You were really lucky that you didn’t get stopped out on your current trade. I have attached a chart and will explain my analysis on how you could have entered at a better price with the market momentum on your side.
First of all you entered during the 1st spike up which is a big mistake cause there wasn’t anywhere near enough buildup to close above the line marked 1 and it was still in a bearish phase. Area marked A is when the market showed that there was bullish interest because of the 1st two green bullish candles and it went up to close above previous resistance that we had on line 1. After that it dipped back down and had a strong bounce to point 3 also what is an interesting point is that it closed above the resistance line marked B so bulls are telling us that this is most defiantly a long play. So now that we know that we look for an entry and as we can see it had a big retrace down to test the strong support A. which it didn’t even get a chance to test because the buyers quickly started snapping it up. In the circled area we can see that after it bounced of support the next 2 15m candles it traded at a low of 1.4035 and the next candle with the line underneath it bounced of there forming an inside bar and closing higher so it was not surprising that the next candle was a big one confirming the bounce, Also look at the price action on the 5m that is the way price usually trades before the big momentum moves starts and even though we can’t see the volume you can bet your bottom dollar that there was heavy volume with lots of smart money accumulating in that area. So basically the perfect way to play the long would be to enter at the circled area and the stop should be if it closes below point A on a 5m or 15m chart. I just wish I noticed this setup because I would’ve been leveraged up big time at this spot.
Also the reason why Support at point A was strong support was because it was trading near the open of the bullish day that E/U had on July 13th where it opened just 5 pips below that area marked at point A and usually the perfect spot where big money comes in to shoot it back up.
Thanks for your advise! I have weakness of price action.
Yeah, I was luck not to get stopped out Then, now I have 212 pips unrealized. But I wanna clarify here to understand properly and I really appreciate if I’m wrong.
[ul]
[li]No reversal entry until recent resistance/suppot breaks
[/li][li]For reversal entry from bearish to bullish, failing to test current support indicates strong bullish power
[/li][li]For the final confirmation for reversal entry, look at consolidation where candles are closing toward the reversal direction
[/li][/ul]
And I have a couple of questions. I would be glad if you answer me.
If the price hit “A” level and surpasses “B” level, can that indicate confirmation of bullish? Is it retracement or possible reversal? If it is retracement, should I use fib. to retrace for the continuation?
As I quoted your sentence above, I could not clearly understand how you knew there are volume within such tiny consolidation of 5-min chart and the crowds are made of smart money are accumulating in the area? Do you mean there would be a large number of sell/buy’s in outside of the consolidation seen in 5-min chart? How did you know that?
If I could understand those riddles, I would have more possibility to maximize my profit and I want to understand sentiment behind the market. Thank you!!
Alright I understand. I assume you went with EMAs because you wanted to give more weight to recent price action, so that you get in the trend earlier. If that’s the case, why don’t you use exponential BB and EMA of that BB setup. That way, all the lines are based on exponential average. So for example, you use BB with a length of 14, SD2, and a EMA 14. Just a thought
Thank you for suggestion. Actually, that sounds interesting. I mean, since I have a lack of consistency in my trade, that could be one of them (consistence in picking indicators :P). Let me mess with my OANDA demo. I don’t think they allow me to use EMA for BB’s center line in their platform, but it can be for MT4 from them. Since I like exponential than simple moving average for its volume of information (I believe EMA has more candles to count), I rather have EMA for that.
In this trade, I was lucky that I did not get triggered with the first stop loss and that I got a lot of advise through this trade. I think I was ignorant for the big move after Europe’s economic events and Bernake’s speech and greedy to my trade.
If put my SL just below the triangle formation seen in 15-min chart from 22:00 to 05:45 (GMT), I could have extra 100 pips. Or I shouldn’t have raised my SL, so I had extra 200 pips? I’ll wait for retracement of recent surge.
By extract1 at 2011-07-20[/IMG]
Then, now I have 212 pips unrealized. But I wanna clarify here to understand properly and I really appreciate if I’m wrong.