What Is an s90/Crossover and How Was It Discovered?
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n 1997, I took a forex course from an individual who understood the mathematical and traditional concepts of the forex like no one else I have ever met. I paid $10,000 for the private session. Everything he said impressed me, because I knew absolutelynothing about the forex at that time. The two-day seminar was conducted by book only and involved a lot of mathematical concepts and formulas that I had never heard of be- fore in my life.
During the first three hours of the seminar, the complexity of the material was simply too much for my mind to accept. When my mind did clear up occasionally, all I could focus on was the fact that I had paid $10,000 for the course. I spent most of the first morning trying to figure out how to ask for the nonrefundable fee back. I was also trying to figure out how I was going to tell my family that I had just given a cashier’s check for
$10,000 to a total stranger for a training seminar about a product called the forex that no one I knew had ever even heard of.
After the first three hours, I went to lunch and prayed. Afterward, I felt more relaxed and at ease with my situation. I laughed at almost everything that was said during the rest of the two-day seminar. The instructor didn’t speak very good English, and I guess my laughter and smiles made him think I was just enjoying the class.
About three months later I attended another course, this one taught by someone in Florida who at least spoke English, but I never told the Florida mentor that I had already been introduced to the forex. I just listened and became aware that I had actually picked up some tips and methodology from the first mentor. Having the information repeated into my brain by someone else may have been why I understood the second session more than the first.
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I continued taking courses, eventually working with a total of seven mentors during my initial days as a neophyte trader. All of them taught me something. I felt every class was worth what I paid, even though I didn’t make any money as a trader until after I had paid my dues with time and a lot of patience.
The only mentor who would continue to communicate with me, for a fee, was in Europe. He attempted to answer 100 percent of my questions by e-mail. He charged me per e-mail, which made me not repeat my questions and caused me to be very selective with the questions that I sent him to answer.
I found out later that only three of my seven mentors were actually trading live in the markets. Several of my former mentors were living off the mentorship fees instead of personally trading. I now consider this very offensive to any new trader being intro- duced to the forex. No mentor is worth paying for if he or she is not currently—and successfully—trading live.
Whether because of my confusion due to way too much knowledge or maybe an un- explained emotional drawdown, my losses were incredibly large in the beginning. How- ever, one day, after suffering incredibly large losses, I had a dream and saw the details of something in the markets that had always been present. After months of research, it became apparent to me that no one else had ever seen this signal procedure or pattern in the markets before, either.
This research led me to the S90/Crossover. I have always felt this dream was a gift from God that had to be shared with everyone. So, once a trader has learned the language from a certified mentor, I will continue to share with all new forex students features and application procedures for free. I will continue to offer free help for as long as I am able.
The only requirement to understand the S90/Crossover is for you to use a candle- stick charting service that has a River Oscillator Indicator (ROI) trading oscillator, a Fibonacci level indicator, and a line drawing tool. The different levels of the S90/ Crossover have more value and accuracy if the data feed is from the averages of more than 100 data banks, which may consist of clearing firms such as future commodity mer- chants, institutions, and banks that are willing to participate in the clearing of trades. For every buyer there must be a seller (and vice versa) and large financial organizations provide this liquidity along with individual traders worldwide. Currently, I use a charting service that has, at times, more than 500 data banks of combined data feed with aver- aged streaming real-time data, which then produces a modified average to measure the currency market properly.
The S90/Crossover is made of both resistances and supports found within uptrends and downtrends. The resistances later become support targets, and support levels later become resistance targets—provided that certain criteria are met. The S90/Crossover levels also provide proper planning opportunities for exact entry points and exits. Once you learn how accurate these levels are, they become a free source of information for you that you can use with any charting service. Free is a good thing!
