Here is how I Fozzy-style trade with Daily charts:
Initially it was my aim to only discuss PBs and a Fozzy-style indior, but I've since decided to show how I utilize the basic 8 over 8 Fozzy indior along with other PA indiors.
First: that works for me, maybe it will work for you also. If not, I hope this information will help especially, and others to utilize PA PBs more. Do not trade this manner without a comprehensive comprehension of what I am doing and only after backtesting and demo trading!
A few words about the standards that I like to use and why:
I am looking for”A” trades; the top, higher quality setups. There are many fantastic opportunities to waste time with'marginal' trades. I examine Weekly and Monthly charts for a'feel' for what a pair is currently performing; I trade off the Daily primarily and occasionally utilize the 4 Hour for a historical entry. (I will discuss that in a later article; for now it is all about the Daily chart).
PBs are well defined and many have their own interpretation of the indior. I like a little body (I use candles because to me they're more'visual') using a long wick; I do not have any set rules about size and proportions and so-forth, I just know what I like to view; and surely an extremely long'nose' using a little body is perfect; there's one on the attached chart. Some traders call this discretion.
Fozzy-style trading is all about trend reversal, it may be for only a day or two or it may be much longer; again the attached chart shows both (it is among my favorites, GBP/USD. Like, GBP/USD has been good to me also!) . IMO Pin Bars are also so when a PB shows up using a trade signal, I listen. But only after I've seen two days of price movement in precisely the same direction (that the PB may or may not be included in two days). A change will not be traded by me after one day of motion in the contrary direction; too risky. I will be kept out of more losers, although I may overlook a few deals. I want some momentum. I've two MAs on the chart for effect; aids me'view' the current tendency. It's nice when these near and/or cross, but that I do not NEED that. I DO NEED that the RSI/MA (Fozzy indior) lines to be closing, shut and/or crossing; that is a large area of the transaction signal. That is one of the advantages of trading Daily charts (4 hour too), there's NO HURRY, we've got lots of time to create a trade decision after carefully analyzing ALL the factors that enter our decision. One more thing: there'll likely be Fozzy-style crosses as shown on the chart, but if I really don't have some form of PA arrangement, I will dismiss the crossagain, also many excellent opportunities to take risks.
OK the chart:
June 5: potential PB, but RSI/MA not near. Wait!
June 6: spinning top, good!
June 7: Trade signal in the close of the day; Fozzy cross, MA's cross using a”Bridge”, large bearish candle=momentum (I'd have looked at the four hour chart throughout the day for potential early entry, more on this later)
June 8: 150 pip transaction which has a little S/L needed
June 8: PB reversal? Wait and watch
June 15: Fozzy cross and MA cross
June 18: Buy signal; 400 pips and small S/L
July 4: PB? Not a trade setup! July 2 candle is UP, 3rd is Down, 4th is UP......No transaction!
July 6: PB looks good, Fozzy cross potential, watching 4 hour for confirmation.
July 9: Watch the 4 hour chart and BUY, 350 pip trade, confirmed about the 10th
July 11: PB? No!
July 16: PB? No!
July 19: False Fozzy, PA does not agree with this RSI/MA crossplatform.
July 20: PB? No!
July 24: PB? Yes, confirmed throughout the daytime on the 25th. 350 pip exchange
July 30: PB?
July 31: Fozzy cross not near enough for mein hindsight I overlooked a trade, but did NOT break my rules!
Aug 1: Another PB?
Aug 2: Buy signal confirmed with all the 4 hoursmall payout, about 90 pips
Aug 3: PB?
Aug 6: PB confirmed on the four hourbut in the end of the day we've got a Dual Top with a lower close, nice PA to keep in the Sell! 130 pips
Aug 8: PB? The bosy of the candle is waaaaaay significant.
Aug 8 9: The same situation as Aug 3 6 together with the Dual Best; Aug 9 includes a Fozzy cross down
Aug 10: Sell...............but in the end of the day, is that a PB that just formed? In your profit for current fad , then wait and see.
Aug 11: Sell continues.............550 pips possible
Aug 16: PB? Fozzy indior not near enough to pick, will wait yet another day
Aug 17: Glad I waited.............amazing PB; but it takes three days for a Fozzy cross AND a MA cross AND a price break of the cap of the PB
Aug 23: Buy at the price break, fantastic momentum today, 200 pips
Aug 27: PB?
Aug 28: This is a demanding one. No Fozzy cross or shut to the Daily; the 4 hour will set you in the trade OR a break of the PB's base .
Aug 29: In case you waited, it was a loser.
Aug 31: PB? I want two days of price movement in precisely the same direction; no here! 29th was UP, 30th was DOWN, 31st was UP; no transaction!
Sept 12: PB? OKtime to”adjust the rules”. 7th was UP, 10th was DOWN, 11th. But waitthe candle around the 10th has been a two pip Doji; it doesn't count, I shall”ignore” it. And there was a Fozzy SELL on the 12th. Whenever there's a Fozzy signal and a PB, I will trade that. I am still in that trade!
Hopefully this explanation is helpful and I have not left out anything or made too many mistakes. There'll be a few questions; I will do my best to answer them. And that I shall post something later about using exactly the very same indiors and standards on a 4 hour chart. In the meantime, if this interests you, why don't you devote some time that in your own. Cheers!
Almost forgotI really do use S T levels as appropriate; that is why I have the red and blue dot indior to remind me of past levels of significance AND I will use Fib levels and retracements; but I still really don't see a need to explain that, everyone has their own way of applying them.