Cypher formation
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Cypher Advanced formation
Tools:
*Fibonacci retracements (38.2% , 61.8% and 78.6%)
*Fibonacci extension (127.2% and 141.4%)
Timeframes:
*The Cypher Advanced formation was originally designed as a swing trading strategy. But it also works on lower timeframes.
Tactics:
*Seek to identify 4 market moves and 3 major Fibonacci zones. The combination of these moves forms the points (X, A, B, C, D) that fulfill the formation.
Rules of engagement: Criteria 1
The Cypher Advanced formation starts with a market movement/impulse leg that establishes our X and A points.
Once X and A points have been identified, we then look for our first criteria.
Criteria 1: The market forms the B completion point by fulfilling at least a 38.2% retracement of the XA leg.
Note: AB move remains valid as long as there is at least a 38.2% retracement of XA and that it does not have a candle close past 61.8% of XA. A candlewick can go to whatever level here. Only a candle close is important as maximum allowed B.
Rules of engagement: Criteria 2
If criteria 1 has been met, then look for criteria 2.
Criteria 2: The market forms the C completion point by fulfilling at least a 127.2% retracement of the XA.
Note: BC move remains valid as long as there is at least a 127.2% retracement of XA and that it does not have a candle close past 141.4% of the XA. A candlewick can go to whatever level here. Only a candle close is important as maximum allowed C.
Rules of engagement: Criteria 3
If criteria 1 and 2 have been met, then look for criteria 3.
Criteria 3: The market forms the D completion (entry point) by fulfilling a 78.6%extension of XC.
Note: D point must go past B. If it doesn’t then the formation is invalidated
Trade management: Entry, stops & targets.
Entry: Limit order is placed at D completion point.
Target 1: 38.2% retracement of CD leg. When attained half of the position closes & stop moves to breakeven.
Target 2: 61.8% retracements of CD leg.
Stop placement: Stop always goes past X. Either 113% XA extension or 1 ATR beyond X, or 78.6% of the 1st target distance above/below the entry.
Tools:
*Fibonacci retracements (38.2% , 61.8% and 78.6%)
*Fibonacci extension (127.2% and 141.4%)
Timeframes:
*The Cypher Advanced formation was originally designed as a swing trading strategy. But it also works on lower timeframes.
Tactics:
*Seek to identify 4 market moves and 3 major Fibonacci zones. The combination of these moves forms the points (X, A, B, C, D) that fulfill the formation.
Rules of engagement: Criteria 1
The Cypher Advanced formation starts with a market movement/impulse leg that establishes our X and A points.
Once X and A points have been identified, we then look for our first criteria.
Criteria 1: The market forms the B completion point by fulfilling at least a 38.2% retracement of the XA leg.
Note: AB move remains valid as long as there is at least a 38.2% retracement of XA and that it does not have a candle close past 61.8% of XA. A candlewick can go to whatever level here. Only a candle close is important as maximum allowed B.
Rules of engagement: Criteria 2
If criteria 1 has been met, then look for criteria 2.
Criteria 2: The market forms the C completion point by fulfilling at least a 127.2% retracement of the XA.
Note: BC move remains valid as long as there is at least a 127.2% retracement of XA and that it does not have a candle close past 141.4% of the XA. A candlewick can go to whatever level here. Only a candle close is important as maximum allowed C.
Rules of engagement: Criteria 3
If criteria 1 and 2 have been met, then look for criteria 3.
Criteria 3: The market forms the D completion (entry point) by fulfilling a 78.6%extension of XC.
Note: D point must go past B. If it doesn’t then the formation is invalidated
Trade management: Entry, stops & targets.
Entry: Limit order is placed at D completion point.
Target 1: 38.2% retracement of CD leg. When attained half of the position closes & stop moves to breakeven.
Target 2: 61.8% retracements of CD leg.
Stop placement: Stop always goes past X. Either 113% XA extension or 1 ATR beyond X, or 78.6% of the 1st target distance above/below the entry.
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