course, once one actually starts taking positions one realizes this is only part of the picture. I understand that risk and money management are paramount. The problems I'm having are:

    1) The time period to hold a position. Right now I'm thinking normal swing-trading time period of 1-3 days.
    2) Where to place the stop-loss. On a short position, at previous resistance? Yet upthrusts happen to take those very stops out. So perhaps the x-period ATR?
    3) The reward I'm looking for. The actual # of pips. On a short position, perhaps the next support seems most obvious. But then, what if I'm looking at an apex in a long trading range? TA-wise, a great cause should have been built up for a significant move. I would expect it to pause at previous support, but then to keep on keepin' on past that.
    4) Whether to scale out.
    5) If I choose to ride the whole or part of a position as it shows profit, where to place the trailing stops to protect my profit.

    Of course, these are probably the standard questions. So let me give a specific example of a trade I would have taken had I determined the answers to these questions:

    Daily EUR/USD:


    4-HR EUR/USD:


    The EUR/USD has shown nice relative strength vs the GBP/USD and AUD/USD, but at point B on the 4-hr chart I'm looking for a breakdown as those 2 continue to exhibit short-term weakness while the USD/XXX pairs are exhibiting strength. I'm looking for the EUR to do a bit of catching up, weakness-wise, w/its positively correlated counter-parts.

    So, the setup, Wycoffian-wise: On the daily on 11/23 at X there is an upthrusting bar of the previous high as well as the channel supply line, possibly climactic behavior; at Y price sits at the demand line of the channel on a wide spread closing on the low, then 3 bars later another wide spread closing on the low breaching that support line. The next 6 bars basically go sideways and are unable to break back into the channel, that demand line support has become resistance.

    On the 4-hr chart, again, as a Wyckoffian, there is a buying climax and quick reversal at E, a range forms from C to D in the red lines, this whole thing becomes an upthrust of another range from A to B. At B a very tight apex forms at the purple lines at significant resistance going back to A and I'm looking for a breakdown hereabouts commensurate to the long range.

    So I'd be interested in some experienced traders various stops & reward on this position. How would you play it - specifically?

    Thanks much,