CBA does it again on the Euro

CBA does it again !! Just open up the hourly chart which i showed in my previous chart. I am putting up the chart again. The control bar is marked as A (same as in the previous article) and i have marked off the high of the control bar with a red line. Look at the beautiful price action around it. Break, retrace exactly to the pip of where the red line is and now we have fallen 100 pips from there. DD ? Less than 5 pips.

Just on the euro today, just following the basics of CBA, you , like me, would have made 100s of pips. I can keep quoting more and more examples from various currencies. It all reiterates the same point. This is the power of CBA. None of it is marked after the fact. The control bars are there for all to see. Anybody can locate them. I have marked them over and over again in several articles of mine and you can see that they prove wonderful time and again.

Multi Timeframe Analysis for Euro Today

Apologies for not posting earlier but had been tracking some nice entries and hence was busy with that.

Today, we had 2 very good examples for CBA. Look at the attached 15M chart of the euro. i have marked off the 2 control bars that i see from today. Both of them have high ranges and are hence easy to locate. I have marked off the high and low of the 2 bars using red lines.The low of A acts as good support and you can see that once the low was broken, the price never came back above the high of A, which acts as resistance. If you had taken a short on break of the low at 4512 with the SL above the high, you would be up by about 50 pips now. Or, if you prefer a smaller SL, notice the price action after the break of the low of B. Price retraced exactly to the low of A at 4512 and this was a very good signal for short (break of support and retrace) and you would again be up by 50 pips by now. The DD for this trade would have been less than 2 pips..I took this trade, closed half at 20 pips and am still holding the rest at BE.You had another opportunity to short, with very low SL, at the low of B at 4498. Doesnt it look beautiful ? How exactly has price retraced exactly to support identified by CBA.

You would notice that price has been struggling to break through 4475. Reason? Look at the hourly chart and if you notice, the high of the control bar A, marked in the hourly chart, comes in around 4475. Hence this region is strong support and so the price was struggling to break thru till now.

Took a Massive Trade on the Euro

Attached is the hourly chart of the euro. For the past 2 days, i have been insisting that the high of the control bar (marked A) which comes in around 1.4325 would be a good place to long. Just look at the price action around this high (marked with a red line) and also look at where it is now.

All that you had to do was watch the price action and place a buy at 4325 or 4330 and with a little patience , you would have made more than 150 pips by now, as i did. If you watch carefully, the drawdown would not have been more than 15 pips at any stage on this trade and you would have made 150 pips. Thats a RR ratio of 10:1. A massive trade. If you are good at spotting control bars, you would see that the latest control bar's high comes in around 4470 and i would be watching the PA around that for a short.

Update on EURGBP Trade

Attached is the 15M chart of EURGBP. It is an updated chart and there you can see the region C which i had marked off yesterday. You can see that after C, the price broke into the control bar region and travelled to 8796 which is exactly the close of the control bar B (seen in my chart from the other article). This was also the TP2 which i had specified in my previous article.

Price then move back up, broke thru the high of the control bars, which acted as resistance, then retraced back and then you can see some consolidation in region D. This is a clear sign that further upmove can be expected. Thats what followed and we see that EURGBP has moved very high further up. You could have made 60-70 pips over 14 hrs just through these 2 setups. With very low DD as well.

Constructing a trade using CBA

Attached are 2 charts of EURGBP. Lets see how we can construct a great trade using control bar analysis. First, have a look at the hourly EURGBP chart. I have marked off 2 bars which serve as the control bars. These are very easy to identify as they are the biggest bars in the current chart. So i simply mark them off as A and B and i have also marked off the high and low of each bar using red lines.

Now switch to the lower timeframe i.e. 15M. This is show in the next chart. You can see the price action clearly. Concentrate on the price action between the 2

red lines in the region marked C. You can see a great battle going on . On one side, you can see price trying to push into the region of the control bars but 8820 acting as support and on the other hand, you can see price trying to push out of the control bars but 8828 acts as good resistance. So, for the trade, you wait for price to move into 8828 and then you realise that 8828 could act as a resistance. You wait and watch to see if 8828 is indeed acting as resistance.

Remember that you should not jump into a short immediately when price drops below 8828. You need to wait and see whether 8828 is indeed acting as resistance. Wait for  retrace to 8828 and see if it breaks back above 8828 or stays below. Here you can clearly see that it stays below 8828. So, you take a short below 8828. Have the SL just above 8828 (6-7 pip SL) and you have a great trade. TP1 is the point which gives you 1:1 risk reward ratio and TP2 is the close or the low of the control bar (this gives a 4;1 or 5:1 trade).

