04-24-11
I moderate the chat room most trading days from approximately 9AM - 4PM Eastern. We're also getting off to an informal start a bit earlier these days, 7:30 Eastern for the people who are interested in trading bonds and and the Euro futures.
Since the room layout screenshot was posted below, I've made a slight adjustment in order to include the 3 minute Euro (6E) chart. The screenshot will be updated soon, but everything else is as discussed below.
Please remember that you do not need to duplicate my chart layout. In fact I advise against it. If you're new to this methodology, your best approach is to focus on how to incorporate the fib work into your trading. If you're using my CCI triggers, great! Ask for clarification on what I'm seeing with them at any point in time. But if you have your own trigger and trade management methodology, work with my support and resistance and you can factor in my comments on what CCI is saying regarding strength of trend. It's not productive for you to try to reproduce my Fibonacci charts and also try to learn to trade with this information at the same time. If you're interested in learning about how to run the Fibonacci work I have various study options available. But on a day to day basis, run your own trigger charts and observe my Fibonacci support and resistance in price and time.
The charts shown are created with The Fibonacci Trader ™ charting software.
http://www.fibonaccitrader.com
Click here to download a screenshot with each chart referenced by number.
Please allow the screenshot to open in whichever program YOUR computer is set up for to view image files, then zoom in and refer to the text below.
Yes, this is A LOT of charts. But you only need to watch the charts related to the security or securities that you're interested in!
For the sake of clarity, let me explain something about Fibonacci Trader charts. When a chart is created in Fibonacci Trader, 3 time frames are selected. For example, my ES 45 minute chart says "S&P Mini - the contract month - 45-135-D". This means that the data that you're seeing on the chart is actually 45 minute bar data. In the background, the program is also storing this data as 135 minute and Daily bars. The reason for this is so that we can put indicators on the chart which are working from the higher timeframe data too. The data actually shown on the chart is that first number though. But if I want a moving average or any other indicator to work off the higher timeframes and display on this chart too, it can be done easily by changing the indicator setting to "Next" or "Highest" in order to access the additional timeframes. There are a few charts in my chat room which use this feature, but the 3 timeframes show up in the title bar of each chart even if only the first timeframe is in use.
Charts 1, 2 and 4 cover the bond (ZB contract)
Fibonacci support and resistance, along with target information, are displayed for the bond on these charts.
Similarly, charts 3 and 5 cover the NQ on the 45 minute and 15 minute timeframes.
Chart 6 is a 15 minute chart of the Euro 6E contract. The daily and 60 minute charts are sent in the morning update email.
Charts 7 and 8 are our main Fibonacci support and resistance charts for the ES. Chart 7 is a 15 minute chart and chart 8 is 3 minute. The best trades are when the price pattern is in agreement on both of these charts with either higher highs/higher lows or lower highs/lower lows present. When trading opposite to the 15 minute pattern (countertrend), we use the 3 minute green extension targets and also watch for 15 minute support or resistance. When the chart patterns are aligned we’re trying for the 15 minute targets and looking for the possibility of specific 3 minute levels to serve as temporary roadblocks; places to manage the trade and benchmarks as to what sort of continued follow through we can expect. These charts also have a 34 ema and the 50/14/6 CCI. I don’t factor in these CCI readings when looking for triggers. As explained in the video reference below I prefer the volume chart based triggers. It’s nice when the time based triggers agree with the volume chart triggers though and some people are indeed using them for a slower paced trigger. Since they are generally slower than the volume triggers they’re also good for learning to observe the patterns.
Chart 9 is a 45 minute ES chart for a longer term perspective. At times I’ll post a still shot of the daily chart if necessary, but having the 3 minute, 15 minute and 45 minute charts live in the room has proven helpful particularly when we need to gauge the amount of time before Fibonacci timing ratios come into play or amount of time until we’re through them. The time based ES charts are set to regular trading hours only.
Charts 10 and 11 are my main ES trigger charts. Chart 10 takes advantage of the multiple timeframe feature of Fibonacci Trader. Price bars are 4500 volume data, the blue boxes around the price bars are 9000 volume data. There are 4500 and 9000 volume 34 emas on price. Immediately below are the 50/14/6 CCIs for 4500 volume, and below that the same CCI combination for 9000 volume. Chart 11 is a 22,500 volume chart with a 34 ema on price, and the 50/14/6 CCI combination below.
