How to trade Forex-Bird-Setup – Complete Guide with Illustrations

First off, let’s address the very basic question which might have crossed your mind by now.

Q. What is Forex-Bird-Setup ?
A. This is a Forex Trading strategy developed by GoldGuru.in. The patrons and many subscribers get a Bird-Range almost everyday. Patrons can ask for Bird-Range for almost every pair (Except Ruble, Yen and such instruments). We cover about 30+ pairs.

As visible in the chart, there are two horizontal bars on the chart above. These two values are named as Upper-Value and Lower-Value, in this case these would be 1286 and 1269.

I shall explain how to use these bars in this article using different types of patterns and setups. Please keep on reading and after reading this entire post, feel free to share your views in the comments section at the bottom.


Calm and Stable Bird-Break-Out

Bird-Break-Out
Bird-Break-Out

In this case, price breaches the lower-value indicating we are going down. Please be informed that there is jitteriness in price-action when a level is broken.. At one point it may seem like Hit-n-Run-Case. You have to be patient and make sure price goes sideways on H1.


Hit-n-Run-Case by the Bird

If you have been trading for a while, I can bet it has happened countless times with you. “I was so right, but, price just hit my SL and went on to hit my target? Heck I hate this!” Well, I have seen this, heard this before.. we all know this is how Forex works, isn’t it?

Forex Bird Setup Hit-n-Run-Case Illustration
Forex Bird Setup Hit-n-Run-Case Illustration

As visible in the chart above, you should not act swiftly when a range is broken, but, be patient and make sure price sustains and stabilizes beyond the bird-level.


Ferocious-Bird

I’ll pick a nice setup and post a chart about this later, as the name suggests PA is too hot and simply flies through the range. It’s too fast for the trader to evaluate whether it’s a fake or true Bird-Break-Out. One of the toughest to trade IMO, but worth if you are a swift trader with perfect MM.


Calm n Stable Bird-Break-Out combined with
Hit-n-Run-Case on same Day (same Page)

Calm-n-Stable plus Hit-n-Run-Case Illustration
Calm-n-Stable plus Hit-n-Run-Case Illustration

On a lucky day, you may get to taste best of both the worlds. In this case, it’s hit n run case + Calm n stable occurring on same day, same page 🙂

 

Bird Range Setup – Illustration for Calm and Stable Bird-Break-Out

Chart Dated: 03-May-2016

As visible in the image, below is the bird band range:

Upper-Level: 1301
Lower-Level: 1287

What we would call this is “Calm and Stable Bird-Break-Out“. During such setups, price would breach the lower Bird Range and capture the area right below lower level giving you ample time to sell n make money.

On the contrary, IF price had climbed and stabilized above 1301, that would have been Bird-Break-Out into North and right thing to do would be to Buy.

Other Bird-Setups

  1. Ferocious PA flies out of Bird-Range
  2. Support on Bird-Range i.e. Hit and Run Case

 

Gold (Forex) View prior to FOMC Statement n Federal Funds Rate as on 27-Apr-2016

Before FOMC Statement n Federal Funds Rate
Before FOMC Statement n Federal Funds Rate

Hi there fellas,

First off, we at GoldGuru.in love to watch news in general, but we do not trade news. We do pick timings related with certain high impact news in order to use such windows for trading Forex pairs. We like to use indicators like VVSA (Volatile Volume Spread and Analysis).

As visible in the image above, we expect Gold price to drop right from the peak OR shoot a little from the peak and thereafter fall like a rock off the cliff within next 24 – 48 hrs.

VSA View Gold (Forex)
VSA View Gold (Forex)

The reasons behind above view are as follow:

  1. Gold Bulls are supposed to go weak if not hibernate during Summers.
  2. VSA Peak-Out as visible in above image (Image with H1 TF).
  3. Huge Pin-Bar on H4 – major resistance level (see image on top).
  4. Intuitive senses indicate a major swing-fall at least within 24-48 hrs IF not a HUGE-Seasonal RALLY.

