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Ford to move higher after rally from recent hurricanesRecently, I have been trading auto manufactures, steel and home building materials. We've looked at GM and LPX. They received a boost from the September hurricanes. Here's another one, Ford. We see a rally and higher high on heavier volume yesterday. RSI is showing good strength. Looking at its Renko chart, there appears to be price resistance at 12.64. News of higher profits coming off of the hurricanes caused a significant gap up in price. Expect that gap to fill and the price to fall to 12.09. This is going to be my buy point with a short-term target of 12.64, a 4.6% increase. My stop would be at around 11.86. For now, I'm on the sidelines... Here's the renko chart I used for finding s/r levels: Happy trading!
NYSE:F
by Brandon50115
LPX to fall 9% over next weekAside from the expected strong Q4 earnings, due to the hurricaines, we should see LPX fall 9% to 25.11. This current rally isn't doing well, showing a small 3-day consolidation, ATR oscillator confirms a weakening in range after a strong move (range strengthened) down. RSI found support at around 51, this is rather bullish, however price action gives too many indications of weakness on this rally. We could be on an "a" correction wave and have just completed a 5-wave cycle. Note that on 7/18, there was a longer than usual correction, lasting more than a month and pushed the RSI below 50, bearish. Corrections have become smaller and smaller, this is unhealthy price action for a trend. More and more people are holding, there's no healthy selling. If there is no selling, the price can't move higher. Also setting up for a correction on its monthly chart, as well Take a look at this daily Renko chart for S/R and the trendline
NYSE:LPX
by Brandon50115
Thoughts on using Renko Charts (cont.)This is based on my continued study of Renko charts. What follows are thoughts on how I would change my trading behavior and not because I've been successful making $$$ trading this strategy. Also, parts of this is original thoughts but the initial Renko strategy is based on work and ideas shared by @GcNaif. I currently have a short position in Wheat based on these concepts (an OTM put for May) but any proposed trades I may state here will just be virtual via my optionsxpress account. Option trading seems like it would be difficult to profit from using this strategy unless you deal with options that are ATM. This strategy is evolving in that I'm trying to change my decision logic from predictive to reactive. The Renko strategy is well suited for this type of trading. Note, to use Renko Intraday charts on TV, you have to pay for a higher Pro subscription. Charts My current strategy is to use the 4hr chart with either a 3 or 5 minute Renko. The blksz will vary based on the market. I have some examples below. If your trading strategy is that of a scalper, then maybe a smaller blksz will be more appropriate. For example, a recommended size for crude oil is 10 pips but a scalper may want to use 5 pips. By having the 4hr SxS with the Renko, you can see the actual price behavior for a block which may influence your timing of when/where to take a position. Moving Averages On both the 4hr and Renko charts, I use the following: EMA 50/100/200 MA 20 DEMA 12/20 I use the 50/100/200 EMA to determine overall trend and also to discover points off support and resistance. Indicators TSI 4hr 14,4,3 / Renko 10,4,3 TSI (True Strength Index) Used to identify divergence between strength and price in addition to identifying potential buy or sell points at or near the 0 line. Stochastics 4hr 14,3,3 / Renko 10,3,3 Used to identify transitions between overbought (cross down over 80) and oversold (cross up over 20). Additionally, during a prolonged move, stoch can pull back to the 30-50 area before returning back to the direction of the trend DMI 4hr 14,14 / Renko 7,10 Used to determine the trend strength and somewhat the direction. When the ADX is at or below 20 and dropping, then there is no trend and price can be consolidating. During this time, identify a trendline, channel, pattern that may contain the price consolidation and wait for a breakout from it. The +/-DI can be used to verify a trade. Basically, when +DI crosses up over -DI, the high price at this cross is the buy trigger and vice versa for a -DI and sell trigger. RSI 4hr 14 / Renko 10 MA of 9 and WMA of 45 PSAR Renko .09, .09, and .18 Used to identify potential areas to place stops as market moves Williams Fractal Renko (default value) used to Identify when potential change in trend of price is occurring Initial Strategy 1) Fractal appearance 2) DEMA 12/20 crosses with 2 blocks based on direction of trade 3) Stoch cross confirmation from oversold for buy and overbought for sell If all three of these appear, then take a position until next fractal Additional Filters 4) Only take a position with the trend based on the 50/100/200 EMA 5) Take a position on cross of +/-DI using the cross block's high or low as entry point based on buy or sell 6) Don’t take a trade if ADX is dropping through 20 until signs it his beginning to rise with the DI in direction of trend Note: The ADX should remain at or below 20 for at least 6-10 blocks to make it a valid consolidation. Others, it is possible that it begins to move back up indicating that there is not consolidation but trend is strengthening.
