TheStrategyLab.com Price Action Trading Support Forum

I currently trade spot forex with the majors (EUR/USD, AUD/USD, NZD/USD and USD/CHF) on 5 minute charts with longer time frame charts such as 30/60 minute providing direction.

I use the ABCD pattern that Larry Pesavento explains in his book "Trade what you see".

I have attached a 5 minute chart of EUR/USD with my ABCD pattern analysis and possible entry/exit areas noted (11/8 evening market open into 11/9).

My entries are at fib retracements (usually 61.8 and 78.6) using candle stick patterns to fine tune the entries.

I'm listing the issues that I face in my day trading:

* Identifying proper starting points for those fibs. Sometimes, they are very obvious and sometimes, they are not.
* Trying to figure out if it is a retracement or reversal.
* After entry, concern if price would stall at the top of the fib drawn ( in the chart, point B area) or any other fib levels.
* Inability to decipher if price would move past the previous resistance area into new territories - in other words, when to let a trade run or when to exit.


I'd appreciate if you could explain how WRB analysis could help me in these areas.

Looking forward to reading the free WRB tutorial and see how I can benefit from it.

Thanks.

Hi wrblearner,

I'm going to began my reply via posting info to the book you reference fo those that may read this message post and know nothing about the ABCD pattern detailed in the book called Trade What You See: How To Profit from Pattern Recognition by Larry Presavento and Leslie Jouflas.



I don't educate traders about Fibs nor about ABCD patterns and if you're having problems identifying proper starting points for Fibonacci ABCD...it's highly recommended that you use a software that automatically plots it for you that's being discussed at many forex forums. Therefore, I'm here to educate you about WRB Analysis and I'll start with saying if you don't understand your own method prior to trying to learn WRB Analysis...WRB Analysis may not be useful to you. However, if you're having problems with Japanese Candlestick patterns...I can help you with that because it is a secondary trade method for me and I use it profitably.

Note: You can read one of my prior discussions of a old thread I had called Trading Hammers (Revisited) at the EliteTrader.com forum to determine the merits of my knowledge in Japanese Candlesticks trading. Also, if you're serious about improving your performance in Japanese Candlesticks as your signals into ABCD patterns...I recommend our Advance Japanese Candlestick Trading Report.

Now, getting back to the ABCD points...it's recommend that point A and point C occurs within a WRB S/R Zone. Point B can either occur within a WRB S/R Zone or itself produces a WRB S/R Zone. Simply, point ABCD should represent key changes in supply/demand to ensure that you're looking at key changes in supply/demand similar to what key market participants are looking at regardless if they know anything or not about Fibs or candlestick patterns. Thus, supply/demand is universal regardless how we try to cloth it with strange trade strategy names.



WRB Analysis doesn't identify retracements, reversal, trends. Instead, it tells you where the key change in supply/demand via WRB S/R Zones has occurred at within whatever you call a retracement, reversal or trend so that you can use those zones to filter (confirm) your entry or exit signals.

Therefore, WRB S/R zones or any other type of s/r levels/zones does not tell a trader if it's a retracement, reversal or trend because to do that you're really starting to traverse into your trade signals because that would be saying it's a reversal, trend will continue or it's a pullback that will eventually retrace to continue the trend. That's trade signal talk and for us to traverse into that...that's where tutorial chapter 3 can help but you're going to have to reveal the basic details of your trade signals so that I can help you to use WRB Analysis to identify retracements, reversal or trends.

Simply, WRB Analysis all by itself without trade signals does not have the ability to identify retracements, reversals or trends as it's occurring in real-time unless you're doing such via hindsight charts. Thus, to do such real-time (as it is occurring)...we need to combine such with trade signals (your trade signals).



I'm a little confused by your question. Lets see, based upon your chart, price moves higher (it's profitable) after your entry and then it stalls and retraces back below the price area that's equal to the high point of point B. It's simply, move your initial stop/loss protection into a profitable trailing stop anywhere within the first WRB that appeared after/above your entry price.

If price continues retracing down...it'll pick off your trailing stop but it will be a profitable trade. However, if price continues back upwards into that area you've annotated on your chart as "Possible Take Profit Areas"...move your profitable trailing stop to anywhere within the first WRB that appeared after the price retraced back upwards and above point B.

Next, when price enters your profit target area as you've annotated on your chart...you can either exit at a WRB that develops in your target area, exit within the range of a prior WRB or exit within a WRB S/R Zone or via a WRB that confirms it's a WRB S/R Zone. You can also keep it simple via scaling out at every WRB that appears within your profit target area shown on that chart that involves volatility breakouts (tutorial chapter 4). Yet, if price continues going higher (above) your profit area after you've exited your position...there's nothing you can do about it and you must concentrate on the fact that you enter/exited your trade accordingly to whatever trading plan you have.

Here's another tip about profit targets...lets pretend my trade signal occurred on the 5min chart and I believe for whatever reasons that I caught a trade within a developing trend...after I moved my initial stop/loss protection into a profitable trailing stop...I'll change the time frame from 5min to 15min and do my exits via the 15min chart interval. Why? Price action is always changing and we need to adapt our exits after entry if the price action changes for the worse or better after the entry. In fact, if I have a profitable trade and the price changes for the worse...I make sure my trailing stop is at a profit. Yet, if the price action improves in my favor...I'll try increasing my profit targets via increasing change the time frame to a higher time frame for my exits.



