I was very satisfied with my trades over the past week. I remained patient and it paid off. Instead of over-trading or monitoring my full watchlist, I only focused on two FX pairs. This resulted in me executing optimal entries by really taking the time to understand the price structure.
The first trade was on the CHJPY pair. Here's my interpretation of the daily (D1) timeframe.
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| CHFJPY Daily (D1) |
- CHFJPY has been in a massive uptrend, characterized by price holding supported above the 60-period exponential moving average (EMA60)
- Price attempted to simultaneously break below EMA60 and a key daily level, which I later determined to be a false breakout
- The hourly (H1) timeframe helped me make a more informed decision on the directional bias
Below is the H1 chart, which I have annotated with all of my key decisions.
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| CHFJPY Hourly (H1) |
- My first 'BUY' signal was generated when price crossed above the descending trend line (DTL), which led to price drifting for a while since the horizontal trend line (HTL) didn't break yet
- When price crossed above the HTL, this is where I started to see momentum
- When price pulled back and bounced above the HTL along with my EMA60, I plotted another DTL and entered another BUY trade
- As price trended higher, I plotted HTLs along higher lows; so far, price has not tested any of the HTLs so I continue to ride this trend
The second trade was on the GBPAUD pair. While my analysis was very similar to CHFJPY, I'll break this trade down a bit further.
Initial analysis:
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| GBPAUD Daily (D1) |
- The D1 timeframe indicated a technical downtrend as price remained resisted to EMA60 after the multi-day pullback
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| GBPAUD Hourly (H1) |
- On the H1 timeframe, there were two key observations that I made
- Price crossed my ascending trend line (ATL), which indicated a likelihood of continuation to the downside
- Price also held resisted below EMA60, which indicated a relatively clean price structure
Monitoring the trade:
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| GBPAUD Hourly (H1) |
- I observed a very explosive move shortly after price held resisted to EMA60
- My stop loss was trailed and re-positioned just above the new lower-high
Scaling-in:
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| GBPAUD Hourly (H1) |
- Price pulled back and managed to hold resisted below the HTL
- I scaled into this trade when price crossed below EMA60 as this indicated high potential for further downside momentum
Final scale-in and stop out:
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| GBPAUD Hourly (H1) |
- I actually scaled in one more time, which was a little bit too aggressive in hindsight; this is because price did not make a new lower low
- Since price did not make a new lower low, it should've been an indication that I needed to be cautious of seller strength
- Shortly after I scaled in based on the break of a weak ATL, price continued to trade higher and I got stopped out for all of my positions
Although I was still positive in this trade, it did teach me two lessons:
- Be patient when scaling in and be sure that the price structure is indicating higher-highs (uptrend) or lower-lows (downtrend)
- Consider using the 4-hour (H4) timerame to not only reduce noise but also over-analyzing each individual candle movement
