3# THE CI System
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Set up your charts:
Add a red 5 ema line (5 period exponential moving average)
Moving Average, type in 5, choose exponential and apply to close.
Repeat the steps for a 13 ema line (blue)
Add 15, 3, 3 Stochastic Oscillator (close) on the 15 min chart
Add 15, 3, 3 or (8, 3, 3) Stochastic Oscillator (close) on the 60 min chart
Before you commence trading, draw in these lines
• Horizontal and diagonal trendlines through important recent highs and lows on the one hour chart
Determine the Trend
The trendlines and chart patterns on the 1 hour chart will quickly show you the main trend direction for day trading. Trade in the direction of the 1 hour trend. Additional clues may be found on 4 hour and daily charts by looking at Japanese Candlestick patterns and the direction of the market..
Primarily, look for an entry signal on the 15minute chart .If you don‘t see an entry pattern there, you may be able to see one on the 30minute chart
Find the entry
Intra day traders look for a bullish engulfing candle on the 15 minute chart. (An engulfing candle is where the body of the latest candlestick engulfs the body of the body of the previous candlestick.) Poetic engulfing candlesticks are fine too as the open of the
latest bar should equal the close of the previous bar but may differ slightly on our charts. Alternatively, you can enter a trade at a morning star .You can enter as soon as the bullishengulfing candle pattern or morning star pattern looks like it will stay there
until the 15minute candlestick closes or you can wait a bit longer for confirmation from the 15, 3, 3 Stochastic indicator. Buy when the %K line crosses above the % D line. Check the 30minute chart for an entry pattern if there isn‘t one on the 15minute chart.
Euro 15 minute
Two CI System entry point are shown in the chart. Both involve Bullish Engulfing bars and 15, 3, 3 Stochastic crosses
A second chance but slightly worse entry comes a bit later if you hesitated at the first entry signal. This is a 15minute bullish candlestick with confirming stochastic signal followed by the red 5ema line crossing above the blue 13ema line on another chart
the 5minute chart. Do not try to trade 5minute candlestick patterns. The 5minute chart is only for exponential moving average crosses and isn‘t essential for use if you trade the 15minute or 30minute Candlestick patterns in a timely manner.
Euro 5 Minute
This chart is for the same trade as shown in the 15 minute chart above. The 5/13 ema crosses are indicated by the red ovals. The vertical green lines mark the time of the Bullish Engulfing as seen on the 15 minute chart above
3. Longer term swing traders can find good CI entries on a 60 minute chart. It is possible to enter before the 60 minute candle has closed. Sometimes waiting until the candle has closed would not be appropriate because price has moved too far way from your stop loss point and it would not be worth risking that many pips.
Euro 60 minutes
Two examples of Bullish Engulfing Candles for
—Buys“. —In the first example, the trade would be best placed before the hour period is complete and at the point of engulfing
1. On a 15minute chart, a stop loss may be placed 10 pips below the low in a 3 bar turning point. The optimum position for the
stop is 10 pips below the low at —1“.
EURUSD 15 min
Try to target at least 1.5 times your stop loss when possible. Exit at one of the following points. Double top, trendline bounce,
161.8% Fibonacci extension 200% extension. Sometimes price will reverse 5 or 10pips before reaching these targets.
38.2%, 50%, 61.8% and 76.4 % retracements of a previous significant move can also be exits.
FOR SELLS (SELLS ARE THE REVERSE OF BUYS)
1. Look for a bearish engulfing candlestick on the 15 minute chart. (An engulfing candle is where the body of the latest candlestick engulfs the body of the body of the previous candlestick.) Poetic licence engulfing candlesticks are fine too as the open of the latest bar should equal the close of the previous bar but may differ slightly on our charts. Alternatively, you can enter at an evening star. You can enter as soon as the bearish engulfing candle pattern or evening star pattern looks like it will stay there until the 15minute candlestick closes or you can wait a bit longer for confirmation from the 15, 3, 3 Stochastic indicator.
(Sell when the %K line crosses below the % D line.)check the 30minute chart if you can‘t see an entry pattern on the 15minute
2. Longer term swing traders can also find good CI entries on a 60 minute chart. It is possible to enter before the 30 minute or 60 minute candle has closed. Sometimes waiting until the candle has closed would not be appropriate because price has moved too
far way from your stop loss point and it would not be worth risking that many pips.
1) On a 15 minute chart, place a stop loss 15 pips above a 3 bar pivot. The optimum position for the stop is 15 points above the high at point —1“ where the entry is as a result of the lower high, bear engulfing and stochastics cross.
GBPUSD 15 min
Try to target at least 1.5 times your stop loss when possible. Exit at 4 of the following pips.
reaching one of these points.
38.2%, 50%, 61.8% or 76.4% retracements of previous significant moves can also be exits.
Supplementary trades apart from CI trades may be taken using other candlestick patterns, 3rd touch of trendlines, 1234 (ABCD)
trades, double tops, double bottoms, higher lows on 1 hour charts, lower highs on 1 hour charts, triangle breakouts, wedge
breakouts, etc. This deviates from the system and is an option for the more experienced traders who use their own judgment and
Putting It All Together
Do not prejudge the market by saying the market is quiet and won‘t do much. Wait for the trades to come to you. Look at other candle patterns as well and enter trades. If you can trade with patience and discipline (sticking to the rules), you are well on the
way to success. To gain confidence with live trading and your system, it is mandatory that you paper trade or trade on a demo first before you risk your money. Back test to see the high percentage of winning trades. When you see the method working successfully over and over, you will gain the necessary confidence. By using multi-time frame analysis, a trader can find frequent entry setups. See it, believe it and trade it. Don‘t say —it can‘t go lower“ or —it can‘t go higher“.
Keep monitoring the 15 minute, 30minute, 1 hour and 4 hour charts to see what is going on. This gives a good road map of what is happening in the market. If you can‘t see something with those, then there‘s really nothing going on and is best to sit on the
sideline waiting. Keep drawing Fibonacci lines and trend lines.
When a currency pair is moving strongly, there will not be any engulfing candles against the trend but there will be a minor retracement. If there is an engulfing candle, there is a high probability that price will retrace to at least 61.8%. After a
retracement, wait for an engulfing candle to re-enter the trade. Keep looking for a new point 3 entry point as explained in the Retracement System above.
Key to time frames on the charts:
The methodology we use in the CI System is powerful compared to other mechanical strategies as we look at many factors and
the more we get, the more powerful the resultant move is.
Each time the EURUSD has stopped, reversed or consolidated there has been a good reason for this, i.e. a Fibonacci retracement,
trendline or a chart pattern or a combination of these factors. This is why you must draw all the relevant lines in so there are no rude shocks ahead. For example, price may hit strong resistance at 76.4% retracement on the daily chart and many day traders wouldn‘t be aware of the reason for the resistance because they haven‘t checked the daily chart.
In this example, the Euro traded between the trendlines and Fibonacci 61.8%retracements ignoring the Pivot lines. This illustrates the importance of looking at the big picture and marking in all significant lines.
The CI System can be used on other time frames.
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