Initially it was my intention to just talk PBs and a Fozzy-style indior, but I have since decided to demone how I use the basic 8 Fozzy indior with other PA indiors.
First: that works for me, maybe it will work for you too. Otherwise, I hope this info will help others to use PA, and notably PBs more. Do not trade this manner without a thorough understanding of what I am doing and just after backtesting and demonion trading!
A few words about the standards I like to use and why:
I am looking to get”A” trades; the very best, high quality installations. There are too many good opportunities to waste time with'marginal' trades. I look at Monthly and Weekly charts for a'feel' for what a pair is performing; I trade off the Daily mostly and occasionally use the 4 Hour to get 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 this indior. I enjoy a small body (I use candles as to me they are more'visual') using a very long wick; I do not have any set rules regarding dimensions and percentages and so-forth, I just know what I like to view; and surely an extremely long'nose' using a small body is ideal; there's one on the attached chart. Some traders call this discretion.
Fozzy-style trading is all about trend reversal, it may be for just a day or two or it may be much longer; again the attached chart shows both (it is among my favorites, GBP/USD. Just like , GBP/USD was great to me too!) . IMO Pin Bars are also about trend reversal, so every time a PB shows up using a Fozzy-style trade sign, I listen. But only once I have seen two days of price movement in the exact same direction (the PB may or may not be included in two days). I won't trade a change after a single day of motion in the contrary direction; overly risky. I may overlook a few good deals, but I will be kept from more losers. I need some momentum. I have two MAs on the chart for visual effect; aids me'view' the current trend. It's nice when these close and/or cross, but I do not NEED that. I DO NEED the RSI/MA (Fozzy indior) lines to be shutting, close and/or crossing; that's a large part of the transaction sign. That's one of the advantages of trading Daily charts (4 hour too), there's NO HURRY, we have plenty of time to create a trade decision after carefully analyzing ALL the factors that go into our choice. Yet another thing: there'll likely be Fozzy-style crosses as shown on the chart, but when I don't have some form of PA agreement, I will ignore the cross; again, also many excellent opportunities to take unnecessary risks.
OK the chart:
June 5: possible PB, but RSI/MA not close. Wait!
June 6: spinning top, good!
June 7: Trade signal in the close of the afternoon; Fozzy cross, MA's cross using a”Bridge”, large bearish candle=momentum (I would have looked at the 4 hour chart during the day for possible early entry, more on this later)
June 8: 150 pip transaction with a small S/L needed
June 8: PB reversal? Wait and watch
June 15: Fozzy cross and MA cross
June 18: Buy sign; 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 possible, watching 4 hour to get confirmation.
July 9: Watch the 4 hour chart and BUY, 350 pip commerce, supported on the 10th
July 11: PB? No!
July 16: PB? No!
July 19: False Fozzy, PA doesn't agree with this RSI/MA cross.
July 20: PB? No!
July 24: PB? Yes, confirmed during the day on the 25th. 350 pip exchange
July 30: PB?
July 31: Fozzy cross not close enough for me; in hindsight I missed a commerce, but did NOT break my rules!
Aug 1: Another PB?
Aug 2: Buy sign confirmed with the 4 hour; small payout, about 90 pips
Aug 3: PB?
Aug 6: PB supported on the 4 hour; but in the end of the day we have a Double Top with a lower close, pleasant PA to keep in the Sell! 130 pips
Aug 8: PB? No more the bosy of this candle is waaaaaay overly significant.
Aug 8 9: The same scenario as Aug 3 6 together with the Double Best; Aug 9 includes a Fozzy cross down
Aug 10: Sell...............but in the end of the afternoon, is that a PB that only formed? in your profit for current fad, then wait and see.
Aug 11: Economy continues.............550 pips possible
Aug 16: PB? Fozzy indior not close enough to decide, will wait one more day
Aug 17: Glad I waited.............amazing PB; but it takes three days to get a Fozzy cross AND a MA cross AND a price break of the cap of the PB
Aug 23: Buy at the price break, good momentum today, 200 pips
Aug 27: PB?
Aug 28: This is a tough one. No more Fozzy cross or even close on the Daily; the 4 hour will put you in the trade OR a break of the base of the PB during the day on the 28th.
Aug 29: In case you waited, it was a loser.
Aug 31: PB? I want two successive days of price movement in the exact same direction; no more here! 29th was UP, 30th was DOWN, 31st was UP; no transaction!
Sept 12: PB? OK, time to”adjust the rules”. 7th was UP, 10th was DOWN, 11th was UP. But wait, the candle around the 10th was a 2 pip Doji; it does not count, I shall”ignore” it. And there was a Fozzy SELL on the 12th. When there is a Fozzy sign along with a great PB, I will exchange that. I am still in that commerce!
Hopefully this explanation is helpful and I have not left out anything or made too many mistakes. There will be a few questions; I will do my best to answer them as time permits. And I will post something later about using the same indiors and standards on a 4 hour chart. In the meantime, if that interests you, then why not spend some time researching that in your own. Cheers!
Almost forgotI do use S T levels as appropriate; that's why I have the red and blue dot indior to remind me of past levels of importance AND I will use Fib levels and retracements; but I do not see a need to explain that, everybody has their own way of employing these.