Entry Zones III

BarroMetrics Views: Entry Zones III

We were looking at the UK 100 yesterday when I said that for Habits of Success traders, they usually look at the weekly for trend identification and zones. So let’s have a look at the weekly, Figure 1 (the yellow lines are the 1-period swing).

We see that from ‘0’, the instrument had an uptrend. But a ‘B’, we broke the low at ‘X’; so, whatever we had in the weekly, we did not have an uptrend. In this situation, there are three possibilities:

  • The start of a downtrend – we need to see lower swing lows, lower swing highs to confirm.
  • The start of a sideways pattern – we’d need to see a turn down from the Primary Sell Zone of ‘A’-‘B’ as a preliminary confirmation.
  • Β The resumption of the uptrend. For this to be the scenario, we’d like to see a line turn on the monthly, preferably to monthly support followed by a monthly line turn up. The line turn up would suggest a resumption of the monthly uptrend.

Figure 2 shows the 1-period swing on the monthly.

What the monthly shows: a sideways pattern, with a pullback to the Value Area High [VAH] (support), followed by a bounce.

Normally I would not trade for a move up from there – for me, the reward:risk is just not there. To go long, I’d prefer to wait for an upside breakout (i.e. a move above 6950 and retest). The reason is in a sideways market, the Primary Sell Zone is usually a rejection zone for a move to the Primary Buy Zone.

As a weekly timeframe trader, I’d be happy to go short at the monthly Primary Sell Zone on a setup and entry on the daily timeframe.

But let’s say John has different reward:risk profile that would lead him to go long at ‘S’, what be the thought processes?

  • Trend up, looking for an upside breakout i.e. if we are long and the upside breakout occurs, we are looking for the uptrend to continue.
  • The zone is the VAH at 6076 to 6077.
  • (turn to Daily chart, Figure 3) Setup – a contraction setup at the VAH; the entry would be the following bullish conviction bar. If we entered at the close, entry would be 6187; stops would be below 6010.

ftse-john-weekly.png

FIGURE 1 Weekly UK 100

ftse-john-monthly.png

FIGURE 2 Monthly UK 100

ftse-john-daily.png

FIGURE 3 Daily UK 100

8 thoughts on “Entry Zones III”

  1. Hi Paul

    Yes.

    But because John is HOS and not Barros Swing, he is unfamiliar with that ND. I mentioned only the setup familiar to him

  2. Hi Ray,
    But, I learned the term “Negative Development” from you during HOS 2011. πŸ™‚

    Remember during one session, I asked you if there is a negative ND, would you enter a trade.

    You “forced” me to answer the question if I were forced to enter a trade then, “Will I buy or sell now?”

    After which, it caused a lot of confusion from the students.
    – You taught us not to wait for retracement before after a breakout, but …

    My experience with the course-mates is that, they do not appreciate the importance of ND.

    Even if John is not familiar with ND, if he could identify and draw the Key Reference Points/Lines, would it help him tremendously in his trading?

  3. Hi Paul

    HOS changed quite a lot since you took the course.

    I reduced the plan’s content as a way of ensuring the attendee learned to consistent apply the trading plan and risk management rules, as well as maintain their journals.

    Since I started the school,my outcome was to turn 70% of the attendees into successful traders. At the HOS level, I did not attain my objective. Hence the change in content.

    The second last HOS did suggest I had found the right combination, but alas, for personal reasons, I saw fit to close down Singapore. Such is life.

  4. Hi Ray,
    It’s great that you have found the right combination.

    How about doing HOS Webinar?

    It could end with a final local session, conducted by you or your trainers.

    But HOS Follow-up would ensure the consistent application and success of the HOS Graduates.

  5. Hi Paul

    I’ll think about it. The problem with webinars is they don’t go over well in Singapore.

    A follow-up using a club-type structure is on the drawing board for Market Profile attendees; no plans for a new HOS, at least at this stage.

  6. Hi Ray,
    1. Recently, Kathy Lien did such webinar for Singapore Forex traders!
    – 5 webinars + 1 live session in Singapore

    2.”A follow-up using a club-type structure” is in my mind, though I did not mentioned it previoulsy. πŸ™‚

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