Structure

I've really struggled on the FX side this year, but the past week has been better. The current nature of the FX market consists of more whipsaws on a lower timeframe, which would require me to widen my stop and really go for the structural moves. I was able to effectively do this last week.

The two trades in question both involve the Japanese yen. The first is EURJPY. Before I plot my execution on this chart, I do want to show how I plot my levels. In fact, I dare say I polished my system a bit because the levels that I plot tie into decisions depending on how price reacts. In other words, I'm not plotting horizontal levels simply for the sake that two price points are near equal of one another.

EURJPY 1-Hour

In this chart, the two yellow lines show what the "old" me would've plotted. If you really think about it, those two lines are plotted simply for the sake of joining two price points that just so happen to be at relatively the same level. They don't in any way contribute to my entry decisions. Now for the actual trade.

EURJPY 1-Hour

Going to provide a rundown in four sections:

1. Price didn't hold cleanly below this resistance, which is fine. It simply means that I likely wouldn't have gone short there. Alternatively, it could just mean that I would reduce my position size and then scale into the trade when the move is underway.
   
   In this case, I stayed out because this move started around 1AM. I likely wasn't looking at this move then.
   
   
2. This bar is a good indication that we're not expecting much upside. More specifically, the reaction off of this minor support was rather weak. This is my first indication to catch a reversal move.
   
   
3. At first, it looks like I shorted into a bullish bar. If you watched this in real time, it would make a bit more sense. The dominant bearish bar is an indication that price is threatening to break lower. When I entered, this bar was a pullback move. Only, it pulled back a lot more than I would've thought. But whatever, my stop loss was wide enough to ensure that I gave this pair sufficient breathing room.
   
   
4. Glad I held through. Price made an explosive move lower and then stalled at the next major level. I exited this trade since it looked like the downside pressure was exhausting.

Overall, I think I would need to look for these types of plays. Just find larger structural reversals rather than trying to scalp or target 1-2 R of short-term momentum. If price is oscillating or whipsawing on the 1-hour or 4-hour timeframe, I should just sit out as it's really just a toss up to figure out the directional move.

So I think the next trade is a bit interesting. Over on CHFJPY, I did something that I usually don't do. I placed a sell stop.

CHFJPY 1-Hour

The overall structure was very similar to that found on EURJPY. What I wanted to see was for price to break that relative low. If it does, then I anticipate further downside potential. Rather than monitoring this trade live, it was really a set-and-forget process. I placed my sell stop and just let it trigger overnight when I was asleep.

I think these types of entries can be optimal. Previously, I've always tried to wait for price to pull back in order to enter. That would surely produce a higher R, but lowering your payoff to get a stronger signal or "confirmation" could be a good thing. For example, I could've shorted when price is pulling back higher. This would produce a higher R-multiple. But if I trade when price crosses the relative low, it provides a stronger signal that there's further downside.

This is what I plan to focus on for FX. I think there will be much less trading opportunities each week. However, I anticipate that this will lead to more frequent smaller losses and fewer larger gains.