MoneyTec Traders Community Forum - View Single Post - Pips In The Pocket Method: Use it almost everyday!

L.C. · 10-08-2008, 19:18

How overnight consolidation affects my trades

I would like to share with you some thoughts I have on consolidation for the method I am describing in this thread.

I mentioned in my last post that I look for overnight consolidation ranges. What I am referring to is the time when the London markets New York markets are closed. It really depends on where you live but to some this is the overnight trading session there is in some cases fewer traders available for the euro/USD GBP/USD.

What I do is identify a new day which is a basic industry stard of 5 p.m. New York time. I identify this period of time with a vertical line on my 30 minute chart at 5 p.m. New York time. that point on I am looking for the overnight consolidation range leading up to the London open.

If that range of consolidation is too small I consider it a risky range I will wait for price to move even beyond that tight level. I have an example of just such a situation below in a chart picture of the GBP/USD.

For example GBP/USD I have noticed that a comfortable overnight consolidation range can vary between 50 to 70 pips. Of course this isn’t exact every single time but this is the general range I am looking for. Anything smaller than that range I am cautious looking for the possibility of a false move.

In the chart example I have posted below the previous range I was identifying for overnight consolidation turned out to only be approximately 40 pips. This caused me to be very suspicious of any cles that closed outside of that range I did not trade it up any higher. This kept me out of the market before the release of the BOE interest rate decision. As you will notice immediately after prices started to come back down eventually I saw another cle that closed below the low level of support. The move up in price after the BOE interest rate announcement caused me to adjust my consolidation range allowed me to correctly identify the proper direction.

I use this overnight consolidation range in conjunction with the method I have been describing in this thread. I wait for a breakout of that consolidation range I am patient to wait for a pullback then look for the morning star or evening star pattern before entering.

Again waiting for this pullback opportunity allows me to confirm the direction after the break out of consolidation it also allows me to identify a smaller stop loss level which would be just below or above the morning star or evening star pattern. Examples of this are in my previous posts chart examples posted above.

This week I will continue to post pictures of my charts with new trades using the same technique.

If you have any questions please feel free to e-mail me or instant message me on this site.

Good luck with your trading this week.
LC
http://www.udaytrading.com/freevideos/freevideos.htm

10-08-2008, 19:18	#4
L.C. level 1 Join Date: Aug 2007 Posts: 33 Downloads: 0 Uploads: 0 Rep Power: 2	Re: Pips In The Pocket Method: Use it almost everyday! How overnight consolidation affects my trades I would like to share with you some thoughts I have on consolidation for the method I am describing in this thread. I mentioned in my last post that I look for overnight consolidation ranges. What I am referring to is the time when the London markets New York markets are closed. It really depends on where you live but to some this is the overnight trading session there is in some cases fewer traders available for the euro/USD GBP/USD. What I do is identify a new day which is a basic industry stard of 5 p.m. New York time. I identify this period of time with a vertical line on my 30 minute chart at 5 p.m. New York time. that point on I am looking for the overnight consolidation range leading up to the London open. If that range of consolidation is too small I consider it a risky range I will wait for price to move even beyond that tight level. I have an example of just such a situation below in a chart picture of the GBP/USD. For example GBP/USD I have noticed that a comfortable overnight consolidation range can vary between 50 to 70 pips. Of course this isn’t exact every single time but this is the general range I am looking for. Anything smaller than that range I am cautious looking for the possibility of a false move. In the chart example I have posted below the previous range I was identifying for overnight consolidation turned out to only be approximately 40 pips. This caused me to be very suspicious of any cles that closed outside of that range I did not trade it up any higher. This kept me out of the market before the release of the BOE interest rate decision. As you will notice immediately after prices started to come back down eventually I saw another cle that closed below the low level of support. The move up in price after the BOE interest rate announcement caused me to adjust my consolidation range allowed me to correctly identify the proper direction. I use this overnight consolidation range in conjunction with the method I have been describing in this thread. I wait for a breakout of that consolidation range I am patient to wait for a pullback then look for the morning star or evening star pattern before entering. Again waiting for this pullback opportunity allows me to confirm the direction after the break out of consolidation it also allows me to identify a smaller stop loss level which would be just below or above the morning star or evening star pattern. Examples of this are in my previous posts chart examples posted above. This week I will continue to post pictures of my charts with new trades using the same technique. If you have any questions please feel free to e-mail me or instant message me on this site. Good luck with your trading this week. LC http://www.udaytrading.com/freevideos/freevideos.htm Attached Thumbnails