I thought I’ll share a recent trade I took. Most of the ideas I used, I learned from Al Brooks.
As you can see GU has been going up this channel and it seemed to respect the top trendline fairly well. I was waiting for a push up, which I eventually got. What I didn’t like about this set up was that this leg up was smaller than the previous one. The pip difference between the previous high was less as well.
I was prepared that it might just break out to the upside and go for 1.35 or 1.36 which is why I used a large stop loss so I could size in if necessary.
The other thing I didn’t like was that there was a lack of any selling pressure. I prefer to enter when I see some evidence that there are sells coming in. This was not the case when I shorted it the first time.
Also, often these patterns can take time to play out and are not reversing immediatly.
So when I shorted and it pushed back up rather strongly I closed my short at break even. It sold off strongly afterwards and I was wondering if I just missed this trade.
Here’s what I’m talking about:
However, this sell off paused and it came up again. This time I was more confident in the set up. It had shown decent amount of sell pressure and it had broken the trendline upwards. It created gap bars between the MA 21 as well. Meaning it went below the moving average and did not touch it for three bars. That has not happened since this leg started. Another sign that this thing is losing momentum and that we either are going to be in a trading range or get a leg down.
I entered again and added to the trade with one more position as it started stalling. Here’s my entry and the small yellow line is the second entry.
As you can see it went beyond my TP. I did not have the tp in the market and exited a bit below my target. The reason I opted out of having the TP in the market is because I felt like this is going to go lower.
As you can see I don’t trade on one sign. I try to create a larger picture for myself with various factors coming together. If enough of them line up, I’m happy to take a trade and go in heavier than usual.
Hope you had a smashing trading week as well!