Since the night of the dream, I have taught many traders the first two levels of the sig- nal; however, there are four levels to the S90/Crossover procedure. The chapters that fol- low present the first two levels, as well as information regarding the associated extreme levels of the S90/Crossover, which I often use as entries as well as for profit targets. The last two levels are a bit more complicated, and I suggest, once again, to locate a certi- fied mentor who has been properly trained to explain the more advanced levels of the S90/Crossover. You can find contact information for a certified mentor in the Resources section of this book.
M I L L I O N - D O L L A R T I P
The S90/Crossover has a foundation based on historical resistance and support points within a trading range. There are legal and illegal features found on the first two levels of the signal, which allow you to enter on valid signals and avoid entries that only look good by observing the illegal features.
LET’S GET STARTED: USING CANDLESTICK CHARTS
For the purposes of the following explanations, Japanese candlestick charts will be used to illustrate the S90/Crossovers. At one time in history, the Japanese actually measured grain and other commodities using real candlesticks. When computers and charting soft- ware applications began appearing throughout the world, candlestick software was de- veloped and then used to measure the massive data feeds as well. Candlestick charting is used by many traders to help measure market momentum; for the sake of illustration, many candlestick time compression charts will be used to illustrate and compare how the S90/Crossovers are interpreted.
There are many other types of charting applications to measure the markets, such as bar, scatter, line, and wave charts. Any charting service will do, but for simplicity, only candlestick applications are illustrated in this book.
RESISTANCE IDENTIFICATION IN TRADING RANGES WITH NEWLY FORMING RESISTANCES
Resistances, for the purpose and application of the S90/Crossover within a bear trading range, are indicated by a grouping of five (or more) candlestick bodies with the center wick(s) being higher than the tops of the two candle bodies or wicks that have previously formed to the left and the two that subsequently form to the right. See Figure 3.1.
FIGURE 3.1 Examples of resistance points. Courtesy of Concorde Forex Group, Inc.
Each of the six candlestick charts shown in Figure 3.1 is an example of a resistance point. Chart 2 in Figure 3.1 is referred to as “twins,” because the high point of the resis- tance point has two candles with the same high (top of wick); this is a resistance because it has two candles to the left and two candles to the right that are lower than the tops of the two twin candles. Chart 6 in Figure 3.1 is also a resistance point; it is referred to as “triplets.”
As the market moves down, resistances are developed, and they should be marked as illustrated in Figure 3.2, in case the market returns to that level. The circled top and bottom represent the trading range in question. Notice that the support areas of the trad- ing range are not considered to have value within the range; therefore, no lines are drawn for supports. Supports will be illustrated later in this chapter.
Figure 3.3 shows a downward trading range with resistances indicated on the top side of the trading range, which is the beginning of the search for a S90/Crossover.
As the market pierces the horizontal line B, a stall often happens in the market, and one of four features will be observed:
1. If the market arrives to the level but does not breach the level with an open and close of a candle body, it may go sideways until it either breaches the level and continues in the same direction or reverses and returns later if the level was not breached (again, see Figure 3.3).
FIGURE 3.2 Example of marking resistance levels in a downtrend. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.3 Resistances in a downtrend. Courtesy of Concorde Forex Group, Inc.
2. The market may strike the level and a reversal may occur, depending on whether the level was also duplicated as a Fibonacci level. As long as the level is not breached with an open and close of a candle body, then the odds are increased that the market will eventually return to the level. If the level becomes a future Fibonacci level within a future trading range, then the odds of the target level being reached are increased tremendously.
In summary, the farther away from the level that the market moves, the greater profits may be made when the market begins its move back toward the S90/Crossover level, which has been duplicated with a new trading range Fibonacci level. Figure 3.4 illustrates this.