My goal is to take the shorter term (4500 and 9000 volume) CCI triggers when the longer term (22,500 volume) is either set up to trigger or has just triggered. Using a combination of timeframes can allow you to get in on a longer term run while also pinpointing an entry to avoid taking too much heat. The volume charts are set to 24 hour.
Other support and resistance factors are visible on these volume charts. On the 22,500 volume chart there's a HiLo activator, simply a moving average of the highs and lows of the price bars since we find that these can very play a role. And on the 4500/9000 volume chart there's a set of Dynamic Trio indicators, a Gann based indicator which tells us when trades will be smoothest as all timeframes are aligned. The Dynamic Trio is proprietary to Fibonacci Trader and you can ask more about how we use it in the chat room. There are files discussing the use of the HiLo Activator and Dynamic Trio on the Fibonacci Trader website too.
For an overview of the CCI triggers please see this page on my site:
http://www.mjbraun.net/Symmetry-Triggers.htm
There’s a pdf file with the patterns involved in all 4 triggers, and the recording covers how we use these together with symmetry. If you’re interested primarily in the triggers there’s more of a focus on that in the second half of the video.
Chart 12 is a Bolze template chart of the ES using 943 and 2828 tick data set to regular trading hours. More information about the use of this template can be found here:
I’m not using that chart for triggers unless I’m looking for a very short term trigger because of an extremely clear reversal or continuation pattern on the fib charts. Since I’m mostly looking for trades with solid potential for several points gain, my primary triggers are relatively slow. On occasion a fib based pattern will come up that can have good potential for a solid continuation or reversal, such as a Gartley or a Crown, and I’ll want something to get me in faster so that I can get to breakeven before facing intervening support or resistance. If other factors are in place I will use the trigger from this chart. I also have a 50/14/6 CCI combination here since on occasion my 4500/9000 combination is too extended (way above +100 or below -100) to trigger clearly. This usually happen under only 1 very particular circumstance which I discuss in the chat room. In that case I’ll use the CCI on the 943t chart.
Other people will use the Chart 12 template trigger as their primary trigger if they are scalping. That’s fine as long as there’s appropriate Fibonacci based support or resistance in place. The tick chart will trigger quickly and plenty of times a room member will be out or at breakeven with 6 or so ticks while I’m still waiting for my CCI triggers. It’s all a matter of how many entries you’re looking for in 1 day and whether you’re more comfortable with a faster or slower trading pace.
Chart 13 is a ES 13 minute chart set to 24 hour. This chart has several purposes. First, it shows us to expect indecision and chop when price is trading between the 34 ema on the 22,500 chart and the 34 ema on the 13 minute chart. Also, if we have a clear setup involving all of the volume charts and the 13 minute is set up to trigger in the other direction we know to watch for the 13 minute trigger to fall apart as part of the confirmation of our multiple timeframe volume based triggers working. And finally, perhaps most important: When the 22,500 volume and the 13 minute both trigger at or close to the same time, we know that we have a fantastic set of triggers with the strong likelihood of major follow through. These are the kinds of trades that we want to do our best to hold!
Charts 15 and 17 are 45 and 15 minute YM charts. While we have a few people trading YM, these charts also serves to show whether there’s confluence between the price action on ES, NQ, TF and YM. It always helps when the markets are in agreement, and sometimes one will pause when the other is at a major Fibonacci level too. Until recently we also had a 3 minute YM chart plus a set of volume and tick trigger charts. I’m not trading YM now though, and it stands to reason that anyone who is trading it would have their own trigger charts running. If you’re interested in trying the CCI trigger combinations on YM volume charts, we were using 2100 volume for longer term, 700 and 350 for shorter term. I know there are people doing well with this combination. The Bolze chart YM settings for a short term tick chart are 144/432/1000.
Chart 14 represents “the spread”. That’s up volume vs. down volume on the NYSE. This is shown as a histogram and if you’d like to set up a similar chart in Fibonacci Trader there is a video on their site which will show you how to do it in about 90 seconds. On this chart I’m mostly looking for a clear trending pattern. Continuing to make new lows below zero implies a strong degree of interest in additional downside and vice versa for upside. There are a few other things to look for on this chart as we discuss in the chat room. This is set to 1 minute.
