1. Trade entry was past the 1.618 time projection.
2. No clear RSI validation and confirmation were seen on the Primary and Proximate time frames. (Could have been the main reason for the trade failure.
Distal (H1)
As seen in the chart attached, I would consider this trade a counter trend trade where the predominant trend was that of a down trend. However, I zoomed out more and saw that there was a support seen at 0.618 Fibonacci Retracement level from the longer term up trend.
Primary (M15)
The only probable mistake here was have been the oversight that the Terminal Price Bar had a tail close and that there was not prior RSI extreme area test. There was an earlier RSI extreme test but that is considered to be too far away to be valid. As mentioned earlier, the main reason that this trade did not turn out well was that the RSI has not had any extreme test which lower the probability of the trade working out.
As seen in the attached chart, since there was not extreme oversold test and exit, there was no way that we could be sure that the market has reached a possible bottom. Therefore, this exemplifies the importance of the RSI as a confirmation factor.
Proximate (M5)
The same mistake was committed here as it was in the primary time frame assessment.
Trade Details
Date & Time: 21 Nov 11, GMT 08:20
Entry Price: 120.832
S/L: 120.620
Trade Update
The S/L was triggered on 21 Nov 11, GMT 08:41 at 120.618 resulting in a loss of 21.4 pips.
Reflection
After this trade, it confirmed that the RSI was a very important element in the assessment of the validity of a trade signal. Therefore, for future trades, I would prefer that the RSI has completed the extreme test before even considering a trade.
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