Formulating a Trading Strategy using CBA

So how do u formulate a trading strategy based on the control bar analysis ?as mentioned before, the control bars appear in all timeframes ranging from 5M to the weekly. So first of all, decide which time frame you are comfortable trading in. Some are comfortable trading in 15M while some are comfortable trading the daily...choose which timeframe you want to trade in. I suggest that for day traders, you choose 15M and for those who work on other jobs, you can choose the daily timeframe.Once u have chosen a timeframe, stick to it and trade that timeframe. Dont keep changing the TF depending on how the trade goes....stick to it...

once u have chosen the TF, mark the control bars. These are bars with the highest ranges/volatility (between the high and the low) and mark the high and low of these control bars. For 15M, take the bars from the past 2 mnths.  For daily, take bars from past 6 mnths. You should get about 6-8 control bars. Mark the high and low of each. You should get good support and resistance areas.....will discuss step 2 later...

We Finally Have a Name !!

Thanks to one of my friends, we finally have a good name for the kind of study that we afre trying to do. After sifting through control price points, control bars, high range bars, we have finally nailed the name for this group of study. Henceforth, this field of study of the bars will be know as Control Bar Analysis (CBA).

This will analyse the volatility of the price action within each bar and using that, we will find areas of support and resistance and using these, we will design a form of trading around this. I already do this form of trading but since it has been personal so far, it didnt require to have a structure. Now that it has been thrown open to the public, it will have a structure and as you can see, we are slowly evolving the basics before we dwelve deeper and deeper into this topic. Patience pays.

Update on the euro control bar

Attached is the hourly chart of the euro. Around noon on Friday, i had pointed out the control bar for the euro and had also posted an article of where i would be looking for longs on the euro. This is an update on the chart. As in the previous article, i have marked the top of the control bar, and you can clearly see how the price came to the exact same support region and then bounced more than 40 pips.

I had called for a long around 4325-4330 and if you had taken that, it would have been a cool 40 pips for a DD of less than 10 pips. Thats the power of the control bar.

Where to re-establish longs in EURUSD ?

Attached is the hourly chart for EURUSD. It is easy to locate the control bar in this chart. I have marked off the top of the control bar and this should act as a good support. I would be looking for new longs at around 1.4330 and this aligns with the top of the control bar and is also a good area of previous support/resistance. Keep it simple.

Control Bar for EURUSD

Attached is the hourly chart of EURUSD. A control bar has formed and i have marked the high and low of the bar. This is a very big bar and hence easy to identify. We can see how the low of the bar acted as good support and has caused a bounce of about 40 pips now. The top of the bar comes in around 4230 and this area should act as a very good resistance now.

This area of resistance will be further supported by the previous resistance in the same price range as can be seen on the left of this bar. I believe this should set us into a good range for the next few hrs. Rest will depend on what outcome the euro summit, that is currently going on, comes out with.

Control Bars for GBPJPY

Attached is the hourly chart for GBPJPY as requested by one of our beloved readers. We have 2 control bars on the hourly chart with basically similar highs and lows. So, consdering both the bars , i have marked off the high and low. You can see clearly that so far, despite deveral attempts, there has not been an hourly close above the high of the control bars and it has acted as good resistance.

The pound is proving to be a stubborn customer in all its crosses and has been pretty range. I expect GBPJPY to go down and so would be looking to short with a SL above 127.9. Why 127.90? Thats where the high of the daily control bar resides. As you know, the daily is usually more powerful than the hourly and thats why the SL is above 127.90.

Control Bars for GU

Attached is the hourly chart of GU. This pair is just meandering with no specific direction. It has been ranging for quite sometime with good support from below but has not been able to make a break to the upside. Again, i have marked the high range control bar from 2 days back and you can see that today morning, the high of this bar, acting as support now, was tested and the price has since bounced about 30 pips.

This pair looks quite weak and hopefully, today's MPC meeting minutes should give it a specific direction. I expect it to go down but lets see.

Control Bar in EURUSD

Attached is the hourly chart for EURUSD. Yesterday we had a very
choppy day with no clear direction and the euro was moving up and down.

So we did not get any big range control bars yesterday. In the chart, i have marked
off the control bar from the day before. You can see that the price is currently
testing the high of the bar and so far, the high has held. Considering the fact that
this pair has not fallen much, i would expect this resistance to be broken and we might
be making a move towards 4270.

Control Bar on 15M in GU

Attached is the 15M chart of GU with the control bar marked as A. It is the bar with the highest range and as you can see, ever since it appeared , it has kept the price within itself. You can see how the high and low of this bar has acted as good resistance and support.

So, for this trading, all that you need to do is identify control bars. For now, just have a look at your chart and choose the bar with the highest range. That should be your control bar and then trade off it with small SL and TP.

Control Bar on GU

Attached is the 1H chart of GBPUSD. The control bar has again been marked as A. It is very simple and easy to locate. You can see that the price has kept bouncing off the highs of the control bar. The high of the bar serves as a good support after it has been broken. It has bounced 3-4 times now and each time , you could have easily made 30-40 pips. I had taken a short on EURGBP and long on GBPUSD as per the control bars and have already closed each of them for 40 pips. Had taken them with a SL of 20 pips. Easy !!

What is a Control Bar and how to locate it?