There's no holy grail to determine if price has a chance to move beyond your profit targets prior to you exiting your position. WRB Analysis can help a little with that but most of it will rely upon your own market experience. WRB Analysis helps via that it gives you the reason why a particular WRB is a key change in supply/demand and if you know that there's a chance that another reason will appear while the price action reaches your profit target area...you adjust your trailing stop into a profit stop and you then sit - wait to see if another key change in supply/demand appears in your favor to make the trade more profitable.

Lets use your chart example. With the knowledge of hindsight analysis...the Forex EurUsd or CME EuroFX futures moved much higher after your chart. The question is why did the price action move higher and was their any clues that there may be volatility spikes identified via WRB Analysis to take it higher in the early morning hours of Nov 9th Monday.

Take a look at the charts of the U.S. Dollar Index, Gold and Oil. We all know that the markets are globally interconnected. Simply, news or events within other key markets often (not sometimes) have impact on the price direction of our trading instrument especially when those other key markets are the talk of the town. Now, I'm a big fan of intermarket analysis in that after my trade entry...I like to also monitor other key markets to ensure their still insync with my trade especially when I'm near or at a profit target to help me to determine if I should exit or stay in the trade to get greedy.

Gold and Oil was moving higher along with Forex EurUsd or CME ForexFX in the early morning hours of Nov 9th Monday before the regular markets open at 0930am est. In fact, tutorial chapter 4 teaches volatility breakouts and saids nothing about trends. Yet, my market experience tells me that when the retracement after a tutorial chapter 4 volatility spike doesn't penetrate below the most recent prior volatility spike...it has a high probability chance of going higher. Thus, a trend is in place and I would stay in that trade until a retracement brings price below the most recent prior volatility spike.

Note: WRB Analysis teaches volatility spikes as swing points or strong continuation price actions.

With that said, I've now included you on the access list for the 30 day free trial and the link below is now valid for you to access the WRB Analysis Tutorial Chapters 1, 2 and 3 that represent the basic tutorial chapters. You'll have access for 30 days in which I will provide support to your questions while you merge WRB Analysis into whatever trade signal strategy you're using to help improve the performance of your trade strategies.

http://www.thestrategylab.com/tsl/forum/viewforum.php?f=61

In contrast, the advance tutorial chapters are 4 - 12 are price at $75 per chapter and you qualify for the special discount offers at the below link.

http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=5&t=165

Edit: Below is a chart of Forex EurUsd currency I've annotated to show Open WRB S/R Zones. Here's a trading tip about WRB S/R Zones...on trend days or strong directional price action days...the WRB S/R Zones may overlap but that in itself is not common.



Best Regards,
M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis)
@ http://twitter.com/wrbtrader

http://www.thestrategylab.com
Phone: +1 708 572-4885
Business Hours: 8am - 5pm est (Mon - Fri)
Skype Messenger: kebec2002
questions@thestrategylab.com

Thanks for your earlier replies to my questions.

I have a question and would appreciate your reply to this as well.

1) Assuming price is moving up.
Candles c1, c2, c3 and c4 are all moving up and c4 > c3 > c2 > c1

So, now we have a WRB candle c4.

And then, the next candle c5 is such that it is >c4. That is, c5> c4 > c3 > c2 > c1

My question is:
In the above situation, would you take only c5 as the WRB or include both c4 and c5 as one big WRB?

Thanks.

Hi wrblearner,

As noted in my conversation with SomeRandomBadger...not all WRBs are important. Thus, you cannot analyze a WRB all by itself to determine if it's important or not. Therefore, I would need to see an actual chart of such a price action you're describing because it's the price action prior to and/or after the WRB that determines if it's a WRB S/R Zone (key change in supply/demand).

Simply, in some price actions...the c4 may be important as a key change in supply/demand while the c5 is not while in other price actions the c5 is important as a key change in supply/demand while the c4 is not and then there's the rare situation where both c4 and c5 are important. However, in that rare situation where both c4 and c5 are important...you cannot merge them into one big WRB S/R Zone because the odds of c4 and c5 being created by the same WRB tutorial chapter is even more rare.

For example, I trade the Emini ES futures and it's been months since I've seen back to back (consecutive) WRBs qualify as a WRB S/R Zone via the same tutorial chapter. Yet, I have seen once in awhile in the Emini ES, forex, energies, metals and treasuries back to back (consecutive) WRBs qualify as a WRB S/R Zone via different tutorial chapters.

To see my own chart example of back to back (consecutive) WRB along with explanation of the price action...read the info at the below link (link works for those on the free trial access list).

http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=61&t=419

Last of all, as a reminder, you must now only post your WRB Analysis questions at the below link that's reserve for those taking the 30 day free trial now that you have access to the WRB Analysis Tutorial chapters 1, 2 and 3 study guide.

http://www.thestrategylab.com/tsl/forum/viewforum.php?f=61

Best Regards,
M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis)
@ http://twitter.com/wrbtrader

http://www.thestrategylab.com
Phone: +1 708 572-4885
Business Hours: 8am - 5pm est (Mon - Fri)
Skype Messenger: kebec2002
questions@thestrategylab.com