First of all, let me say that this is a 15 minute chart. That's all we are using for analysis.
No daily charts, no 4hr, just a 15m chart.
So, you have probably guessed, we are looking for short-term trading opportunities.
I won't go into great detail about the financial side, we'll deal with that later, but to save some of you longer-term traders the bother of reading further, the system works like this....
- We are looking for trades that last between 2 minutes to 2 hours. That's it!
- I will be demonstrating how you can place your trade then go get on with your life.
- The downside risk on each trade is 1.25% and the upside profit potential is 3%. There are parameters between the two extremes, which will be discussed later, but those are the basics.
Let's take another look at the chart and I will run the indicators by you
Forget about the green and red thing on the left for now. I will cover that with entry/exit rules later.
For now let's look at the system...
This system takes into account a few different things. It's in fact a few different systems combined into one.
Once mastered it will prove to be a very powerful weapon.
It looks at momentum, it looks at volume, it looks at trend, it looks at price actions, and in many instances it gives 'clues' to the future.
The main indicators on my charts are moving averages and oscillators, so lets discuss those first.
The red average is my 20 exponential which shows me the short term trend
The blue is my 80 exponential which shows me the medium term trend
The lilac is my 320 exponential which is my long term trend
As the chart suggests, the red has just risen above the blue suggesting the short term down trend has just become a short term uptrend.
These are the things I am looking for when I am trading. I am not a scalper looking to make 2 ticks here and there, I am looking for a short term which will move at least 8 ticks and preferably 25.
Why 8 and 25?
Wait and see! First things first! Patience, Patience!
You'll also notice a light green moving average. That's a 7.
You may be asking why 7,20,80,320
Vey simply, these are multi timeframe moving averages. I can see the 5 minute chart, the 60m chart and the 4 hour chart all from my 15 minute chart without having to change anything.
The 7 ema is the 20 ema from the 5 minute chart.
The 20 ema is the 20 ema from the 15 minute chart. (Obviously)
The 80 ema is the 20 ema from the 60 minute chart.
The 320 ema is the 20 ema from the 4 hour chart.
When you see the 4 bunched up nicely in colour formation there is a very strong possibility of a good solid move about to develop.
As you can see the 7 is now above the 20 which is above the 80 which is above the 320. This could rise quite strongly later today. I will post another chart later this evening to show what happens.
Next indicator is the MoneyFlowIndex or MFI below in pastel pink.
This is an oscillating indicator, similar to the RSI but it also includes volume.
To give you an idea on how I read it there's a light blue moving average added to the indicator and if the pink bar is above the blue m.a then there's money pouring into the Yen signalling strength and if it's below the blue m.a then there's money pulling out of Yen, signalling Yen weakness.
The next indicator is the RSI, which allows me to use trendline analysis and to look out for divergence patterns emerging.
The large green dotted line accross the centre is the daily Pivot Point (PP). Above it in lighter grey is the Middle Resistance One (MR1) and below, again in lighter grey is the Middle Support One.
General rule of thumb is trade with the Pivot behind you.
A lot of this may sound complicated at first glance but this is just a little insight. I will simplify things one by one as time goes on but for now that demonstrates the basis of the system.
I will break it down in my next post.
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