422# Sonic R System TAH
Higher Low Trading System
Submut by Nico 23/01/2012 (Written by GuruKris K2 Capital) souce:www.ForexFactory.com
Entry for buy or sell :
This strategy is based on wave analysis. So it’s important that you have a good understanding of waves. First you should see a LOW in the price , then price should make HIGHER LOWs (HL). Like the example below, after making a HIGHER LOW, look for the candle go above upper white line (upper band of tunnel dragon indicator) and wait till the candle closes. Then put a buy stop few pips above the high of that candle.
Pay attention to the angle of the slope on Tunnel Dragon (or three 34MAs). The steeper, the better. Avoid horizontal ranging periods. (Direction of angle : Long 1 to 2 O’clock, Short 4 to 5 O’clock, avoid 3 O’clock ranging)
Have general trend/bias in mind, you can check it in higher time frames like H1, H4 and daily. Using SHI_Channel_MTF on a new chart you can easily determine the trend of each TF.
It’s better that price be above the 89EMA for a long entry.
General approach to Long/Short:
Price can often cross the Tunnel Dragon in 3 ways.
2. 89EMA below Tunnel Dragon ie (89EMA below 34 EMA Low of the Tunnel Dragon)
3. 89EMA middle of the Tunnel Dragon ie (89EMA between 34 EMA High and 34 EMA Low of the Tunnel Dragon.)
For Long entry based on the above point 1 situation
Wait for current candle high cross 89EMA and make sure the previous candle high is lower than Tunnel Dragon 34 EMA high. Wait for the current candle to close. Now mark that candle high + 5 pips as your long entry and any candle cross that level become your entry for long.
For Long entry based on the above point 3 situation
Wait for current candle high cross Tunnel Dragon 34EMA High and make sure the previous candle high is lower than Tunnel Dragon 34 EMA high. Wait for the current candle to close. Now mark that candle high + 5 pips as your long entry and any candle cross that level become your entry for long
In the example above, none of the next 3 candle cross point 1 candle high + 5 pips and price drops below Tunnel Dragon 35EMA high. Now you should reset your entry and wait for the price cross again Tunnel Dragon 35EMA high. In this case from 2nd point candle high + 5 is your entry for long.
The same applicable vice versa applicable for short.
The same rule applicable for going Short based on point 1 situation (89EMA above Tunnel Dragon but price crossing 34EMA Low).
The same rule applicable for going Long based on point 2 situation (89EMA below Tunnel Dragon but price crossing 34EMA High).
Importantly you should decide and enter short or long when the price cross the Tunnel Dragon up and down and based on where the price moving inside trend channel of your TF. Use SHI_Channel_MTF.mql. So you can avoid fake entries.
Channel is useful for analyzing a trend of a particular TF. But It may grow (gap between upper channel and bottom channel) in the trending market and shrink in the ranging market.
For Long price should running in the bottom of the channel and there is enough room for price to flow up side of the channel. If the price running in the top of the channel wait for price to break the upper channel. It is safe to enter long after Price breaks the channel and new candle open after the channel high.
For Short price should running in the top of the channel and there is enough room for price to flow down side of the channel. If the price running in the bottom of the channel wait for price to break the bottom channel. It is safe to enter short after Price breaks the channel and new candle open after the channel low.
While price breaking either channel top or bottom watch SonicR VSA Histogram. When the price to break either channel it should resist the supply and go. So there is some thrust in the volume. The volume is slightly higher than previous volume that confirm price break.
For example your chart TF is 15M. You load 15M, 1H and 4H Channel.
1) H4 trending Higher H1 trending Higher M15 trending Higher
2) H4 trending Higher H1 trending Lower M15 trending Lower
3) H4 trending Higher H1 trending Higher M15 trending Lower
4) H4 trending Higher H1 trending Lower M15 trending Higher
5) H4 trending Lower H1 trending Lower M15 trending Lower
6) H4 trending Lower H1 trending Higher M15 trending Higher
7) H4 trending Lower H1 trending Lower M15 trending Higher
8) H4 trending Lower H1 trending Higher M15 trending Lower
You can even compare D1 TF. Will increase the combination.
Take Profit :
Trading against the Higher TF from shorter TF (2-4 and 6-8), you might be in the side of retracement of a Higher TF. So don’t expect long run and book profit where ever the upper channel or bottom channel reaches. If the channel breaks you can look for next higher channel or use PPZ (Pivot Point Zones) or resistance or round numbers for take your profit.
If you trade with the Higher TF (1 and 5) you can expect long run and price may break the top or bottom channel and you can expect price reach new high or low and you can catch good profit. You can use PPZ (Pivot Point Zones) or resistance or round numbers for take your profit. Or you can use Trailing Stop.
Stop Loss :
Put your SL above or below the nearest fractal (ie) the fractal should be higher than 2 fractal from its left for short and the fractal should be lower than 2 fractal from its left for long. 3
As per my view none of the technical indicators predict the trend of the market. Max indictors are repainted one and are based on price movement. Using this system you can stay and trade in the right side of the market and even this will lead to wrong trade in a ranging market. You can win more trade than losing trade which increase your profit and make you a winner.
Here is the Sonic R System Summary:
The Sonic R. System is a method of trading price movements between areas of support and resistance. It trades on the M15 chart. It uses a price activity WAVE at an S&R area to validate a trade setup, and technical indicators called the DRAGON and the TREND. The DRAGON is used for picking the trade entry. The TREND is used to confirm the correct trade direction. Historic S&R is used for picking the trade exit.
L-H-HL starting below Dragon for longs, H-L-LH starting above Dragon for shorts, showing "bounce" or “breakthrough” at S&R. Best if WAVE leg #1 crosses thru the Dragon.
Must be angled up with PA above it for longs, and angled down with PA below it for shorts.
This is a market bias indicator and it is best if PA is above it for longs and below it for shorts.
Prefer not to open trade during asian session. Recommend London session for best momentum. Trade can be closed anytime.
Prefer to trade the pair EUR/USD. Lowest spread. Usually a wide range. Most important is it is most traded pair, which means better volume and better momentum for the trade.
Placement of EP
Wait for a WAVE leg #3 candle to break out of the DRAGON, and place your entry order at least several pips beyond it. It is better if there is no strong S&R area just beyond the entry. Remember also, it is best if PA is above TREND for longs, below TREND for shorts.
Placement of Re-entry
It is best to let PA clear the most recent high, or low, and if there is no strong S&R area just beyond this re-entry.
Select a historic S&R level. Such levels can include whole/half/quarter numbers and the middle of consolidation areas.
Placement of SL
These are the rules for placement of the SL (see picture below that illustrates):
1. The SL must be beyond the H/L (for shorts/longs) of the recent large scale price swing.
2. The SL must not be more than 100-120 pips from the EP (for EUR/USD).
Share your opinion, can help everyone to understand the forex strategy.