FOREX Holy Grail
THE HOLY GRAIL
During the trading day you can hear the specific terms such as "Buy the Grail" and "Selling the Holy Grail." How to become a tradition in the community of traders, "The purchase of the Grail" means "bottom", meaning the place where it can be based pickup. "Sale of the Grail" is an opportunity for a successful short sale. This refers to the technique of the Holy Grail, one of the benefits of trade practices for all time intervals, from Linda Bradford.
The basic concept is not new. It is widely used by those who trade on trends moving average. The key here is to buy on a pullback established uptrend or sale on the correction of the established downward trend, as well as to avoid trading in the channel. Linda uses a 14-period ADX to determine the strength of a trend, then it uses a 20-period exponential moving average (EMA), to identify entry points and support. When the ADX rises above 30, it uses some of the criteria for purchase, when the price retraces back to the 20-period EMA. This concept is good for entry points both upward and downward trend in
principle of establishing a method of the Holy Grail takes advantage of the rollback to go in the direction of an existing or pop trend. "Retracement" - a word usually indicates pullback within an existing trend the language of technical analysis. Figures called flags and pennants were long identified Richard W. Schabacker in his book "Technical Analysis and Stock Market Profits". Later, Robert Edwards, along with John Magee, popularized in a book "Technical Analysis of Stock Trends". The key to the flags and pennants - the fact that they are areas of consolidation and, therefore, should appear on diminishing volume.
Linda technique combines the use of classical figures chart with ADX and moving average. In our experience with the technique of the Holy Grail, the requirement that the ADX was more than 30 - Not obligatory, if it rises from its minimum. We have improved the technique of input by using the method Dunnigan Bar Count.
First of all, we believe that the trend ADX is more important than the absolute level. LeBeau and Lucas also share this view. While the trend is rising ADX, we will seek to roll back to the 20th EMA as an entry point. Second, we noticed that if the level of ADX above 50 - the trend is approaching its climax and it may be ending, we tend to stand aside in such circumstances. Third, we draw attention to the flags in the diminishing volume.
Example # 1
In this example, we use a daily chart of Lucent Technologies. From the peak of April 7 has begun to consolidate. Please note that the volume and the ADX began to fall, as price formed a triangle. May 12 LU tried to break through the downward trend indicated by the gray line on the volume. It was met the next day, the sales and formed a key reversal day, creating an intraday high, but closed below the close on May 12. Played on the breakthrough were discarded because the LU has fallen back into a triangle, and the downtrend line was adjusted to a new position (blue line). June 4 LU tried again on the volume break the downtrend line, but the next day, it was again greeted by sales. Notice , the ADX was sideways rather than down.
Buyers in the presence of a bull flag have two choices. Aggressive should place a buy order above the high of each "downstream" (Lower low, lower high compared to the previous day) until the order is filled, the stop-loss just below the low of the day when the order is triggered. Conservative players must place a buy order above the high of the first day of the breakthrough namely, June 16. Once the order is filled, the initial stop is placed just below the low of June 16. Traders could then follow the LU, using the method Dunnigan Bar Count Stop
Example # 2
's intraday example seen in a very liquid instrument, S & P futures contract. On the morning of July 19, September S & P made a Trader Vic 2B double peak and the market immediately went through 20EMA5 down to 1421. Over time he reached 20EMA5, sellers in the 5 - and 15 - minute were ready to sell on weakness in 1425. It shows us the first sale of the Grail. Aggressive traders can enter, placing a stop order to sell under the ascending bars, to enter into the trade. The second is based Grail was exactly the same as the first. Third and fourth were more complicated. We'd stopped in the third with a small loss and were not included in a fourth, as an opportunity to reverse the trend (test Trader Vic 1-2-3). Notice , every time the market fell by testing at least before the last bear flag, the goal was achieved
Example # 3
In this example, S & P closed at its low of the previous day. In overnight trading on Globex, the high was 1296.60 with a minimum at 1283.60. Since many traders believe that these points are important support and resistance levels, we mark them as "anchor", along with the minimum of the previous day at 1283. S & P was in clear downward trend, but opened with a break up (data not shown Globex on this chart) and made three 5-minute candles rising (Higher highs and higher lows relative to the previous bar). We started the day by drawing a horizontal line at 1283, with the potential installation of Trader Vic 1-2-3.
When the movement reached a level of resistance (Defined by a maximum of Globex to 1296.60 and the 20-period exponential moving average on 1297.44) and did not go higher, were found sellers. When at least a third ascending candles - 1293.50 (White formed a shooting star, indicated by an arrow) was broken, it was a signal to become in short, expecting that will be tested at least 1283. Sale of the Grail was founded.
trade was to be short immediately after the breakdown 1293.50 with an initial stop loss at 1295.80, the morning peak, with the expectation of profit in 1283. The risk was 2.3 points against profit of 10 points, the ratio of 4:1 is better. Using a conservative trailing stop, placing it on top of each "down" (Lower high and lower low relative to the last candle) candles We have closed trading on testing a minimum, when there was no lower.
Subsequently S & P has done 2B bottom (Can be traded in the same manner as above, but vice versa) and the market jumped to the maximum of the day, attracted by the magnetic effect of buy stops imposed by mechanical systems that are bought in the first hour of the breakout. What it was morning!
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Translation 2000 Investo.ru