You are correct. This is not a NickB style SCALP, but I’m asking of it is a NickB style REVERSAL. The long wick on the 12:00 candle seemed to be forming a LWP, or Long Wick Pattern, as described in NickB’s e-book (although it has weakened since). You can even see the same type of LWP a few candles back at the last reversal.
My bad. Carry on 
That looks like an excellent reversal! The only thing I would have done differently was get into the trade a little sooner…
I don’t know the proper SL and TP levels for EUR/JPY, but the standard 70 or 100 pips that work for NickB reversals on GBP/JPY would have been a successful trade here.
I enter reversals based on the NickB method, but I do my exits and stoplosses a little differently. Here’s what I would have done…
I would have set up a pending order to go long at 132.50, which is a few pips above the 00:00 candle. My stoploss would have been a few pips below the candle at 131.55 and the profit target would have been the upper trendline.
Note too that the price dipped a little below my original stoploss [B]before [/B]the trade was triggered, so I would have readjusted my pending order and moved the SL down a little to 131.35. If it had moved down so much that a 1:1 RR ratio was no longer possible I wouldn’t have traded the reversal, but it this case we were still risking 115 to gain 130, so it’s still a good trade.
To make your pics larger don’t add them as attachments. Upload them to a free image service such as Imageshack or Photobucket and then hit the “Insert Image” button (the one that looks like a mountain with a yellow sky) instead of “Attachments”. Then just put in the direct link to the pic the imaging site gives you and you’ve got a huge picture.
Great EUR/JPY reversal nice trade!
Thanks for the input Phil. I was actually waiting for a short trade in the pic that I posted, not a completed long. I guess that might mean that I was way off, lol. Especially since it never came to fruition. 
Was I wrong to set my entry just below the 12:00 candle’s wick?
That long trade would have been amazing, but sadly I missed it.
Ah, I see what you mean. You threw me off cause you called it a NickB reversal.
A NickB reversal needs to bounce of a strong S+R line that has not been recently broken. While that may have been a good S+R line (I don’t know since I don’t trade that pair) it still wouldn’t have been a NickB reversal because that line was broken about a dozen times last week. A NickB reversal needs to be off a S+R line that hasn’t be broken recently.
That being said, if you were to trade this because it’s a trendline bounce then it’s a great trade, it’s just not part of the NickB system. I trade bounces like that all the time!
Your entry point is perfect! I would have put my stoploss a little further back though, on the other side of the trendline, since it’s basically acting like a “diagonal S+R line” at this point.
OK, my semantics were off a bit. I guess I didn’t realize that Nick’s reversals were always off of S/R lines. I think some of this stuff is starting to make sense though. Thanks again.
I must have made a few mistakes in writing the book as people always get thsi one wrong. A LWP does not have to form on a S+R or scalp line, it certainly helps but is not essential.
lol I’ve been trading your method for over a year and now you tell me.
The ebook definitely gives the impression that you only take reversals on line bounces. Through all of chapter 5 reversals and S+R lines are linked together.
Some quotes:
[I]“All you are doing is using candle patterns such as LWP�s and S+R or Scalp lines together.”[/I]
[I]“If you look at the chart below you can see highlighted a S+R line and an LWP forming on top of it. This is what you should be looking for to enter a reversal trade, it really is that simple!”[/I]
[I]“However now that an LWP has formed on the line you can trade the reversal and hopefully make some pips back.”[/I]
[I]
“You have the LWP�s preceeding trend, the LWP�s reversal and the S+R line.”[/I]
The best setups definitely form on S+R lines but really all a LWP is just a strogn reversal pattern. You can take them anywhere they form.
Right now one has formed on an S+R line on the GBP/JPY 4hr I am lookign for a good entry point.
I saw that one too but I’m sitting it out because of all the major news events coming up soon.
Hi Phil,
Need your advice. These questions may sound stupid but they are important for newbie like me. Thanks in-advanced.
(1) Ref to Nick’s post: GBP/JPY moves roughly 200-300 pips per day. In the past 24 hours it moved over 400 so it is very possible that its getting exhausted.>>>> Where can I get ADR? Can I put ADR on chart?
(2) When you enter at 4H chart, will you check other Time Frame for further confirmation to exit?
(3) How do you know the mkt is in High/low/med volatility?
Thanks
HI Nick, can you show me your S+R line? Appreciate.
Ya, I’ve been through the e-book about five times now and that it what I thought, that the LWP’s had to be off S&R or scalp lines.
I thought the same thing, but as I began to think it through I realized that solid LWP formations that follow up with confirmed reversals tend to form scalp lines in themselves. I guess in simplistic terms, there has to be a first LWP sometime; the one that creates an ideal scalp line.
I’ve begun demo trading LWP and group pattern reversals that aren’t associated with nearby scalp lines, and as long as the formation is correct they’ve been very successful so far.
Cody
I guess the reason I got Nick’s point on this was because of his pictures. When he showed a LWP there wasn’t a line in the pic.
They are, but behavior is not as predictable. It makes sense when you think about it. There are no certainties, only probabilities; there is a “good” chance that when price moves past one of these lines that previously offered support/resistance, traders jump in and the price shoots onward. But during the asian session, trading volume is much much less than it is in the London and NY sessions. This means you’re dealing with a smaller pool of traders, and of course a smaller sample size always means statistics/probabilities will be less well demonstrated. If one big player makes a move, with the thin volume he can make price move contrary to what one would “normally” expect to happen when there are a lot of traders active – since a bigger pool of traders means an anomaly will tend to get swept away by the tide.
Hopefully someone else who tracks trading time will chime in with their own results, since the 7 months of my records is too small a period to draw a definite conclusion.
Dear all,
I guess Phil is busy, can anyone help me on my queries? Thanks a lot.
Sorry, Mumpips… I’ve been here all day but somehow overlooked your post.
I’ve attached an MT4 ADR indicator that someone else posted on this thread. I’d like to give them credit but I saved it on my computer and now I don’t remember who it was. Whoever you are, thanks for the indicator!
I never look at lower time frames. 95% of the time I’m looking at 4H charts, and the other 5% I’m looking at daily charts.
I judge how volatile a market is by it’s ATR (or ADR, if you prefer). Take a look at this chart with an ATR(14) indicator on it. It’s a daily chart zoomed way out to give you an idea about the overall market conditions right now. As you can see, the last part of 2008 was really volatile, while most of 2007 wasn’t. Right now we’re seeing medium ATR’s which show that normal market conditions are returning.
Of course you can zoom the chart in to compare individual days to each other, this zoomed out version just gives an overall picture.
