GBP USD 5 Min:

Price fell from the open in an expanding triangle down channel hitting a major channel line (bold dotted line slanting down left to right) on the nose rising then just breaking it suggesting of a failed break out long trade. But there was no buy signal. Instead price rose and fell in 5 waves forming an expanding triangle with trend set up (see blue lines slanting up and down). After 2 lows the 3rd High reached a double top a measured move (bold dotted horizontal lines) the signal candle was the first candle clear of the 20 MA (gap bar) and touched the 50 MA. The entry candle also engulfed the signal candle indicating selling pressure had started.Entry into the trade broke a mini channel line.

There were 6 hard signs for the trade:

With trend expanding triangle set up, double top, measured move, 20 MA gap bar, break of mini channel line engulfing candle.

There was one soft sign: first touch 50 MA.

There were no deal breakers.

Trade management: 60% was closed at 4 pips which was the break of the potential up trend line then 20% was closed at the bottom of the bull candle at 6 pips. SL was then set to 1 pip above the mini pull back after the trade was triggered at BE minus 3 pips. Small red arrow.

Price wobbled tested the entry and the pull back position so the trade would have been stopped out if we had merely set it at BE minus 1 plus spread. Then fell so that some more was harvested at 10 pips and 20 pips. with the rest left for 30 pips as it would be not unexpected after the opposite expanding triangle trade failed to have a further drop equal to the original drop from open ie the length of the morning channel or at least the vertical height of the expanding triangle complex.

Another lesson in SL placement being as important as nailing the entry. It also means if you miss the entry just let it go as you will not be able to manage it as safely as you should.

Price action at its surgical best maintaining clarity of thought in apparent chaos with traders yelling buy / sell in equal numbers.

Thanks to Al Brooks

Views: 166

Comment by netwoxed on July 31, 2014 at 1:23pm

U dont trade fundamentals ?

Comment by Constantine on July 31, 2014 at 6:05pm

Not at all, they are a complete waste of time as the market makers already know the results and or have decided which direction the market will take. All you can do is follow them hence price action and hence why price will shoot up with bad news or down with good news often after spiking briefly in the direction of the news before the big boys press sell and stop everyone out taking their money. Its all rigged.

http://www.tradeguider.com/bestofwyckoff/The_game_in_Wall_Street.pdf

This book was written in 1898 and is applicable today as it was then

Comment by netwoxed on July 31, 2014 at 6:56pm

Hmmn. Its good to have a trading strategy. I use to stay on only price action too before until i watch jarrat davis videos on fundamental trading and it makes things so uncomplicated. will read the book. Thanx.

Comment by Constantine on July 31, 2014 at 10:10pm

My friend I watched the videos a long time ago. All the traits of bullshit. I also don't care that he was given an FX prize. It was probably a trend he followed. If was any good he would be churning out the cash not selling crappy videos. Furthermore people would be offering him a fortune just to spend a day trading with him. Look at me. I teach for free and am not interested in any other strategy. If I ever were to teach for money it would be for at least 10k a day but it would need about 3 months of constant supervision or specifically to train someone up to work for me. So take great care. Its all rigged so fundamentals are just a smoke screen or an excuse to push price the way the institutions want.

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