Given above analysis, we are short and would leave a small piece open for long run if expected fall turns into Seasonal Bear Rally.

Your valuable comments shall be highly appreciated.

 

 

 

Most Traded Currencies

Most traded Currencies:

United States United States dollar : USD ($)
European Union Euro : EUR (€)
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Canada Canadian dollar : CAD ($)
Hong Kong Hong Kong dollar : HKD ($)
Sweden Swedish krona : SEK (kr)
New Zealand New Zealand dollar : NZD ($)

Country or territory[1] Currency[2] Sign[3] ISO code[2] Fractional unit Number to basic

Abkhazia None None None Apsar[A] None

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None None None Centavo None

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BASIC TECHNICAL ANALYSIS

Definition of TECHNICAL ANALYSIS (TA)

Processing market data, especially past data in order to forecast future price action is called technical analysis. There are many advantages bound with technical analysis. Its easy to learn and to use, it makes clear signals although not many of them are valid. In this section we will learn more about all that technical analysis can give us.

What really works in TA

This part of technical analysis works perfectly. It isn’t based on any complicated indicators just on past and current price action. Basic technical analysis include all methods based on drawing trend lines, recognizing sideways trends and breakouts from it. Also major and minor support and resistance levels, gaps, stoploss hunting and all things plainly visible on any price chart. Knowledge and experience in spotting and using them is vital for gaining success on any financial market around.
TREND IS YOUR FRIEND

Don’t betray your market friends

Most of people when sit before price chart with very strong up trend sells as they see that it won’t go any higher. If you traded before you certainly know this course of action but let me ask you – what is the probability that trend will break just when you start to watch it? Most of people when they see situation for a first time would buy but longer they try to trade then they spend more and more time on trying to recognize top of tops or lowest bottom and buy/sell on them. I assure you that entering with trend and getting profit is much easier than spotting highest highs or lowest lows. Best places to enter with trend are of course discounts but this we will cover in one of next articles.
FORMATIONS

Price making pictures

Patterns that price movements are forming from time to time have also some importance. This part is rather difficult because patterns are rarely precise. To spot them and use them you need some experience that comes from practice only. Many traders are using chart patterns in market situation assessment both to describe big picture situation and short term decision making.

TECHNICAL ANALYSIS – Set of tools not Magic Wands

TECHNICAL ANALYSIS

Set of tools not magic wands

Many traders see indicators and systems built solely from them as the only way to foresee near or not so near future on forex and also on other markets. Trying to interpret various indicators correlations the main sense of technical analyze gets lost somewhere and many beginner traders start to trade indicators not market price. Indicators as well as systems based on them are *tools*, one should never forget about that. There is no way that any tool without knowledge how to use it and experience of using it will bring anything more than injuries. Lets take an experienced carpenter with his set of tools – he is making state of art furniture from raw materials daily but if you take an apprentice he will only waste resources and even harm himself with just the same set of tools.

NO FREE LUNCHES

For success you need to pay with your time, energy and/or money

There is no magic in indicators. It is statistical research not a magic wand. It takes time to learn how to use them properly, it takes experience to use them profitably. Technical analysis is easier than fundamental, both of them are not rocket science but still you need to invest your time, money and energy to learn how to analyze markets in order to make profitable decisions.

HOLY GRAILS

and other automated money generators

Millions of traders and analysts are in pursuit of a golden method that will make them instantly rich beyond any recognition. Unfortunately after years that we spent in the market we didn’t found any trace of the holy grail of financial markets. What we found are tools only. Some of them are better some worse but no mechanical money generators were found. This makes us to draw conclusion that matter if we earn or lose when trading markets depends solely on ability to asses current market situation and take advantage of it. As every ability can be learned and trained to sufficient level, ability to see what market is doing and what will do next is not an exception here. It will take time and lots of sweat but frankly it’s the most profitable ability that can be learned on our little planet.