Ok, lets start with the question that is uppermost on everyone's minds. What are control bars? I have a specialised algorithm which calculates the bar to me but as i said, that wouldnt work out when i throw it open to the public forum. Not all people can use this algo and i cannot expect everyone to depend on me for the bars.

So, lets try and come up with a good universal definition for control bars. In my mind, its quite simple to find good control bars. Just open up your chart and choose the bar which has the highest volatility, in other words, the biggest bar. This is a good control bar for everyone to work with.

I can give so many definitions for it but that will only add to the confusion. A simple definition is a bar on your chart which has the biggest size. Simple..I have attached a chart of EURGBP and you can see that i have marked a bar, which is a control bar in my view, as A. It is the biggest bar in my chart and as you can see, it acts as a fantastic control bar as it keeps price within it and once there is a break outside this bar, you can see that there is a good breakout and also the high and low of this bar then starts acting as support/resistance.

I have taken a short using the low of the bar as the resistance. It has less SL and the idea is to take off half of the position at 1:1 and leave the rest for 3:1 or 4:1 trade.

Random Thoughts on Control Bars

I have been working on the control bars for more than 6 months or so. So far, i have been analyzing, re-analyzing etc etc. and have worked on trading strategies aligned with the control bars and other various aspects of it. So far, it has remained purely my work which i have not shared with anyone nor have i felt the need to see if anyone else has worked on it.

It is only for the last 2 weeks or so that i have put it open into the public forum. To be honest, the response has been much bigger than i had anticipated. My blog used to get about 20 visits per article but it has now been getting more than 300 visits per day over the last few days. They say that with great power comes great responsibility as well.

Putting this into the public forum has given me a lot of power to take this, discuss and teach a lot of people. But i also have the responsibility to ensure that i give out the right information only. Till the time when the control bars were analysed only by me, i wasnt answerable to anyone. I could analyse, trade, make mistakes, commit errors etc and still get away with it. But now that i have thrown it open to the public, i need to be more careful in what i say and how i say it.

The first few posts may not have had a great cohesion for a lot of people and i can see that many are yet to grasp the basics. This is my problem as i just put up all the stuff which i had gathered in my mind without trying to either categorize or structure my thoughts.

Now that there are so many people looking into this, i will ensure that i post things in a more structured manner. I am not one of the so-called analyst who comes into twitter/blogging etc. with a specific agenda in mind. I am a trader and what i have posted so far as just what i see/do on a daily basis. This is the reason for the lack of structure so far.

Anyway, from today, i will try and start explaining things in a better manner. Lets start with the 1H charts as the PA in those charts are slow enough for me to explain things. Control bars work on 5M and 15M as well but the PA is sometimes so that i dont have the time to explain things as it happens.

I will post more charts/examples as we move along.

Updated chart with control bar in GU

Attached is the 5M chart of GU...In an earlier post, i had marked A and B as control bars. You can see how the highs and lows of these bars have acted as good support and resistance. Between B and Z, you see a test of its high which acted as resistance and price went down. At Z, you have a break and retest of the low of bar B. A short there would have yielded 30 pips easily. Again at Y and X, you see a retest of its lows which again acted as resistance and price going down. As the market is slow, you dont see big moves at Y and X.

Updated chart with control bar in euro

Its been a quite hour or so in the markets which gives me time to post this updated chart on the euro. I had marked out a new control bar on the euro a couple of posts back and now, i have just drawn lines off the top and bottom of that bar. Look at the price action around the bar. Remember, this is just a M5 chart which is considered by many traders as pure noise.

As the market is ranging , you dont get big moves either side but you can clearly see how the high and low of that bar acts as support/resistance. Something which can definitely be traded for good pips with a very good R: R ratio...amazing...isnt it?

Clear Explanation of control bars.

So far, i have tried explaining control bars and how to trade them using M5 charts and these are too fast for me to post and also very tedious...here i present 1H charts which r easier to understand...i have marked off the 2 recent control bars on 1H chart as A and B...

The idea to trade these is to wait and do nothing till the price is within the control bars...If there is a breakout, then go long or short with small SL of 30-40 pips and u can make 100s of pips.

Look at bar B...The next 3 -4 bars after that dont break above it and so you just wait. Then there is a breakout and retest of the high of bar B. You can either enter on the breakout or the retest. You can have SL of 30-40 pips and you would have got in at around 5880 and you have a trade for 300-400 pips. As i said, these bars are noticed as soon as they appear and i am not fixing data after the fact.

Now look at the most recent bar A. Again, a long on a breakout of this would have fetched you close to 200 pips. You are now having a retest of the bar. Would be interesting to see if it bounces up or whether it gets inside the bar A. If an hourly bar closes inside bar A, then the high of Bar A would be a good resistance. Shorts near the high of this bar (after break thru inside the bar) would be good for a move down to the low of this bar. Idea is to take off one half of your trade for 1:1 and leave the rest for 3:1 or 4:1 reward risk ratio...