3. The market could breach the level with an open and a close as it passes by the level and then retreats back to the opposite side for a new open and close. This means that the market has opened and closed on each side of the level and the level can never be trusted again, unless it forms a new support or resistance in the future in the same area, which increases its value at that time. (See Figure 3.5.) This type of market action on each side of the level is considered an illegal S90/Crossover and cannot be trusted unless a future level is established in the same area with a new trading range. Then it becomes a historical level with increased odds of becoming
FIGURE 3.4 Example of the market returning to the resistance level, followed by a reversal. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.5 Example of an illegal S90/Crossover. Courtesy of Concorde Forex Group, Inc.
a market attraction for a future target or a bounce entry as a reversal point in the market.
4. If the market not only breaches the level, as shown in Figure 3.6, but immediately continues in the direction of the former run, then this is a good sign, and as long as the level is not defined as illegal, the odds have increased that the market will even- tually return to the crossover as a target and a possible new bounce entry, provided other confirmations are present to justify the entry. Such bounce confirmations may be a PCI (percentage change indicator), ROI, or even a volume indicator. This new entry would be considered a reversal or bounce entry.
TRADING RANGES WITH NEWLY FORMING SUPPORTS
Supports within a bull trading range, much like the resistances in a bear trading range, are also indicated by a minimum grouping of five candlestick bodies with the center candle(s) or wick(s) being lower than the bottoms of the two candles to the left and to the right, as shown in Figure 3.7. Notice that the resistances are not considered at this level to have value within the range. As the market moves upward, the supports should be marked, as illustrated in Figure 3.8, in case the market returns to that level. Figure 3.7 offers an example of a view of how supports will appear.
FIGURE 3.6 Example of the market breaching the resistance level and continuing in the direction of the former run.
Courtesy of Concorde Forex Group, Inc.
FIGURE 3.7 Examples of support points. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.8 Example of marking support levels in an uptrend. Courtesy of Concorde Forex Group, Inc.
SUPPORT IDENTIFICATION REITERATED
Trading ranges with newly forming supports, for the purpose and application of the S90/Crossover within a bull trading range, are indicated by a grouping of five or more candlestick bodies with the center wick(s) being lower than the bottoms of the two can- dle bodies or wicks that have previously formed to the left and the two that subsequently form to the right. Notice that the resistance areas of the trading range are not considered at this level to have value within the range and therefore no arrows are drawn on the top side of the trend within the illustration in Figure 3.9. When the market is bullish, then we look for supports to mark within the bullish trading range. As the market moves up, supports are developed, and they should be marked as illustrated in Figure 3.9 (i.e., on the bottom side of the trend) in case the market returns to the level.
Just as covered previously on the resistance development side of the S90/Crossover, if the movement of the currency pierces the horizontal line, a stall often happens in the market, and one of four features will be observed:
First, if the market arrives to the S90/Crossover level but does not breach the level with an open and close of a candle body, it may go sideways and eventually either breach the level and continue in the same direction or reverse and return later if the level was not breached. (See Figure 3.10.)
FIGURE 3.9 Example of marking support levels in a bullish market. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.10 Example of a sideways pattern followed by a market reversal from the S90 level. Courtesy of Concorde Forex Group, Inc.
Second, if the market strikes the support level and reverses, it may depend on whether the level was also duplicated as a Fibonacci level. A Fibonacci level in this sce- nario is drawn from the previous trading range in question and may be indicated by a
.50, .382, .618, or another Fibonacci number. (If you need more information on Fibonacci levels, check the Internet; there are also many books available on this topic.) As long as the level is not breached with an open and close of a candle body, then the odds are in- creased that the market will eventually return to the same support level. If this particular level becomes a future Fibonacci level within a future trading range, then the odds of the target level being reached are increased tremendously.
Summary: The farther away from the resistance or support horizontal level that the market moves, if the market remains legal, the greater the profits that can be made when the market begins its move back toward the S90/Crossover level. If that level happens to coincide with a Fibonacci level due to the development of a new trading range, then the strength of the level becomes more obvious. (See Figure 3.11.)
