The Trend of the Week Trading Strategy

[g31forex]

I am proposing a trading style that I want to try out starting next week.

My trading was very successful last year, but it was a very long term strategy that gave me very few trades - since I was too busy to pay close attention to the markets on a daily basis.
This year I am devoting more time to trading forex, and I’ve been trying to figure out how I am going to trade on a more active basis.

The Trend of the Week Trading Strategy

Pairs:
Gold (not really a pair but offered by many brokers) - to start with
And Add later:
AUDUSD
EURUSD
GBPJPY
GBPUSD
USDCHF
Silver
(Not necessarily in that order)

*** I chose to start with Gold because it trends more often than most of the currency pairs,
and reacts more reliable to pattern breakouts

So the basic rules are as follows:

Indicators:

1)Support and Resistance (Barry)
***red and green dots above and below price (where fractals would be) that provide
local support and resistance fro highs and lows - aid in the confirmation of my pattern breakouts

2)Moving Average MTF
-timeframe: 10080
-MAPeriod: 1
-ma_shift: 0
-ma_method: 0
-applied_price: 1
***Gives the weekly open price as a line on any time frame

3)Volume (only used as supplement)
-watch for increase on breakout of pattern to confirm

BUYING:

-can only buy above the weekly open price
-can only buy above the most recent Support and Resistance (Barry) indicator red dot on 15M
-buys will be placed when the price breaks above resistance patterns and the candle closes
-most recent swing low contained within the reistance pattern will be used as stop-loss

SELLING:

-can only sell below the weekly open price
-can only sell below the most recent Support and Resistance (Barry) indicator green dot on 15M
-sells will be placed when the price breaks below support patterns and the candle closes
-most recent swing high contained within the support pattern will be used as stop-loss

***2 positions will be opened for each trade - position 1 closes at 1:1, position 2 closed manually
***risk will range between 1-3% per position
***for the first trade of the week - look for breakouts of support and resistance patterns formed at the end of last week

Here’s what my chart looks like:

My next post I will draw the S/R that would have constituted the breakout patterns for the beginning of this week, then as the week goes on I will plot lines for patterns that could be potential trades - but I will not make any trades til the markets open next week.

[g31forex]

Here’s a chart with the initial breakout lines drawn at the beginning of this week.
The white horizontal line at the top would have been the BUY line, and the white tendline on the bottom would
have been the SELL line.

Then as the market progressed, new patterns formed before the old ones broke out and the next chart plot the new support and reistance.
The top thick white trendline is the new BUY line, and the bottom thick white horizontal line is the SELL line.
Notice the old lines are dashed white lines now.

The next chart shows the next resistance trendline that was broken for a BUY signal (white-dashed line), and the current resistance pattern is the thick white trendlie at the top.

[g31forex]

I would like to add that I will try to hold the second half of all my trades and try to close them all after a good run in my favor.

Studying gold’s intra-week behaviour, there were many times where it trended strong for the first half of the week, then changed the trend for the second half. I will likely close all trades and stop trading by wednesday if I have made a couple successful trades by then. Or if I have had some wins and losses, I will stop by the end of wednesday if the market has been trending the first half of the week and I am up by at least one win.

[g31forex]

There is a concern with the corrective pattern on GOLD right now.
There are a couple possible wave counts that I have plotted that could yield different results, one of which would be a false breakout (fakeout).

One wave count below, would be an a-b-c-d-e triangular correction, in which case the trend would resume upon breaking the trendline. (red arrow pointing up is the most likely direction if this wave count is the case)

An alternate count would be that the first drop to the 1633 price range was the wave A, and the rest of the price action after that was all part of the wave B, in which case we are in wave C of wave B, and a wave B fakeout will cause the price to break the trendline, only to complete wave B then drop for wave C - probably past the 1633 low of wave A. This might trigger a stop loss if I were to buy after the breakout. - major spike in volume might indicate that the uptrend will resume instead of the fakeout.

I dont have any methods for avoiding fakeouts at this point - at least none that would also filter out any valid breakouts.
Another option might be to wait for the price to break the high of 1646.85.

