I lost on a NYO trade thinking tody was following the sell day template. I got stopped out for a loss.
I checked EU and GU and thought the pattern on EU was more attractive along the lines of the template and went with a short there.
After the trade lost, I started doing post trade analysis to try and figure out if there was something I missed. I think I found it.
We had simultaneous bullish and bearish divergence on the 1 hour chart for EU GU.
See thumbnail…
I think a filter I will use on trades in the future is monitoring this simultaneous divergence and use that as a clue to maybe sit on my hands and not trade.
The 2 vertical lines are the open and close of the NY session (12:00 GMT to 14:00 GMT - 7-9 NY ET).
The yellow lines highlight the bullish divergence that formed. The red lines are bearish divergence.
You can see that the EU started its downward trend an hour before GU. When GU followed an hour later, it met support at the pivot level for the day which is also very close to the asian session low (the 9am GMT hourly candle on GU).
Looking at GU a little more…the 5:00am GMT candle hit the MR1…went above the pivot and MR1, then retraced to the pivot/asian session low. We had bullish divergence in place.
In terms of clues…
- Bullish divergence on the 1 hour SMT chart.
- Confluence of support where the 9am GMT candles closed.
- GU at the pivot
- EU at Previous Day Low
- EU at Today MS1 pivot level
- EU at Yesterday S1 pivot level
- EU at 261 extention of this weeks TT
When we look at divergence on the SMT…if we see bullish divergence, we want to see if there’s support in place to trade off of. On the EU…we had a confluence of support to potentially anticipate price moving higher.
Because we had simultaneous divergence…I also looked for areas of resistance because when you have bearish divergence, you want to look for areas of resistance that could be confluences to push price lower.
On GU…price had run up to R1, which coincides with yesterdays pivot and previous day high. Coming into NYO…price had retraced from R1 a bit.
To me…it looks like we had simultaneous divergence, and a case could have been made for price to go either way as both pairs were meeting resistance or support.
In hindsight…in my analysis for NYO trade, I will look for this and if I find something like this, it would be best to stay on the sidelines.