A month of GBP/JPY through the eyes of ACD Methodology Mark Fishers ACD Methodology from The Logical Trader
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Wednesday Jan 9th 2008: 3am - 3am EST
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Comments for Jan 9th 2008:
Another day that the market seemed to pay attention to my ACD lines, not long after the opening range lines were drawn we immediately dropped through the A-Down, and quickly through the C-Down in true GBP/JPY style leaving us little time to formulate a confirmation signal. Being a C-Down Day we should have expected a downward bias and that is what we got. Multiple retraces to the C-Level, A-Level and even the Opening range late in the day provided plenty of opportunities for pips on the short side.
Could the system have made you money today?:
1. Playing by the rules we would have missed the good A-Down trade due to the speed at which it broke and proceeded to break the C-Down in the same 5 minute bar. By the rules your confirmation of A-Down is when price violates and sustains a break for a period of half your opening range (I use 1st 30 minutes for currencies so confirmation is 15 minutes).
2. First good trade opportunity is at the first retest of C-Down around 4:30am. You got confirmation just prior to the spike and with the break of the C-Level you have a downward bias on the day. So with that in mind you would either boldly trade a bounce off the C-Down with a tight stop or pass on this one.
3. With a downward bias (due to C-Down being breached) you may have traded another bounce off C-Down just before 6am. By the book Mark Fisher states your stop should be beyond the other side of the opening range. I think for currencies that's not close enough, and should either be tight or at least beyond the next line of resistance such as the A-Down above. A tight stop would have stopped out, but a stop beyond A-Down would have survived. The position of your stop or the timing of where you entered would determine the success of this trade, which would have netted you some great pips on the run down for the rest of the morning.
4. Seeing as how the last run up blasted through C-Down I would have waited for a test of A-Down rather than trading another bounce of the C-Level. Depending on the entry we would have gotten some decent pips taking profit at the C-Level once again.
5. A second test of the A-Down I would sit out and watch price action rather than jump into another trade. Indeed the A-Level was broken and we eventually saw 3 opportunities to trade bounces off of the opening range.
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