FX:NGAS
by mxb1961
1
Thoughts on using Renko Charts (cont.)Some of the following ideas are based on concepts outlined in this link: forexformation.com And, from the book "New Concepts in Technical Trading Systems" by J. Welles Wilder, Jr. In my previous ideas on renko charts, my main goal was to identify price consolidation based on ADX and then trade the breakout. In this idea, I'm going to add another concept which is using the Parabolic SAR that was originally described in J. Welles Wilder's book and also included in the link above. In addition to the PSAR, Wilder created the Directional Movement Indicator (DMI) which includes the ADX that I've leveraged too. In his book, while describing the PSAR system, he added an alternate way to trade the system which is to use the DMI to determine when to trade. For example, if the +DI is dominate, then only trade to the up side based on PSAR signals and likewise, if the -DI is dominate, only trade when -PSAR signals are to the down side. If the market is not trending (the ADX is dropping to 20 or below), don't use this or stay out of market. In Wilder's book, he suggested the parameter defaults that are used by TV but the above link uses an AF of .09 and increment of .09. I'm not sure why but it looks like this might work better with Renko Charts. For Renko Charts, I'm using 3 views of a market (using crude oil as an example): Daily TF: source/close | style/traditional | blksz/.50 2Hr TF: source/close | style/traditional | blksz/.25 5Min TF: source/close | style/traditional | blksz/.10 I use the daily TF to get a sense of what the market direction or bias, the 2Hr to look for patterns to trade and the 5Min to time or trigger a trade. Using Wilder's suggestion to use the DMI to determine the trades to make, I'm going to start by using the daily TF DMI to drive which direction to make trade but use the 2Hr to identify the block/PSAR to make a trade and the 5Min to finalize the trade. With this being said: Daily TF: +DI is dominate to only take trades to upside 2Hr TF: PSAR signaled a buy several blocks back 5Min TF: Currently in a price consolidation and waiting for a breakout above 54 to potentially go long
TVC:USOIL
by mxb1961
Thoughts on Renko Charts (cont.)Since my last discussion on Renko Charts, I've made some changes to what my view of long term vs. short term is. Currently, I'm experimenting with a 2hr and 5 min chart I'm continuing focus on my primary scenario of a breakout of price based on consolidation dictated by the ADX of the DMI. The general goal is to find 2hr charts that have an ADX reading of 20 or lower for at least 7-10 periods. During this period, identify a pattern (trend line, triangle, channel, support/resistance lines on price) and then look for price to breakout. However, instead of using the 2hr chart to identify the timing or trigger of the trade, use the 5min chart to make that determination. Recent soybean chart can be used as an example. The last consolidation in price occurred at (B) in the form of a triangle on the 2hr chart. However, if you look at the 5min chart, the trade could have been triggered by its own breakout based on similar consolidation (A). Notice how the 5min chart expands on the actual movement of the 2hr chart. An example of a continuation breakout can be seen in NGAS. Using this chart, (A) on the 2hr is just a one block pullback but the 5min chart shows a decomposition in price that ends with the ADX dropping below 20 forming a possible ascending triangle before price breaks out to the upside. Corn is currently in an extended channel on the 2hr chart which has led to a similar pattern on the 5min chart. This could be a market that is ready to be traded on the breakout of the channel.
OANDA:SOYBNUSD
by mxb1961
1
Thoughts on using Renko ChartsOne of the first links I came across which seemed to have the least complex strategy: www.dailyfx.com Another challenge I quickly came to was what settings to use on TV for Renko charts. A special thanks for @GcNaif for helping me with these configurations for Crude Oil (which I've used similar concepts for other markets listed below) I've carried over some indicators and strategies I've used in past on other style of charts which include: EMA's: 7/13/50/200 True Strength Indicator (TSI): 25/4/4 Stochastics: 25/3/3 Directional Movement Indicator (DMI): 14/14 For the settings of the Renko charts on TV, I'm using: Source: close Style: Traditional Box size: This one varies by market and also by time frame I think that Renko is supposed to be tick based with box size the price movement that happens before a box is rendered but with TV, this has to be emulated with a short time frame. For trading signals and short term bias determination, I used 3 minute chart as recommended by @GcNaif. In addition to the 3 min chart, I use a daily Renko chart for long term bias determination. Some links/strategies you will find suggest a 4 hour chart. One thing that you have to keep in mind is that a box won't be final until the time frame has closed. With a 3 minute period, this means that a block will be final every 3 minutes and that strategies can be based on this frequency. However, on a daily Renko using a 'source' of close won't be final until the close of the day (which in Crude Oil there can be alot of movement within a day). I've found it hard to make trading decisions on some of these markets using 4 hour higher. Some key concepts: short term bias is determined by 50/200 EMA on 3 minute chart. If 50 is above 200, the bias is up. If 50 is below 200, bias is down. If they're at or near each other, move to the daily chart and look at the same to determine the long term bias and use it. TSI above 0 is bullish and consider buying. TSI belwo 0 is bearish and consider selling. Stochastics crosses up over from 20, considered a buy signal soon. Stochastics crosses down over 80, consider a sell signal soon. 7&13 EMA cross over either up or down across price use as either buy or sell based on direction Only make trades in direction of short term bias First strategy I'm exploring: Breakouts using DMI. This is based on the ADX of the DMI dropping below 20 for a period of time causing price to consolidate. AUDUSD Box size: 0.0001 On the current 3 minute AUDUSD chart, you can see a breakout based on ADX at point (A) on this chart. After the selloff, price consolidated again based on ADX and is currently at a state where it may breakout to the downside again (B). Looking at point (B), there are a couple of things I'm looking for as a confirmation based on pointes from above. a) TSI drops below 0. A strategy using TSI is that above 0 is bullish and could be buying with a drop below 0 is bearish and should be selling b) Stochs crosses over above 80 and drops c) 7 & 13 EMA cross over price with bias down SOYBNUSD Box size: 0.01 NGAS Box size: 0.01 Crude Oil Box size: 0.10 Crude Oil looks like it is moving into a period of consolidation on the 3 minute chart but the daily chart's ADX is still strong. This coming week should help resolve the question if the ADX will continue below 20 on the 3 minute chart or if this was just a bounce and price will continue up. The daily time frame is posted above. The 3 minute chart is below: WHEATUSD Box size: 0.01
TVC:USOIL
by mxb1961
6