The Power to Predictusing advanced analysis to trade today’s Forex market

by Mike Hamilton

Part one: back to basics

Part two: advanced entry / exit strategy

My background story • Traded stocks in the UK from 1984 - using a value system• Invested in TA training heavily 15 years ago (UK & US)• Traded commodity futures (grains and oil) in the boom up to 2007• I now focus on forex day trading. I swing trade stocks (UK / US) and commodities • Founder of TradeTheEasyway.com - simple modular training• Managing Director of Sandton Direct Forex Brokers• Trading style: pivots and cycles………….

Sold 80% of portfolio in early Sept '87 / traded property from '98 / sold .coms Jan 2k

Здравствуйте from Майк Хамилтон

1 - Are you a scalper?2 - A intra day trader?3 - Swing trade / investor?

What type of trader are you?

Indicators are lagging / they can confuse the pictureI only use stochastics / macd on big time frames, I only use 2 moving averages on small timeframes

I'm going to show you the code of trading how the markets find levelsstarting with the basics, then looking at advanced techniques for analysis

Part one: the basicsI’m going to share my trading edge with you

• support / resistance• moving average• trend line

Main market levels can be found using 3 pivots

• each touch weakens this pivot• so if the level is retested enough times, it will normally break• the 4th test is the break through normally• resistance becomes support / support becomes resistance

Pivot 1 : support / resistance

Pivot 1 : support / resistance

EURJPY daily chart 2013 to 2016

3rd test has false break

4th test is works well

Pivot 1 : support / resistance

GBPJPY 15 minute chart 12/7/2016

1 – London open – break out2 – My entry 45 minutes later

Pivot 1 : support / resistance

This is a clean chartNo indicators, just a line

How many of you took the trade?

• these are guide ropes not defensive lines• the 50 day average on a daily is the main trend guide line• the 200 day average needs to be tested sometimes to improve liquidity – if

it holds – great sign of a move coming

Pivot 2 : moving average

Pivot 2 : moving average

Blue arrows = support line

Red arrows = touches of 200 ma

Daily EURJPY in 2007 / 08

Pivot 2 : moving average

To trade the trend in this chart , only buy above 50 ma

Same chart showing 50 maDaily EURJPY in 2007 / 08

Pivot 2 : moving average

This chart does not respect the daily 50 ma in the middle period

Same chart showing 50 maDaily EURJPY in 2007 / 08

But this later period is very clean and trending wellMany traders counter trend trade with lower success rates

• the daily 50 ma is the trend keeper - if a chart is under the daily 50 I look to short

highs, if its above the 50 I look buy lows

• after a break away from the ma, the first test is normally a fade / pull back which then continues in the direction of the original break

Pivot 2 : moving average

Pivot 2 : moving average

Same chart showing 50 maDaily EURJPY in 2007 / 08

Once this daily chart holds above this support lineRespect for the daily 50 tests is MUCH HIGHER

Pivot 2 : moving average

50 maIntra day EURJPY 15 minute chart this week

Day traders can use this also!

These are a problem for many traders because there are a few ways you can use thembut I will show you how I use them, and later, why these are so crucial

Pivot 3 : trend lines

• from the most extreme point, find the next point so for a market that has sold, find a lower high

• the more touches there are the better

• the bigger the time frame you use for these the better• I do not use these on 5 / 15 minute charts

Pivot 3 : trend lines

Pivot 3 : trend line

EURJPY – daily chart

The higher lower trendline is drawn 1st

the 2nd is a copy of the 1st lineThen dropped down to find the right touches

You end up with a very powerful patternWhich predicts these big drops

Pivot 3 : trend line

EURJPY – daily chart

Simple, but watch what happens when you build this up

Pivot 3 : trend line

EURJPY – daily chart

The lower trendline is a copy of the 1st lineThen dropped down to find the right touches

You end up with a very powerful patternWhich predicts this recent low

Same theory – just bigger picture

Pivot 3 : trend line

EURUSD – 1 hour chart Sideways for 2 weeks!!!

Put them all together and you can find key pivotsPivots are what we all need to findTrend lines and support / resistance help you find very powerful chart patternsThey show you where the big funds are buying / sellingI find so many traders miss this as they do not do the basics on bigger time frame charts!

Basic Pivots summary : Why are these so important?

Pivots

USDCAD – daily chart

Where are we going?

Pivots

GBPAUD – daily chart

Where are we going?

We all know markets don't move in straight linesbut how do they move?

How do they find a better way to predict the level to enter and exit?

Part 2 : advanced forex analysis

Trading is not intuitive, you need to know how the markets think and behave

They move is predictive waves,But these are not random

In the 1920’s Mr Elliot made a comprehensive study of wave patterns.

This is one of the biggest part of my trade plan

I will show you how to use it in forex

Part 2 : advanced forex analysis

Part 2 : advanced forex analysis - waves

Wave 1 - happens when there is a lot of fear but the buyers step in and break out

Wave 2 - profit taking and lack of support – this wave must be inside the original move.

Wave 3 - those who missed out on wave one join in and original wave one traders are back in – this wave must be bigger

Wave 5 - trend traders keep buying lows but momentum is now slowing

Part 2 : advanced forex analysis

Wave a, b, c, are corrections and the cycle may repeat if wave c holds above wave 1

Part 2 : advanced forex analysis

GBPJPY – 1 hour chart Brexit moveWave 3 is the powerful move, 3 and 5 are the completion of the move

Part 2 : advanced forex analysis

GBPJPY – 1 hour chart Brexit movewave pattern 2+ weeks later to close the gap left by Brexit at 13950

Part 2 : advanced forex analysis

Weekly GBPJPY

Trading is based on support and resistance and emotionMarkets need a reason, a trigger, to buy and sellFibonacci is the best method to measure all of these elements

We have designed a way of using this so it is the main part of our trading strategy

Part 2 : advanced forex - fibonacci

Here is a standard fib grid showing extension levels

This is all about retracements / pull

backs for entries

Combine this with Elliot wave theory and you have the ‘code of trading’

Part 2 : advanced forex - fibonacci

This is an ideal 5 wave pattern

Retracements would line up with

fib levels

So entry and exits can be set by this

This is at the core of my trading

Part 2 : advanced forex - fibonacci

Here is the Dow winding down from

2007 to 2009

You have wave counts

And action around the 50 ma as we

saw earlier

But look what happens next…..

Part 2 : advanced forex - fibonacci

Part 2 : advanced forex - fibonacci

Part 2 : advanced forex - fibonacci

This is how my 3 hour GBPJY chart looks.Do I need ma’s?Do I need rsi? DO I NEED ANY OTHER INDICATOR to trade this chart ?

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