A month of GBP/JPY through the eyes of ACD Methodology Mark Fishers ACD Methodology from The Logical Trader
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Friday Jan 18th 2008: 3am - 4pm EST
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Comments for Jan 18th 2008:
The chart is a little busy today as plotting the Pivot Range (in pink) with the central pivot point is right in the middle of all our ACD lines. Personally I am used to all these lines so if its too much noise I would suggest you have a duplicate chart in the same timeframe to plot your different systems to make things more clear for you to read. That being said... comparing where these lines are in relation to each other is very important in calculating the strength of any resistance or support, when they double up on each other it can increase the strength of any signals.
I really wanted to focus purely on the ACD in this month's recap of the GBP/JPY pair but here's a little extra. The failure to break into the opening range at 10am was also a point after some news that a nice head and shoulders pattern on the hourly was broken. The neckline being at about 209.50 which also just happened to be the 50% Fibonacci retracement on the hourly from Wednesday's low of 206.98 to the top of the head and shoulders formation yesterday at 212.37. A great place to go short when broken. After the level was broken, price traded down to the 76.4% level before retracing slightly to close a little higher. Nice setups like this don't happen every day.
Could the system have made you money today?:
Failure to break out of the Pivot range and the opening range which you will notice have roughly the same top and bottoms. A good A-Down, and C-Down (albeit without confirmation) early set the tone for the day. Failure to maintain price action above the Pivot was definitely a sign to go short, especially with a failed retest around 10am EST.
1. A-Down and C-Down early in the session were not tradable as there was no clear signal (no confirmation, price failed to sustain level for 15 minutes). Failed C-Down long with tight stops would be prudent in this situation, a weaker signal but a smaller trade size would be called for.
2. Failure to break stay above the Pivot would be a signal to short, below the pivot with a weaker signal or on the retest around 10am for a stronger one (Not ACD but a decent signal). Trading the pivot in this case I consider a much weaker signal as the pivot lies inside the opening range, which is somewhat of a no mans land. The failure of the pivot coincided at a level which was also a failure to maintain price action within the ACD opening range. A much better failure to trade since it was testing both indicators!
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