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We keep coming back to Gold and i think I am going re-name my blog as “Goldology” -:)))
But somehow, Gold seems to respect the Fib levels (and subsequently the harmonic patterns) very precisely and frequently and hence we can identify more setups on this.
Lets have a look at a certain harmonic pattern which has completed on the 4 hr time frame.
For those who are familiar with the harmonic patterns, we know that each pattern - the Gartley, Butterfly, Bat & Crab are identified by price forming at certain fib levels.
Now there a pattern that I have come across quite frequently, which does not fit into any of the above mentioned patterns.
It can losely classified as a Gartley, since it is most similar to the Gartley.
And like all other harmonics, it has very specific parameters which makes it stand apart.
So should we call it as the “Sunil” pattern????
Now, thats a thought -:))))
But till the time we christian this pattern, let us call it as the XADE pattern -
As we have mentioned earlier, a harmonic pattern is nothing but an impulsive wave, followed by 2 corrective waves, which form at precise fib levels.
For the XADE pattern, the two corrective waves (A-B and C-D) always form at the 50.0% and the 78.6% of the initial impulsive wave (X-A)
This makes it similar to the Gartley, since the Gartley has the two corrective waves (A-B and C-D) always form at the 61.8% and the 78.6% of the initial impulsive wave (X-A).
But this is where the similarity ends.
For the XADE pattern, the price target is always the 127.2% of the wave A-D…..not more. not less
WHICH is usually equal to the impulsive wave X-A.
If we label the price objective as ‘E’, then the waves XA and DE are found to be similar….which is we labeled it as the XADE pattern.
Hence we can expect price to achieve the price objective (the 127.2 of A-D & the measured move X-A) and change trend from there.
This occurs with surprising frequency, but again….always let price confirm the moves and mange the trade to reduce the risks.
Now, if this price objective is fulfilled, we could be looking at the formation of a bearish Wolfe wave….but lets take things one step at a time.
Sunil.
PS - Suggestions for a name for this pattern are welcome -:)
I think the price projection for this move comes to around $965.
Would it be possible for you to mention the target in your future posts?
Would D be a Stop loss level for an entry ? Sometimes it may break this level and resume the up-move - what does one do in such circumstances ?
Hi Sunil
I would like to thank you for all your forex teachings. Regarding a name for that new pattern you found in gold, as I lost some money on that today, I suggest to call it:
” SofarNil”!
Best Wishes
Hello Siddharth,
The pattern eventually failed and did not fulfill the expected targets.
In any case, the expected target was the 127.2 Fib level of 903.78 & the stop loss was placed just below the ‘D’ level.
Regarding the situation of price taking out the stops and then moving in the anticipated direction….well, there is nothing that one can do about it. Consider it as a losing trade and move on.
Yes, one can reduce the occurrence of such a situation by placing the stops at the correct technical levels.
Which means that the stops should not be placed at random levels, but technically correct levels which price would respect.
Sunil.
Hello Mehdad,
I appreciate your suggestion.
“SoFarNil” is not a bad idea & I will definitely keep it in mind -:)
But, a name of “SoFarGood&SoFarBad” would be more appropriate, since that is what trading is all about.
If it’s any consolation, I too, had a losing trade on this setup of Gold, but as a trader one must take the losses in stride & move on to the next trade.
There are never any guarantees in trading and let me repeat myself again -
As a trader, we use our technical analysis to determine the most probable trade. Once you enter a trade, the markets take over & it’s completely out of your hands.
BUT…you can control that one factor which IS your hands…which is money management & trade management.
Try and keep your risks as low as possible, and if & when the trade goes in your favor, manage it to get the maximum profits out of the trade.
It is the only way to make your account grow…period.
Sunil.
Dear Sunil/Hi
Thanks for your comments. Fortunately my loss on this trade was cut short by the stop-loss. I noticed that if we went one TF higher to daily, there is a short Gartley which has just now passed the B point (831.19).
Regards