My first chart

Beginner Questions
1

Hi all, a newbie here. I have gone through pip school and this is my first trade set up, - going short on the ero/usd

It is a dailiy chart. This is my first attempt at technical analysis. Does this make sense to anyone or can anyone see any obvious errors I’m making?

Any feedback or advise would be welcome

Thanks, Simon

trade.jpg700×560 65.7 KB

2

May I ask how your thought process went? I notice you have some trendlines and Parabolic SAR, stoch and also a fib and I’m curious which lines and/or indicators you used to arrive at the sell setup?

Sorry to play 20 questions :slight_smile:

3

Hi o990l6mh,

Thanks for replying

Well it looks like over the long term it is in an up trend, but it looks to me it could bounce down and find support where there had been resistance a couple of weeks ago. That is where I put my take profit. I used Fib to find a stop loss based on a previous high and low.

Also (I forgot to mention this) on the Oanda chart that last candle is a red candle that had closed below the previous days green candle. I don’t know why MT4 is different from Oanda (anyone?)

So also part based on the oanda candle pattern (it looked like Bearish Engulfing candle patteren)

anyway, that was my basic thought process on it:)

4

Difference between Oanda and other brokers will depend on when they start and close the trading week and at what GMT hour they start a new daily candle.

I do agree with you that the recent EUR rally may be running out of steam and that at least a retrace may be in store.

Then again trends always last longer than we think they will and the pair hasn’t yet quite attacked the 2008 dec 18 high.

Looking at the daily chart, Friday formed a doji, but it did manage to put in a fresh 2009 high first.

One thing I’ve learnt is that we should listen to advice from others, but only to a certain extent, so don’t listen to much to me. Ultimately we have to reach our own conclusion and trade that belief. There will always be someone with an argument to do the opposite of what we are planning - if we listen to much to others there will never be any trading.

That being said, here’s what I’d do. I would wait for a bearish bar on Monday to confirm that price indeed is turning down. If we get a convincing bearish bar on Monday, we then have basically an evening star candlestick formation to support a short trade.

As the chart is right now I agree with you, I expect a retrace, but I don’t yet see the price action confirmation I want.

One other thing worth noting, which supports our belief that a turn may be in store is that price is right at the 61.8 fib if drawn on weekly from the 2008 high to low. This is a common place for price to retrace to before turning.

Since there’s been a long ranging period, a potential trade should be taken with a pretty tight watch, if price starts to show indecision when reaching 1.44 (the top of the ranging zone) I’d consider moving my stop to break even to eliminate risk. One might even take partial profit.

Your analysis shows that you’re on the right track. It’s not at all a bad setup you’ve found. Let’s see how it turns out.

5

Hi there,

I am newbie myself :D. However, I’ve notice with my practice trades that it is a lot more safe to go with a trend, then against it. I would rather wait for the pair to go down and find support and then buy. Personally, I feel more comfortable with it. In addition, when you trade with the “flow” of the market there is a better possibility for bigger return and less risk. Another thing that I would probably correct is your Fib levels. I would rather apply them against last run.

Best of luck.

6

Thanks o990l6mh,

Its good to know I’m on the right track

It will be interesting to watch what happens over the next few days,

Simon

7

I agree with MacGyver.

It looks good for a possible short trade, but the keyword here is[I] “possible”[/I]. You’d want to wait for Monday’s candle to form and confirm the reversal before you actually make the trade.

I’d want to see a bearish candle that closed below Friday’s low before I would enter that trade.

8

all I know is that I would never take a trade unless there was confirmation from a higher timeframe. Since you’re already trading the daily, this means you should be looking at the weekly charts to see if that entry looks good there or if you catch something there that might invalidate this trade. Also, you aren’t looking at very much of the daily chart, move it to fill the screen with as much price information as you can!