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dzonefx
dzonefx
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Number of messages : 636
Points : 3976
Date of Entry : 2013-01-29
Year : 49
Residence Country : Beograd

ma1 Critical Characteristic Of The Trendy Kangaroo Trading

on Sat Sep 26, 2015 2:40 pm
The critical characteristic of the trendy-kangaroo-trading set-up is, of course, the trendy kangaroo candlestick. This candlestick will stick out beyond where the market paused. It is critical for the trendy kangaroo to print away from the other candlesticks which are stuck in the box.

Because the trendy kangaroo is always in the direction of the trend, it is impossible for the trendy kangaroo to have a large amount of room to the left. This is in contrast to the standard kangaroo-tail trade. The trendy kangaroo is judged by how far the tail sticks out beyond the recent market pause. If there is much of the tail sticking out in an area on the chart where the recent candlesticks have not traded, then the trendy kangaroo is deemed an excellent trading set-up.

FIGURE 10.3 The trendy kangaroo appears on the AUD/USD daily chart. The trendy kangaroo must stick out beyond the market pause. It is important for the trendy kangaroo to stick out beyond where the recent market pause has traded.
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In Figure 10.3 we see the AUD/USD daily chart with a trendy kangaroo which sticks out beyond the recent market pause.This is an excellent trendy kangaroo set-up.The same holds true for a trendy kangaroo that pops up during a downtrend.The trendy kangaroo has a long tail that sticks out above the market pause. The trendy kangaroo will never have much room to the left simply because it prints during a strong trend. However, the trendy kangaroo should always print away from the recent consolidation. The more the candlestick prints away from the market pause the better.


FIGURE 10.4 This daily USD/CAD trendy kangaroo is an excellent example of how this candlestick should stick out beyond the recent market consolidation range.
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Take a look at the chart in Figure 10.4—the USD/CAD daily chart prints an excellent trendy kangaroo during a strong downtrend.Bearish trendy kangaroo trades are traded much like standard bearish kangaroo tails. The sell stop is placed below the low of the trendy kangaroo candlestick. Once this sell stop is triggered, the stop loss is placed above the high of the trendy kangaroo candlestick. See Figure 10.5 for an example of a bearish trendy kangaroo-tail trade on the USD/CAD daily chart.

FIGURE 10.5 The trendy kangaroo is managed in much the same way as a standard kangaroo-tail trade. The sell stop is placed below the low of the trendy kangaroo candlestick. The stop loss is placed above the high for this bearish trendy kangaroo on the USD/CAD daily chart. The market fell over 1000 pips after this trendy kangaroo tail printed.
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Bullish trendy kangaroo tails are similar to standard bullish kangarootail trades. Once the market prints the trendy kangaroo, you may manage this trade just as you would a normal bullish kangaroo tail trade. You may place the buy stop above the high of the trendy kangaroo. The stop loss goes on the other side of the tail. So for a bullish trendy kangaroo tail, the stop loss is placed below the low (see Figure 10.6).

FIGURE 10.6 This bullish trendy kangaroo candlestick on the daily AUD/USD chart suggests the market will soon move higher. Within two days the market moves 175 pips higher than the entry price.
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The trendy kangaroo tail will often print on an important zone. Take a look at the four-hour GBP/CHF chart in Figure 10.6. The market pauses at the 0.96500 zone. Several candlesticks find support on the 0.96500 zone before the bullish trendy kangaroo tail prints. This trendy kangaroo tail offers a clue; the market is ready to start marching higher again. After the trendy kangaroo prints the market moves 317 pips higher over the next two days.A few more examples of the trendy kangaroo set-up will help you to identify the difference between a good trendy kangaroo and a poor trendy kangaroo.

FIGURE 10.7 This bullish trendy kangaroo on the four-hour GBP/CHF chart has many of the standard kangaroo-tail characteristics.
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In Figure 10.7, the market prints a nice bullish trendy kangaroo on the four-hour GBP/CHF chart. Notice how this trendy kangaroo has all the standard kangaroo tail features except for the “room to the left” rule.The tail sticks out beyond the nearby candlesticks, but because the market is in a strong downtrend, there is little room to the left for the trendy kangaroo tail.

Trendy kangaroo tails will rarely have room to the left because they occur during trends, so there will always be price action to the left. The trendy kangaroo tail should, however, stick out beyond the recent choppy price action. Otherwise, the standard kangaroo tail rules apply.

Notice the open and the close of the trendy kangaroo are both in the bottom third of the candlestick. The open and the close of the trendy kangaroo are inside the previous candlestick’s range. The very next candlestick trades higher than the high of the trendy kangaroo, triggering the buy stop. The trendy kangaroo maintains all the characteristics of the standard kangaroo tail trade; the only difference is that it prints after a pause during a strong market trend.You may notice that the daily AUD/JPY trendy kangaroo set-up (Figure 10.8) is not on a zone.

FIGURE 10.8 This bearish trendy kangaroo tail on the daily CHF/JPY does not print on a zone. However, the candlesticks immediately to the left of the trendy kangaroo tail have similar highs, and thus they define a minor zone.
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This makes the trendy kangaroo unique; it is a naked trading set-up that is not always found on a zone. However, under most circumstances a minor zone will be seen at the market pause immediately before the trendy kangaroo. Notice how the highs of these candlesticks cluster near the bottom of the trendy kangaroo tail. Thus, the consolidation of candlesticks before the trendy kangaroo tail establishes a minor zone, and the bearish trendy kangaroo tail extends above this minor zone. Obviously, ideal trendy kangaroo setups will line up with a major zone, but this is not necessary.
By:Alex Nekritin

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