Chart 16 is a range chart of the NYSE Tick. I like to see a pattern here too, especially on additional entries in a trend. Higher lows in an uptrend, lower highs in a downtrend. Watch for that pattern to break as an indication that the market may be reversing at least on short term. Also we look for divergences at extremes in the 1000 – 1200 range. Price bumping up against a major upside target extension while the tick is starting to make lower highs is a good sign that the target will hold. As with the spread, there are other things we look for here which can be discussed in realtime in the chat room.
Chart 18 covers another market internals factor. The data displayed on the price area of the chart is number of Advancing NYSE issues. The CCI is set to factor in Advancing issues, Declining issues and Unchanged issues. This provides added confirmation on the strength of market directionality. Divergences here can be strong indications that reversals are in store.
Charts 19 to 24 are similar to the ES charts, but they're based on TF, the Emini Russell symbol. I'm sure that if you've read through the ES description above, you'll understand how these charts work too. Please ask me if you need any clarification.
Now for some frequently asked questions about the charts:
Why are your ES and TF volume charts set to 24 hour but your Fibonacci Charts are set to regular trading hours?
It’s accepted practice when plotting Fibonacci support and resistance to focus on the time of day when there’s more volume on the security in question. On the stock index futures this would correspond to regular trading hours. Usually when a level projected from an overnight swing is tested, it will retest during the trading day and is less likely to hold in any case. The volume charts are used for triggers and they are far more reliable if they’re not subjected to gaps between yesterday’s closing price and today’s opening price.
How did you come up with these figures for the volume charts?
The original index contract we focused on with these volume chart triggers was the old mini Russell contract, the ER. A lot of study and testing went into coming up with the most effective figures. When it came time to focus on the ES, we started by multiplying those ER volume figures by the factor of the difference between ER and ES volume, then did a great deal of additional fine tuning. Many thanks to ECI_Ed for his work on backtesting various volume figures.
The same applies for use of the 34 ema and 13 minute chart; lots of study, trials and testing.
Why do you use THIS retracement level instead of THAT retracement level?
I use the levels which I’ve studied and are comfortable with, and which allow me to read and interpret the chart in a way I’ve found is productive. I’m not saying that it’s THE right way, but it works for me and it also allows me to interpret price patterns for you. While I do experiment with other levels and take notes on the results, changes to how I approach this aspect of my analysis must be made slowly and very carefully.
Do I need to reproduce all of your charts in my own charting platform?
Absolutely not. Focus on the trigger and trade management charts that you’re comfortable with, whether these are the trigger charts that I’m using or another method. Look to my charts primarily for the fib work and if you’re learning about my triggering methods and I’m pointing something out. You don’t need your own fib charts in the chat room unless you’re more comfortable running some of the fib work yourself, perhaps on other timeframes than I’m following. If you’re working on learning about the fib work yourself, then yes you need to match those charts too if you’d like to reproduce my levels. But keep in mind; it’s very hard to learn about how to do all the fib work, interpret it, and trade using it at the same time. One step at a time is the best approach!
That's a lot of charts you're showing. Do I need to watch them all?
They're grouped to allow you to focus your attention where you'd like. If you're only interested in the ES, for example, you can resize the camera window in the chat room to only show you the ES charts. If you're using your own triggering techniques you can focus in even further and just display my ES Fibonacci charts.
And finally: Why aren't you calling trades?
Various chat room members use my Fibonacci work in different ways. Some are following my CCI triggers, and at times I will walk through a trade that I'm involved in. But others are working from different timeframes or with different methodologies. For example, I'm almost exclusively a trend trader. I look for a pattern of higher highs/higher lows for longs, wait for a pullback to support and then take a buy trigger. Others who are more adept at countertrend trading may wait for an upside target to be met and will then take a SHORT down to the support where I'm looking for a buy. In the past when I emphasized "we're looking for longs here", it was very disruptive to the members who were already short or considering a short. Also since there are several trading strategies used by various members, individual traders may already been in a trade which I'm considering or still waiting for confirmation based on their own strategies. My role is to provide the best possible support and resistance which I can find, and explain the ramifications as far as targets if these levels break. In addition I do the best that I can, given time constraints, to explain the triggering methodology I'm using personally.
An example of another triggering and trade management method used by some of our members can be found on our forums:
http://mjbraun.net/Forum/index.php?board=20.0
Don Huntsman has been very generous in documenting his method in a manual which can be found near the top of that board, and he does his best to answer questions on the forums and in the chat room.