Hello traders, how y'all doing today? It's been another few days since I posted, but there is very good reason for that!
I prepared a big weekend analysis, all ready to go, but then had my internet usage capped - HOORAY! At a snail's pace of 28.6kbps, there was no way I would be able to post. By the time the connection usage was reset on Tuesday morning, a few of the things I wanted to post about had already been rendered moot. As I always look to the future, I decided not to post the analysis which at that point was already history.
Instead, I'll fill you in on two setups that I traded in the past 24 hours.
EUR/AUD
This pair was starting to look good from a reversal perspective.
1. On the daily chart, it had cleared major resistance.
2. It had completed the wave 1 move.
3. A nice symmetrical triangle (ABCDE) suggesting a continuation scenario.
4. 1.325 offered some decent support on the 15 minute chart
I ended up entering a long on the break of 1.3265 with a fairly tight stop set at 1.3235. As you can see from the rest of the graph, the first break of the triangle where I entered was a fake out, the next attempt after a small retracement was a more decent effort, but also ended up being a fake out. Ultimately the stop got knocked out and price action retraced to the 1.32 level.
Immediately after, price rocketed up and topped out at 1.33856 - PAINFUL.
Point of consideration: The triangle was actually a wave 'B' correctional wave from Elliott wave theory. My mind must have been elsewhere, as Elliott wave theorists should all know that the correction completes at the end of wave 'C' which is suppose to break past wave 'B'.
If I wasn't such a 'nut', the correct course of action was to wait for a close back above 1.322 and confirmation that the level now holds as support, then enter the long. This would have resulted in a very health 160 pip profit.
GBP/USD
Unfazed, I kept an eye out for opportunities going into the American session with the FOMC statement and Bernanke's press conference on tap. I had prepared my strategy! GBP/USD was starting to consolidate into a very well-defined head and shoulders pattern.
The event risk was sure to get price action moving. So, I target a clear resistance level in anticipation of a 'right shoulder' top. At the point of US market open, the hanging man candle has almost formed, but I actually jumped the gun and entered at 1.600. The idea is you wait for the candle to finish forming and set your trade up.
In any case, by US market close I was 60 pips in profit. During the Asian session, price further destructed and eventually reached, and broke the neckline of the pattern. Bring out the party hats right?? Wrong! The bearish candle break rejected. Then the second attempt to break turned into a bullish pin bar rejection at the 100MA level. At this point, this suggested that there would be a mild pull back. Given the volatile nature of the market, I chose to book the 120 pip profit I had at the point. Then what happened?
As you can see going into the European session, the price stupidly reversed like a rocket, charging straigh past the entry price. What happen to the bull taking the stairs and the bear going out the window?? Fundamentally, nothing had changed, but such is the nature of the market. I shall be watching the ECB conference closely tonight with the new incoming EURO president Mario Draghi. No doubt he'll be tested by the press gallery for comments regarding the height of Greece government's insanity. We will see if any opportunity presents itself for a fresh short.
Good luck tonight all!
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