23 Feb Update To 10th Feb Trading Plan; 23rd Feb 2014
As you’ll remember in my previous post of 2 Weeks ago I gave details of 5 currency pairs each demonstrating early stages of set-ups I tend to follow before entering a trade.
As things stand I’ve not entered trades in any of them as yet. For one of them I missed the chance as the move began overnight therefore making the risk/reward ratio a little less favourable, one I forgot about, one didn’t play out as expected, one still hasn’t finished the set-up and one is very close to decision making time.
I’ll go over each one again showing the original charts, the current charts and an explanation of my position.
This is the original AUD:CAD chart of two Weeks ago where I predicted a triangle type formation:
What we actually saw was a double top, in fact its a valid and trade-able 2B top but because it didn’t hold the predicted pattern I’ll probably just forget about this one and concentrate on the others. Here’s how it has panned out so far:
For this one I was looking for a lower high to fit with visible signs of weakening momentum and what MACD was telling us. A 61.8% fib retrace of the previous swing move would be the ideal area to enter a short with something like the pattern below to follow:
So far, this is exactly what we’ve got so now is the time to watch this one closely for a good intraday trade entry with stops above the recent high:
For EUR:USD I suggested the following as a potential bull flag break-out to come:
That’s exactly what we got, however the bulk of the move occurred overnight and by morning I felt the risk vs reward had been adversely affected and therefore did not enter the trade:
If we move to the EUR:USD Daily chart you can spot what really put me off entering the trade so late into the move – The green 200 MA hasn’t yet been tested for support and its always much safer to enter a swing long after a successful 200 MA test otherwise the break-out has a higher risk of eventual failure. The MACD histogram is already trending down despite no new high as yet which is another concern:
For EUR:AUD I wanted to take a long entry looking for a rally to form a Head and Shoulders top pattern at the very least, if not, a new high:
So far this has played out perfectly, but I forgot about this trade and didn’t keep my eye on it and therefore did not take it:
This one was analysed with a longer term outlook to eventually see some kind of rally that will take price back to test the bottom of the old trading range. These “Box Trades” have quite a high success rate but do require a lot of patience, possibly more than I’ve got!
So far the consolidation near the lows looks reasonably promising but its still too early for me to commit to a long entry. For you, it would be down to your personal belief in the trade and whether you are happy to hold a position for a potentially long time:
Now that all these charts have given a little more information as to how they are likely to pan out I think the one to watch in the short term has to be GBP:NZD but we still need to see further evidence of a reversal around this 61.8% fib area before we can commit to the trade. The one concern with this one is the gap down on 2nd February in the 2.0340 area. We know that markets like to fill gaps even when other technical evidence suggests price wont make it there, and this is a bit of a concern. With that said there’s an unfilled gap much higher up from 25th May 2012 and that is yet to be filled proving it can take Years for gaps to fill, but it doesn’t make a trade against it any easy!