Lunch time, which means time to take 10 minutes and look at the markets to see what is going on…
Market has broken out of a trading range to the downside yesterday, but seems to have found another range with the bottom of first range acting as the top of the second range (on the four-hour chart). Sideways movement continues on the 1 hour chart, with no clear trend. Price is hovering near the mean of this secondary range, so no opportunities here.
Broke above the range that price has been trading within since 10/26. Up move has been explosive and almost equal length to the down move prior to the range. I tried to play this range but was stopped out several times and missed this move. At this point, price is bullish to my eye, so looking for bullish entries on lower time frames. Hourly chart shows near vertical price move with no clear market structure. 15 min chart shows a brief period of sideways movement before another bullish move. Note to self: watch for retracement followed by double bottom to get long on this market.
Currently ranging on the 4 hour chart, with bottom of range at 1.30466 and top of range at 1.33007. Price is currently at mean, so too dangerous to play here. Skipping hourly and 15 minute looks for this pair. Set alerts for top and bottom of range to draw my attention back here again when price should be better.
Market had put in a double top on the four hour chart early this November, and then a bearish trend has ensued. I put in a long play at 1.27378 thinking that the market was going to retrace up to 1.27937 (foolish thought), and that trade is currently -12 pips. Market is looking like it might start ranging on the 1 hour chart following a retracement up and then failing to put in a lower low at 13:00 UTC today.
This market just broke range to the downside at 13:00 UTC on the hourly chart. My first instinct is to look for bearish trend following opportunities, however, 4 hour chart shows uptrend that double topped, then moved into a range and broke to the downside. I still want to say bearish but not sure if market will find support at 0.99264 (previous resistance level that was violated prior to double top). No entry signals on the 15 minute chart so sitting on hands here and watching for a double top to form after a bullish retracement.
Four hour chart currently in a range from 113.068 to 114.619 with price currently at 113.416. My gut is saying to be cautious about looking for bullish opportunity. Price has been trending down from 114.619 on the hourly chart since 11/6 which suggests to me that bears are gathering strength and bulls starting to falter. A double bottom exists on the 15 minute chart which is a bullish entry signal in my plan but I don’t have RSI divergence so staying out of this trade.
My Trade Rules for Following Trends
I know indicators are not popular here, but screw popularity. In my trade system, I must have these things in order to take a trade (which I was not following yesterday because I let the excitement of live trading go to my head):
- Double top or double bottom after an impulse leg that violates structure level
- RSI > 80 for the first top in a double top or RSI < 20 for the first bottom in a double bottom
- RSI lower on second top than first top (or higher on second bottom than first bottom)
- Direction of trade must match direction of trend on the four hour chart
- Risk vs reward of 2 or more (Reward >= 2R where R = risk)
Entries are allowed anywhere between the close of the bar that forms a valid pattern completion and the neckline, provided that risk / reward is met.
Stops are placed above the highest high of the double top or below the lowest low of the double top typically by 6-10 pips depending on risk - reward factor. Target is the neckline of the pattern. If I am going to take a second target, then second target is at 0.618 retracement of the initial impulse leg that formed the first half of the pattern.
My Trade Rules for Range Trades
This is a simple trade. Buy at top or bottom of range via limit order. Stops are set to 10 pips outside the range, and target is the other side of the range. I allow myself a discretionary exit at the mean if price looks like it might reverse.