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Testing time, Day 2 UPDATE

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    Testing time, Day 2 UPDATE

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    I wrote a post something like 4 pages, and then when I got to the end of it, I realized that this post really was a mess and instead, I’ll try to tell you about stuff in a bit shorter and simpler manner.

    Today I tried those 4 templates I brought out in my previous post, I used 15-min charts and 3 pairs – GBP/USD, EUR/USD and EUR/GBP. To shout out loud, I think EUR/GBP in most cases might be pretty useless pair to follow. 5 hours ago I thought that it would go up but...well, the thing is that it didn’t move at all. Only within ca 10 pip range and if I had made a a trade with this pair then right now I would have lost just the spread as the price is the same as it was 5 hours ago. That’s for one.

    Before I go into deeper analysis of today and such, I also need to say that my 2nd and 4th templates are too similar. And I have redone my templates now. Indicators that seem to be the best are Aroon, Bollinger bands, RSI, Williams %R and maybe sometimes also Parabolic SAR. I will also keep Starc bands. I will also keep stochasic oscillator. Hmm, so pretty much everything, just need to reorganize things. And I believe two templates are good enough for now. Previously I tried following 3 pair, 4 charts for all of them, nah, didn’t look right. Hmm, actually I’ll add 3rd chart as well. Never mind :D

    Template One

    - EMA, 50
    - Aroon
    - Bollinger bands
    - Williams %R
    - RSI

    Template TWO

    - EMA, 50
    - Starc Bands
    - Parabolic SAR

    Template Three

     - EMA, 50,14,9,5

    Now, what happened today with EUR/USD and GBP/USD and could those charts have predicted it all? Where there any visible patterns that could have confirmed it?


    Firstly, so that you’d understand, the yellow line on Template 1 is 50-period EMA, red lines are bollinger band, others names are on the chart. On second template dark red is 50-period EMA, dots represent Parabolic SAR, two red and one white line in the middle are starc bands. And on template 3 the red line is 50 EMA and blues, from darker to lighter, are 14, 9 & 5 EMA.

    Chart 1

    At 12:30 Aroon gives a bullish signal. Generally it was right, however, one candlestick with a very small body ranged between ca 60 pips thus it would be good if we had a good stop loss in place there. As even though our initial signal was good, it was a bit premature. So using a very tight stop loss here and entering our trade again in ca 15 minutes might have been a good idea. We would have taken ca 30 pips. Note that %R indicator incdicated oversold sitation initially, but after the ugly candlestick (called spinning tops) %W now confirmed Aroon and once the top had been reached, %R again indicated overbought market giving us a sell signal.

    Around 16.15 lower bollinger band penetrated the price, but not the candlestick body but just lower shadow. %R sort of predicted that and it could have been good time to buy once it had been penetrated, but with a rather tight stop. And from there as well we could have taken ca 20 pips. Interesting here is that the Aroon first showed possible strong bearish momentum, but once lower band had pentrated the candlestick, both Aroons started moving in the same direction side by side thus preddy much making itself not too important indicator for the time being.

    Now, chat about Chart 2?

    Chart 2 didn’t really give us any good indication of what might be happening – the price went up almost to the higher starc band as well as to the lower starc band. Parabolic SAR, even though it could have gives us something to think about, it wasn’t confirmed by RSI from the first chart.

    And what about Chart 3?

    At 12.15 it could have given a bullish signal as the 5 EMA crossed both 9 and 14 EMA and then eventually also 50 EMA. At 15.00 it did the same again giving a good bearish indication. Nothing else really predicted the preceeding downwards movement as the simple EMAs.

    Is there anything else that could have predicted that even before 15:00? At around 14:30, if we would have looked just a bit back, 24-36 hours then the price had formed a triple top. 16:15 also short-term tripple bottom is visible.


    Chart 1

    We didn't really get any signals before 13:30 when lower bollinger band touched the price, 15 minutes later reached a low of 33, %R was on its way down as well, thus 13:45 might have been a good BUY signal and made us up to 30 pips. 14:45 we get a BUY signal from Aroon which however isn't confirmed by anything else. And 15 minutes later the two aroons start to move in the same direction indicating a moment of indecision.

    Second chart?

    14:15 price was close to upper starc band thus could have given a sell signal but it couldn't have been confirmed.

    Chart 3

    At 14:15 gave a buy signal followed by a sell signal at 15.15

    All in one it looks like it will be very difficult to set stop losses, but I think I will go the road of really tight stop losses. We'll see tomorrow.

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