TECHNICAL ANALYSIS ON FOREX MARKET

Forex market is, as we all know by now, by far the most liquid market on earth. Currencies tend to move in strong trends which basically makes trend following indicators work better on them. Currency exchange rate is influenced by numerous factors such as international trading deals, government actions, FOMC meetings, interest rates. Even rumors can have some influence on currencies. Exchange rate shows average of all factors interpreted by traders. Indicators that show anomalies in current market situation sometimes shows the very start of major trend changes. To take advantage of such indications again knowledge and practical experience is needed, but above all ability to see big picture. Only when seeing complete market situation, various indications are worthwhile.

Trend Lines – Trend is your friend

TREND LINES

Useful trading tool

Ability to draw trend lines is one of most basic and most useful way to asses market situation and take advantage of it. Before we go into details about how to draw them and interpret their indications lets ask important question:

What are trends anyway?

Market is a constant conflict between buyers and sellers, supply and demand. Price and it’s movements are current result of this conflict. Depending on which team is winning price is going up and down. Situation when price is tending to move in one direction for longer time is called trend. If we are looking for daily charts then we see big or major trends – these are most important. Zooming in to shorter timeframes we will notice smaller trends that compose major one. Smaller chart timeframe shows smaller trends which are less important than trends on bigger timeframes. We have three types of trends.

Up trend

Price is moving up. Buyers team is winning because of economic event, global situation or rumors. Local lows are being made higher and higher same as highs.

Down trend

Price is moving down. Sellers team is winning because of the same factors that buyers are winning during up trend.

Sideways

Buyers and sellers are in balance. Price is not moving significantly into any direction remaining in a range. Random price movements inside range can be quite aggressive until it break out from it, one of teams starts winning and starting new trend.
LOOKING AT THE BIG PICTURE

Most important while using trendlines is looking at whole market situation. It is advised to take positions according to major trends even if minor trend shows opposite trends. To draw trend line we need two local highs or lows third one will confirm if trend is established. Usually when price is about to touch major trend line, on shorter term charts it is moving pretty aggresively. Thats why positions are more risky in such times as many uncertain traders are changing teams rapidly.

Forex Strategy – 5 Rules to Follow

Technical Analysis and Systems

If you take few indicators and combine them so one confirms signals given by other you can say you have an indicators system. How much it is worth? This depends on wide statistical studies done on it which are including testing on historical data (back testing), random data tests, demo market testing and in the end live trading. Most of combinations are failing at some point, especially those which aren’t adjusting to current market situation. Good system need to be updated frequently, trader need to change parameters according to changing market. There are few basic rules in making technical indicators systems.

RULE 1

Different approaches

While combining indicators to work together best results give choosing different indicators which are processing market data in much different ways. This makes confirmations more reliable. For example joining few moving averages will give worse results than joining average with RSI oscillator.

RULE 2

Limited number of indicators

There cannot be too many indicators in system. More than 3-4 will make system fogged and difficult to operate. 2-3 is optimal number, at least for me.

RULE 3

Look at big the picture

Many traders and wannabe traders says that you need to follow your system signals blindly. They can’t be farther from reasonable approach. You need to take under consideration whole market situation including economic data, formations, trends, supports and resistances and so on. Your system is a tool, not magic wand. If you follow it blindly you will hurt yourself just as carpenter using his saw with closed eyes.

RULE 4

Test before you trade

Huge advantage of technical analysis is that it can be easily tested. Historical testing although it’s not very best way to see if system is worthwhile gives wide selection of parameters which provides basic information about the system such as number of transactions made, drawdown, exposure, profit/loss ratio and hit rate. Profit/loss has limited importance as it can be easily adjusted by optimizing parameters of systems indicators. Test system to find where problems are not how good it could be. Try to make it fail – this way you will see how reliable it can be.

Most important thing is distance and reasonable approach to technical analysis systems. You need to be aware that mechanical following any technical system will surely cost you money. If it would be otherwise who would need traders when having computers…