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FX CRYPTOCURRENCIES


strategy was to buy if prices broke out to a new 20-day high or sell if prices broke out to a new 20-day low. Now, markets generally trend 20% and range 80% of the time which leads to a lot of false breaks. So, Larry took the Turtle concept but instead of trading the direction of the breakout he looked for a new 20-day low or high followed by a reversal. So, if price came roaring back inside the old range after a breakout he entered the market on a stop order to trade the reversal with a stop a tick away from the low or the high of the day. This is essentially what I do too, but I have tweaked the strategy to include intraday setups and for the most part trade it in the direction of the bigger trend to try raise my batting average.


Chart 1.6 shows a Turtle Soup setup. Bitcoin undercut the low of the range and then sprung back inside the range again. Weak longs got flushed out, new short positions opened and then price reversed, completely shifting market dynamics.


ABCs


To pick an exit point is just as important as picking an entry point and yet it receives a lot less focus by most traders. A market which has a lot of market


20 FX TRADER MAGAZINE October - December 2018 participants tends to move


in symmetry. Once you start identifying ABC structures you are going to start seeing them everywhere and in all timeframes. Put them together with Fibonacci analysis and you know where to anticipate a turn and a possible entry point. The most recurring retracement level is 61,8% of the initial leg which means you can calculate your desired entry point in advance.


You want to enter on pullbacks and exit on extensions as close to the completion of an ABC structure as possible. These are the steps I follow. Identify an


impulse wave, which essentially is a straight line move. Wait for the pullback and see if Fibonacci support holds. If it does, then that is the C point which means you can calculate the profit objective. In chart 1.7, the A point is 1,830, the B point 4,980, and the C point 2,970. Simply take the dollar amount the market rallied from A to B and add it to the level at which the C point was established and that gives you the target. In the case of chart 1.7, buying pressure exhausted itself at $6,180 the same day as this screen dump was saved and Bitcoin subsequently pulled back to $5,366 over the next 4 days.


Chart 1.7 October 21, 2017 – Bitcoin at $6,071


Chart 1.8 December 9, 2018 – Bitcoin $15,744


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