On Monday (18/November/2019) i entered a short on AUD/JPY on the Weekly time frame.
This was a rather complicated decision, since i did miss the original entry signal (Pinbar) on my “Part Time Trading Strategy” ,- but i did manage to get an entry on the second strategy that i am trading “3 SMA Trend Following Strategy”
Here are the details:
A very clear and visible descending trendline can be drawn on the Weekly time frame, with price making consecutive lower highs and lower lows. On the latest swing 2 weeks ago, we got a decent looking Pinbar, which unfortunately i could not trade because i was lazy
If i did enter, now i would have been an additional +40 pips in profit just from that
But, no point in punishing yourself for a missed opportunity, i just tried to find another potential setup.
So when i scanned through my charts for potential trends on the 3SMA Trading Strategy i noticed a trend signal on the same pair for the Weekly time frame, and this is where i decided to enter this trade, some sort of a second chance trade.
In this second chance trade i found a Fibonacci level, the trendline, and the dynamic area of resistance as a confluence of resistance coming together in one area, and i was confident that the bears are full commando geared up to defend this level.
p.s:the system is also showing a signal for a short trade on the 4H
I had two ways of entering this trade:
Wait for a BPC from the flag formation that was forming in the retracement
Click on the Sell button upon the first candle close bellow the 30 SMA (green)
I went for option number 2, not because it was faster, but because it was more simplistic, and if there is one thing that i like in my life in general, it’s minimalism.
The lower i was going in the time frames, the more evidence i found that this is going to be a full swing to the downside. But there is no point in zooming down, since i am trading the more significant charts from a time frame perspective.
One more interesting thing from a technical perspective is that price is currently flip flopping around the 74.000 major infliction point. As i am writing this, it’s bellow this level.
BTW, if a meassure the full potential of the previous swing, than this position has 800+ pips potential
But, i am not going to wait 3 months for that.
Managing the trade - Plan of action
Once price reaches the equal distance from entry to Stop Loss in profits, i will trail my SL to break even and exit half the position, and leave the other 50% to reach it’s full potential. I am looking for a 1:2 Risk to Reward ratio, or potentially up to 5% gain on my account.
I have a question for the traders here on baby pips, if any one wants to give me their opinion.
If we zoom in to the lower time frames (as i mentioned previously), on multiple time frames (D,4H,1H, M30) we can see that i can actually move my stop loss to 74.450, because that area more or less has been retested a few times, and it’s obviously a strong level of resistance.
By doing this i will significantly reduce my 3% risk, and could potently use the remaining risk to search for another trading opportunity,
What do you guys think, is this premature Stop Loss trail that i am considering valid from a technical perspective?
Please see this chart bellow, it’s on 4H and you will get a better picture.