Third, the market could breach the exact level with an open and close as it passes by the level and then retreats back to the opposite side for a new open and close. This means that the market has opened and closed on each side of the level and the level can never be trusted again, unless it forms a new support or resistance in the future in the same area, give or take 10 pips, which increases its value at that time. (For the sake of
FIGURE 3.11 Resistance and support levels. Courtesy of Concorde Forex Group, Inc.
simplicity and clarity, when a historical event such as a repetitive level occurs, the word area may be used in association with a historical S90/Crossover level, which means “give or take 10 pips on either side of the level.”)
In general, once the S90/Crossover becomes illegal and the same level keeps re- curring in the same approximate area, then you should take notice of the validity and strength regarding the importance of the area for a reversal entry or a future target if trading toward the historical area. Most likely, if this type of event is occurring, a Fibonacci level will be in place as well for additional confirmations. To reiterate a com- ment made earlier about not trusting the level if an open and close occurs on each side of the S90/Crossover, this type of market action on each side of the level is considered an illegal S90/Crossover and cannot be trusted again unless a future level is established in the same area with a new trading range. Then it becomes a historical level with increased odds of becoming a market attraction for a future target or a bounce entry as a reversal point in the market.
Figure 3.12 is an example of a resistance point turning into an S90. Figure 3.13 is an example of a support point turning into an S90. Figure 3.14 is an example of when a resistance S90 becomes illegal. Figure 3.15 is an example of when a support S90 becomes illegal.
Fourth, as in earlier illustrations based on supports of a trading range that generated an S90/Crossover, the market not only may breach the level, but may immediately con- tinue in the direction of the former run. This is a good sign as long as the level is not
FIGURE 3.12 Example of a resistance point turning into an S90. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.13 Example of a support point turning into an S90. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.14 Example of when a resistance S90 becomes illegal. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.15 Example of when a support S90 becomes illegal. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.16 Example of the market breaching the support line. Courtesy of Concorde Forex Group, Inc.
defined as illegal. The odds are the market will eventually return to the crossover as a target and a possible new bounce entry may become evident, provided other confirma- tions are present to justify the entry. Such bounce confirmations may be a PCI, a ROI, and a historical S90/Crossover, which are often referred to as clusters in the market, or even traditional volume indicators of some type. This new entry would be considered a reversal or bounce entry. (See Figure 3.16.)
BREACHING A LINE LEGALLY OR ILLEGALLY
An S90/Crossover begins with resistances or supports. An extended resistance or support line is drawn horizontally into the future. The market may return to the horizontal line, and at the point of contact a new predictable future is determined. This determination is based on whether the line is breached. This is also where the illegal or legal aspect of the level is determined.
Figure 3.17 is an illustration of a support line breach. In Figure 3.18, the market has opened and closed below the support line, turning it into a legal S90.
Figure 3.19 is an illustration of an illegal breach.
FIGURE 3.17 Illustration of a support line breach. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.18 Illustration of a legal breach. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.19 Illustration of an illegal breach. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.20 Resistance levels are found on the top side of a bear trading range. Courtesy of Concorde Forex Group, Inc.
FIGURE 3.21 Support levels are found on the bottom side of a bull trading range. Courtesy of Concorde Forex Group, Inc.
APPLYING FIBONACCI LEVELS
The Fibonacci .50 area of a trading range may offer an S90/Crossover support or re- sistance for the birth of a new future entry or target, depending on whether the future contact level is breached legally. If the level is a Fib level, then its strength increases. The five levels of a trading range that have increased sensitivity are 25 percent, 38.2 percent,
50 percent, 61.8 percent, and 75 percent of the measured range.
Resistance and support levels, or S90/Crossover birth levels, may coincidentally oc- cur at the levels shown in Figures 3.20 and 3.21. If you do not understand how Fibonacci levels are derived, you might remember them better by associating the most common Fib levels of a trading range with the human body, which also offers Fibonacci levels. For example, the chest area is .382, the waist is .50, and the knees represent the .618 level of the body, as shown in Figures 3.20 and 3.21.
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