The trade focus number(s) are potential entry point(s) I expect PA to break if it must continue its journey, and should it retrace, I also try to be ready for the counter trend trade.
Let me use the attached CADCHF to illustrate the way I use the trade focus numbers:
1. First, I identify the trend on the H1, H4 & D1 charts, and look for trades in that direction, as we've all learnt that the trend is our friend. The trend however need to take a breather and will pullback; therefore I also take counter trend trades, when PA is retracing and 3 consecutive lower TFs are moving in the same direction;
2. On the attached CADCHF, my initial focus was to go long on a break of the Aqua horizontal line @ 9189 and/or short on convincing break of 9105;
3. The new session opened at the vertical plum line, and no long trade was triggered; but a short trade was later triggered during the US session;
4. As stated above, I always like to see at least 3 consecutive TFs moving in the same direction before I enter any trade but in this case we had almost all the TFs in agreement to the down side. Therefore I consider this a high probability trade;
5. I will only be looking for short entries on any retracement, using either the M5 or M15 TF;
6. The pair has been in a downtrend before retracing up, but the H4 chart has since confirmed resumption of the downtrend around April 6th, as per attached H4 chart.
7. The Asian session resumed on May 1st with PA going down and bouncing off the WS2 at 9123 and going to 9171 where it met another resistance, to resume its ride down, thereby giving us a better entry point;
8. So we had an opportunity to enter short at 9144, and another one after the small pullback to 9137, on break of 9123 (where it initially bounced during the Asian session) for additional 18 - 39 pips before the focus number.
I also use the MACD and/or Zoltan Kiss' TWS QQE to filter my trades, in addition to the Heatmap from Mark McDonnell of Forexearlywarning.com to monitor strong and weak currencies.
This service is not for newbies but for "experienced" traders, who already have their own system and method of trading, as the focus number(s) will only confirm your analysis/research.
Another Example of How I Use the Trade Focus Numbers
On May 2nd, someone asked me what I thought about the AUDUSD, and I responded at 11.49 pm PST as follows, and attached my chart:
Trend is still up as you can see on the H4-W1 TFs but since we have 3+ consecutive lower TFs in red (M5-H1), I will confidently take a short trade with the 38.2 - 61.8% FR level as target as long as the AUD continues to weaken on the CSM.
See posts 209 & 210 at http://www.forexfactory.com/showthread.php?t=290685&page=14
AUDUSD had been a sell below 1.0880 from my previous post 196.
By 7.15 am PST on May 3rd this was my update:
PA made it to the 50% FR level @ 1.0845 (missing the exact point by just 2 pips) but still good for 50+ pips from the point of my post.
By 10.27 pm PST same day, May 3rd I had another update:
PA finally made it to and beyond the 61.8% FR level @ 1.0788 for additional 50+ pips. PA is retracing now but more downside seem possible.
I said, "but more downside seem possible," and AUDUSD ultimately dropped to 1.0535 by yesterday!!!
A Further Example of How to Use the Trade Focus Number(s) for Reversal Trade(s)
Using the EURUSD as example: Trade Focus Numbers was to buy above 4417 and sell below 4279. See enclosed chart below:
1. First I establish that we are still in a ST bearish retracement, as the H1 & H4 TFs were bearish while the D1 is bullish;
2. The initial setup candle broke above 4417 but closed right under it, and the next candle was bearish;
3. Now I have 4 consecutive lower TFs (M5 - H1) moving in the same direction for a possible buy;
4. If I decide to take this trade, I should know that it will be a ST trade until the H4 turns bullish for H1-D1 alignment;
5. A bullish pinbar or hammer shows up after the bearish candle, supporting possible continuation of the bullish trend but I have an MA obstacle above;
6. If anyone took this trade, they had ample opportunity to close the trade for a small profit or break-even, as PA moved 20+ pips and we had 7 candles above the buy point when PA stated warning us, I am tired and can't go any further;
7. My next point is the reverse use of the Trade Focus Numbers, and I hinted at this in the May 5, 2011 article - How I Use the Trade Focus Numbers, and you can see bullet point # 7;
8. Now we have PA unable to make any appreciable progress from the buy point, as it was having problem closing above 4442. After 7 candles, PA dropped; made a low @ 4379; retraced to 4407, not reaching the initial high @ 4442 and we now have M5-H4 (5 TFs) confirming a bearish outlook. The CSM confirmed JPY & USD as the strongest currencies, and EUR & GBP as the weakest currencies;
9. We now have a better entry point, and I will without hesitation be prepared to short the EURUSD on break of 4379 (100 pips before the trade focus number) with an entry order and my stop at the new swing high @ 4407;
10. PA dropped 25+ pips within the same M15 candle, and continued downward;
11. Stop can be trailed by moving it to the next 2 candle high behind PA, where it was eventually taken out @ 4297 for 82 pips on a slow Monday morning :-)
12. A friend skyped me when he entered at the exact sell point and as soon as PA was 15 pips in black, he moved his stop to BE and eventually closed the trade for 20 pips.
There are several ways to skin the cat, and this is why this service is for "experienced" traders who are just looking for breakout numbers to enhance their entries. It doesn't take much to be successful in this market - 25 pips per day will give you 125 pips for the week; and this will in turn give you 500 pips for the month, which on a 100K account translates to #5,000 (USD or UK STG).
The GBPUSD buy point was never triggered but the sell triggered @ 6353 and made a low of 6269 without threatening the entry at any time!!
I hope you can see the value of the trade focus numbers.
Good trading friends,
George
Reverse use of the Trade Focus Numbers
Examples of reverse trades:
A. EURCAD
Trade focus numbers for May 15/16 - buy break of 3714 and sell break of 3641. Setup candle broke below 3641 but no trigger as no candle closed below the setup candle. We now noticed some confluence of events:
- potential bullish divergence, and
- a 1-2-3 formation
Break above point 2 gives us a potential buy 50 pips before the TFN buy trigger as long as PA does not close below point 3, where a stop should be viable. With CSM and MTF confirmation, long is taken @ 3664 and 1st PT easily attained @ TFN 3714. PA dances around this number for few candles and continues its up move for another 60+ pips
B. EURUSD
Trade focus numbers for May 13 - buy break of 4276 and sell break of 4206. The short trade did trigger for 15+ pips but reversing with a 1-2-3 formation, giving us an opportunity to consider a possible buy above the #2 point with stop @ the #3 point and the trade focus buy # as PT1, which PA easily broke through.
C. EURUSD
Another A-B-C bearish formation on the same day, May 13
Use Alert/Alarm to Monitor Focus Numbers
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