Breakouts Work
I ended this week with a few wins. My Breakout Continuation plays worked surprisingly well as volatility picked up. This was also contributed by US inflation ticking marginally higher, all improving the likelihood of a near-term rate hike.
Unlike with the USDJPY trade, this was a Breakout Continuation due to an over-extension (xBC). This chart shows the classic price action - price spike, failure to make a new higher high, and then enter on neckline breach.
Finally, I identified another over-extended Breakout Continuation opportunity over on the 1-hour timeframe. NZDCAD made a triple top. Price failed to push higher and returned to the 0.85765 level each time. This essentially became the level for me to watch.
So what I'm really saying is that it was possible that I just happened to pick the "right" direction on these shorter term moves. In today's trade review, I'll give a rundown.
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| USDJPY 1-Hour |
The trade on this pair was very structural. I didn't catch the initial breach at the 115.675 level. However, the price drift to the upside was a good indication that we're not anticipating demand to pick up.
I entered this trade as soon as I saw downside momentum pick up. This was indicated by dominant bearish bar. Shortly after my entry, price unexpectedly began drifting to the upside again. This wasn't much of a concern to me because the Level-Failure play was designed to be pre-emptive.
Reviewing this trade, I did make one mistake. More specifically, my inaction was suboptimal. Since this signal is designed to anticipate a breach, I should've placed a sell stop just below the 115.055 level to scale into this trade. Other than that, this was an amazing 5.14R outcome.
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| AUDUSD 1-Hour |
Unlike with the USDJPY trade, this was a Breakout Continuation due to an over-extension (xBC). This chart shows the classic price action - price spike, failure to make a new higher high, and then enter on neckline breach.
I would say luck did play a small role as I was at the right place at the right time. Although US retail sales disappointed, the likelihood of a rate hike is still very much on the table. As such, we saw a reversal where the DXY ticked higher and most majors sold off.
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| NZDCAD 1-Hour |
Finally, I identified another over-extended Breakout Continuation opportunity over on the 1-hour timeframe. NZDCAD made a triple top. Price failed to push higher and returned to the 0.85765 level each time. This essentially became the level for me to watch.
Since I took this trade overnight going into Friday, I had less than 24 hours for this pair to play out before the end of week close. As such, I decided to only target 2R. Unfortunately, the loss of momentum happened quicker than I expected. This trade was manually closed out with a 0.86R.
My entries this week have been thought out and on point. I didn't recoup the losses from the previous week despite having multiple wins because I did scale down. Rather than putting on size of 1-2%, I reduced it down to a consistent 0.5%. If I am able to find the groove to trade this size over the next few weeks, I will consider sizing up again.