[g31forex]

Well. . .breaking out - now well see, wave B or wave 1

[g31forex]

Well this week started out with a loss of about 2%, as i sold at 1633.45 at the beginning of the week when the lower white dashed trendline was broken in the chart below. But the next trendline that broke in the direction of the weekly candle was the top solid white trendline, where I bought at 1641.35 ( a bit late for that breakout). So I currently have two positions open from that price.

The next trade that I made on gold was just recent - another break to the upside of the solid white trendline on the below chart. I bought at 1646.00, with a SL of 1640.

I want to try to hold these positions open until the high of 3 weeks ago at 1661, but its likely that I will cose them after the next major retrace and impulse, aftr this one that broke out of the most recent trendline.

I also made 2 trades on the Aussie - one last night and one this afternoon - since I didnt like the loss of 2% that I opened the week with I capitalized on a couple opportunities I saw for a gain of 6.4%. I’ll put teh charts in my next post.

[g31forex]

My fist aussie traed setup was when i saw that the aussie bounced off a support trendline the day before, i waited for significant retrace, then confirmation from a simple indicator i designed that measures lows or highs of candles of candles for reversal signals. The chart below shows the trendline - thick white.

I bought at 1.0274 with a tight stop loss. chart below shows entry price(orange line) and my indicator - with green arrow pointing up at entry candle.

The next trade was a Buy, earlier today, based on a bounce off a price level where a support trendline(white) and the daily pivot point (light blue) intersected.

[aliugursermet]

hi, you are all mentioning your past trades and what happened to trades?

[g31forex]

Jeez - fear always gets me out way too early - I’ve made 10% this week after closing all my trades yesterday - short of all my targets. But if I had left them open longer I would have had a maximum EXTRA gain of 20%! Mainly was from the last AUDUSD trade I had, since the stop loss was so tight the position size was much larger than my gold trades and still risked only 2% of my account. - it was only a 13 pip stop loss, and i closed it at about 26 pips i thought 2 to 1 was pretty good - and it made back my loss on gold and then some. Although my target was more like 60 pips above the entry, and the pair actually climbed about 140 pips after my entry! Next time I need to think about maybe 2 positions and scaling out or a trailing stop.

[g31forex]

Hi aliugursermet - I closed my gold trades both in profit yesterday - both around the 1655 price level.
It was shy of my target but I just figured that I had two profitable trades open and the market just made a decent impulse in my direction so i closed the trades while i was up.

One of my stock jockey friends always told me “you can never go broke taking profit” and ive kinda been trading by that rule for the last year and ive actually done fairly well even though i rarely close my traeds at their targets.

[g31forex]

Gold is in another corrective pattern - ive drawn the resistance trendline in white that would make a good breakout buy, but this time i will look for a buy signal lower, near that support trendline (dotted white line).
There are alot of support levels near that trendline, and if gets down in the neighborhood of 1646-1649 i will be looking for a reversal pattern on the 5 minute or 1 minute charts such as a reverse head and shoulders or a triple bottom - something like that, then buy once the pice breaks out of the pattern and use the low for my SL.

I think that would be a good entry if it gets down there and it would be a better price than buying the breakout.

My only concern is that this recent impulse in gold prce could be a wave 5 in which case the resistance trendline would be broken by wave B then price would drop for wave C.

And it might drop to the white support trendline below:

This is not my prediction - i mean i am planning to buy gold - i am just giving a scenario where the chosen direction of my trade is wrong - which i hope is not the case!

[g31forex]

A possible scenario with gold price:

[g31forex]

After the price met with the white support trendline (bottom trendline rising on chart) that I mentioned on Tuesday (an actually penetrated it pretty good) there were actually two spots in that day that i highlighted where reversal patterns formed on the 5 min chart, and would have been great BUY’s once the price broke above the resistance created by the pattern displayed by the red resistance dots. - The first opportunity had a breakout price of 1647.93 and the second one had a breakout price of 1648.51, and in either case the swing low created by either occurence woukld have been a good SL, although a better choice might be below the previous day’s low which is the dotted red horizontal line on my chart.

This wouold have started a LONG position from a much better price than buying the breakout from the resistance trendline - which means a shorter stop and a larger position size with the same risk, and also a larger potential gain in price.

But - I didnt make any trades since I have already had some success this week and I wasnt wathcing the charts at all on wednesday i missed the reversal patterns anyway.