Hi pgtips (that tea makes me nostalgic!) - sorry to hear about this loss, and sorry I was not on the thread this morning; I messed up and assumed that it was NFP today. I don’t trade intraday on NFP so was not trading this morning other than a couple of end of day trades from earlier in the week. So I missed your Cable trade idea message from this morning.
I am not the expert here, so this is just personal opinion, but in case it is of interest, for me the picture was a little mixed when you went long. I always take a clear bias from the higher timeframes when looking to enter a trade, if I can’t see a clear picture then I stay out - one reason I study a lot of Pairs, I’m fussy lol.
If you pull up a Weekly Cable chart, I have a couple of S&R lines on there suggesting that we are in a rough range: it’s a little scrappy, so we’ll all draw in slightly different places, but the top of the range would be around 1.6620, the bottom around 1.5400 or a little lower. So your trade was around the middle of that range. That range follows a fall on this Pair, so my within-range bias would be short. I’d go long from the bottom of the range, but short from the top or middle.
Drilling down to the Daily chart, I have a third level on there. Again it’s rough and a little choppy (I have not traded Cable recently, largely for that reason) but it is at around 1.5936. It is a soft level, but has had a lot of respect - it acted as Support in March (check out the low test on 28th March), June and July of 2011, as well as September, October and December 2009 and January 2010. It then broke, but has acted as Resistance in August and October (and almost December) 2010, before Price reluctantly broke back through in January 2011.
Anyway, that was maybe a little confusing (sorry!) but you get the idea - there is a level around 1.5936.
If you draw a Fib from the high of 19th August 2011 to the low of 6th October 2011, the 50% retracement level (which is the most powerful Fib reversal point, imho) comes through the chart at 1.5947. Given that my original level was pretty averaged out, that is very close.
Then look at the Daily chart from a couple of days ago, 29th February: a beautiful low test right out of that old level, my own 1.5936 and the 50 Fib. I thought about trading that short then, but the Daily had recently put in a higher low, and Cable has been choppy and rangebound, so I left it. (My Entry per my rules would have been 1.5945, so although yesterday’s buyer bar would have made me slightly nervous, I’d now be 1.5% or so up. I’m happier on the outside looking in, though, as it would have been a higher risk trade than I like, I’m mentioning only to show how others view the same situation.) You mention that the previous day’s candle was a buy, but it had a fair bit of wick at the top, and that combined with the preceding high test suggested that the buyers were running out of momentum.
Then to look at your trade, you entered off the Hourly chart. That is a great idea - I like to spot a trade on a higher timeframe and then drill down to a lower timeframe for a more efficient Entry. However on this occasion, just ahead of your Entry Price put in a lower high on the Hourly chart. That would have invalidated the setup per my rules - I want to see consistent higher highs in that situation, separated only by pullbacks. A lower high would be enough of an alarm bell to have me pull the idea and wait for a cleaner setup.
Anyway, apologies for the rambling nature of this - had to flick between this box and my charts to pull up the dates and levels! - and if this sounds at all preachy or patronizing, neither is my intention. You posted the idea, so I assume you would hope for feedback, so I thought that I would share my take on it.
I did not trade this, but between the range, the S&R level, the Short bias prior to the range, the Fib level and the high test on the Daily, the lower high on the Hourly etc, my bias at that moment would have been short rather than long.
For me, the key to successful currency trading is to look a confluence of several factors in favour of a trade. I also always look for a confluence of factors [I]against[/I] that same trade. I will only enter if I have several reasons to do so, and no real reasons not to.
Hopefully you find this helpful, and take it in the spirit intended. You can take a lot of positives from this trade: spotting the channel, correlating the timeframes, balancing the pros and cons of a number of Pairs… analyzing losing trades such as this one is the best way to move towards consistent profits, so stick with it.
ST
