10.6 EDSEL

[nanningbob]

Let us go back to the eur/nzd week 1 where price was ranging for the week. price would cross over the 60 causing a red bar and then reverse and cause a goldenrod bar. It then would cross and be red and then back up to goldenrod. It was ranging. What can you do to deal with this? I marked with a blue area where price hit the 60 MA line.

[nanningbob]

What you do is mark the last swing high and the last swing low. This will now become your range area and you ignore the red/goldenrod/red/goldenrod 4H bar. It will drive you nuts. Your new parameters now become the last swing high and the last swing low. This is your range area until it breaks out. The two red lines show your range area. The first blue area is where is touched the 60 MA on the 4H chart and the second blue area shows you your range area you can trade. The top red line is the last swing high on the 4H chart and the bottom red line is the last swing low on the 4H chart. With these lines marked you now go to the 1H chart or lower to trade. You will be looking for range trades. Your profit target should be about 1/2 half of the range from top to bottom. If you dont see enough pips to do that then dont bother trading that range or taking the trade.

[nanningbob]

Since this is the eur/nzd the space from top line to bottom line is 200 pips. Any trade you want to take you should be able to see about 100 pips to make the trade within the range area. So we go to the 1H chart and see what we can do. The 4H bar and 1H bar are now ignored and you look for signals from the STO 7 on the 1H chart. I marked those areas in blue in the STO 7 area on the chart. There are over 10 signals for the week. You will want to ignore any trades where you can't get at least 100 pips as a TP projectoin. If you do this you will get fewer whiplash trades. When the STO7 gives you a trade signal you then can try to see if you want to trade.

NOTE: The dummy lights 1H/4H are for trend trades and not for range trades. I know in earlier testing I mentioned you could do this but the 1H signals dont match up very well with the range definition.

[nanningbob]

Now let us take a look at the aud/usd that just touched the 60 MA signaling it ended this run of the DT. I marked the last swing high and swing low. It is 100 pips and could be worth trading Monday. If price breaks above the top red line that signals reversal and if it goes below the bottom red line it means continuation of the trend.

[nanningbob]

Now back to the eur/nzd where its trend ended. I marked it in blue on the chart and added the last swing high and low. Price action is pretty flat but let us look at the 1H chart anyway.

[nanningbob]

ON the eur/nzd 1H chart for the week no buy trade was worth taking and maybe two sell trades made something around 40 pips. Not a good week to range trade. Price shoots north so you wait for a 10.4/10.6 signal to trade.

[nanningbob]

eur/cad has ended a run. You can look at range trading it. Ignore news spikes for setting the high and low. Spikes distort reality.

Since the 240 and 60 MA are inside the range area, previous high/low. You use the swing high and low to determine the new breakout into the next UT/DT.

[nanningbob]

Sometimes price is running wild and you just wont get a swing high or low. Just the way Forex is at times. eur/cad example.

[nanningbob]

There are times when the rules just arent going to fit. Here is the gbp/nzd and I placed some previous swing high and swing low lines. They were all broken during this range time. That is just the way Forex can be. It is why I use large SL and small lots and often use multiple entrance points. Every trade whether buy or sell would have made a profit in this mess if you gave it enough room.

[nanningbob]

Now let us put it all together and watch for the reads. AUD/CAD for last 9 weeks.

1. Price breaks above the 240 and 60 lines and 7 day UT occurs, not a strong one but there is one.
2. Price touches 60 MA lines and price goes into range for the rest of the week. It breaks out of the range but stays inside the 240 and 60 MA lines which is a range area. Since price does not enter a DT but it does break the bottom range line, the range has been broken but it is inside the 240 and 60 which is also a range area. It does not break into a DT.
3. Price breaks up above the 60 line again and starts a new UT.
4. This is a nice UT and lasts at least 3 weeks.
5. Price breaks the 60 MA signaling the end of the UT and we draw range lines. Price stays inside this range for almost a week and then breaks the lower range line but stays inside the 240 MA ranges some more with a short break just above the 60. Areas 5 and 6 can be traded on the 1H chart using the STO 7 to enter and exit.
7. Price breaks below the 240 and starts a new DT. This is one strong move and almost a week later signals its end at the 60 line.
8. End of DT and setting up range lines.
9. ?? will price break past the top range line and the 60 to start a new UT or will it break the bottom line once again going into a DT.

CONCLUSION: Reading #2,3,5, and 8 helps you signal beginning and ending of trends and helps you mark the last swing highs and lows to signal the range area. You then look for break outs to trade trends or play the range area for shorter profits.