Starting from 9-15 I initially had a swing reversion trade in mind from a 1hr head and shoulders pattern, the pattern followed through but was very short lived and I was forced to change bias very quickly. I know some of you can change opinion on a pair with the flip of a switch based on data. I have on the other hand had a difficult time changing bias quickly and efficiently, its a skill i have been working on and in my opinion is critical to learn so you have pure data parameters to prove if you are wrong. I know, I know, for me even though I do have data parameters to prove my position it normally takes me to close the trade and evaluate to change my bias even in the face of evidence, its a very strange trading phenomenon. I started out as a strict swing trader, in and out reevaluate, pick my entry, pick my exit move on, learning to get with the trend and ride it has been a skill I have all but given up on because i know in the end learning to ride the trend and build a position with entries on the pullbacks is the way to large consistent profit with minimal stress due to constantly analyzing the markets. Now dont get me wrong I love the markets and I love to develop and plan trades but I do also know that eventually I want a life other than sitting in front a computer screen evaluating swing trades.
Anyway this wasn't a psychology forex blog post so I will get down to the actual trades.
This was the initial setup for the swing trade short with the first target being the red support line, at this point I had it in my mind we were going to the second red line before resuming bullish momentum.
The next chart is my reentry short after the first target was achieved, this is where it gets interesting. When the bounce occurred I anticipated a lower level consolidation and drift lower below weekly pivot to second target,however price then consolidated center move and broke the high of center and I closed the second short to look for clues of the bulls entering the market. One of the first indications that this was as low as its going was the rejection of the market pivot on the daily, this rejection also was in confluence with the wkly pivot.
Now at this point I'm considering that the range is not going any lower and I start to look for longs. The first long target was to the resistance of the range, I was very involved with the long and didn't get to document the exact entry on this first long so my apologies.
After this initial long target was achieved i started to look for the evidence that this was in fact the breakout of the range, now I typically don't trade breakouts, I have a strat that is specific to fading breaks on smaller time frames and let me tell you if you fade breaks for a living considering that markets range and fake the majority of the time you can do very well, but thats a different blog. Now considering the amount of time we have been in consolidation, FOMC, Scottish referendum as well as close colaboration with a dear friend of mine and fellow Forexmosperian Sir Gissachance, I figured this was a legitimate break, so I went on the hunt for evidence, so here in succession is the list of clues i used to make my decision.
- Rejection of market and weekly pivot at ema confluence.
- Complete and broken head and shoulders on 1hr time frame
- Broadening formation on daily with test and rejection of 200 day ma
- Bull hinge on daily and Renko stochastic
- Positive momentum on 5min, 1hr, 4hr and daily chart.