H4 - Primary
In the case of NZD/USD on the primary timeframe, there was a nice shake-in move when the Bearish Butterfly Pattern completed. For this particular pattern, there was a slight overspill to the upside where the pattern completed at the permissible limit of 1.41 XA projection instead of the usual 1.27 XA projection.
As seen in the attached chart, following the completion of the pattern at the 1.41 XA projection, the price action stabilised on the following price bar which was my cue for a short position at hand. However, it should be noted, at the point the the trade execution, the RSI has yet to exit from the overbought area and that my main consideration of the short came from the proximate timeframe.
D1 - Distal
Referring to the distal timeframe, there was not much confirmation factors in this case except for the fact that there might be a possible shake-in as seen in the chart attached at around the 0.76751 region.
Currently, the price action has violated the steep falling trendline to assume, in my opinion, a short term countertrend following the RSI's exit from the oversold region.
H1 - Proximate
In the proximate timeframe which I make my decisions to short this pair, the discerning factor in this case to decide that the completion was at the 1.41 XA projection instead of the 1.27 was due to the following reasons:
- Despite an early RSI exit with a price stalling behaviour, there was no other confirmation factors. In addition, the H4 RSI was still in the overbought region which made me had my doubts.
- In order to stack the odds to my favour, I would prefer to see a trendline violation to confirm a valid trade execution which in this case, it occurred only after the price action tested the 1.41 XA projection. In addition, the RSI in H4 was also turning down, BUT has not exit from the overbought region yet. The basis of a trade execution was when the RSI shows a clear breakdown on H1 after the trendline violation.
Following the various confirmation factors, the trade was triggered at 0.77097 under a market order.
The IPO 1 was hit later, gaining a profit of 73.2 pips. As for the 2nd batch of the trade, the trade has been set to break even and managed accordingly.
Update: 10 Jun 12
The trade was later closed when the accelerated trendline was violated, gaining a profit of 62.6 pips.
Reflections:
I have come to appreciate the bigger timeframes better now as they are more reliable. For the bigger timeframes, the trend is easier to discern and there are lesser noise and thus reducing the rate of false positive signals.
I have been following up with my own trading results and realised that the moment I trade with the smaller timeframes, it becomes harder to trade as the markets has been choppy recently and that it was simply ridiculous for me to stay glued to my computer and trade the signals generated.
After doing some thinking, I have decided that I will take away the need to trade (if not, I would consider it an addiction), and respect the bigger timeframes. I do understand that when we go up the the bigger timeframes, there will be lesser signals and this is true. However, on the flip side, when the signals arise, they are usually of a higher probability of success. And this to me is important, I would prefer to have quality trades over quantity as the quantity will slowly kill your account if you take all those small trades that are generated on the smaller timeframes and you will then slowly get lost in the noise.
I would say that despite the news of the Europe region causing all the market choppiness, there are always opportunities in the market, and as traders, we must be learn to master our emotions and be prepared to take action when the market presents us an opportunity. Investing in one's education on trading is crucial if you are new to trading and it will save you tonnes of money and time to get you into the trading business. Just as I have signed up with Scott, the founder of Harmonic Trading, I have never looked back. Then again, this is not a one time education where you attend and make big bucks following the course. You will need other ingredients such as dedication, patience and diligence to make it work coupled with the experience which will require some time.
Good trading everyone.
Update: 10 Jun 12
The trade was later closed when the accelerated trendline was violated, gaining a profit of 62.6 pips.
The next chart attached shows why we should respect the trade management rules and act accordingly without getting too attached to a trade.
In this case, there may be a chance that the price action may go back to test the PRZ and set us up for a Type 2 Reversal. Following next week, I will be looking for a reaction of the price action at the PRZ on a secondary retest.
Update: 11 Jun 12
As I was talking about looking for a Type 2 Reversal this week in this pair, the pair gapped through the PRZ which invalidated the setup when the market opened today. Thus, there would be no trade in this case for the Type 2 Reversal.
Reflections:
I have come to appreciate the bigger timeframes better now as they are more reliable. For the bigger timeframes, the trend is easier to discern and there are lesser noise and thus reducing the rate of false positive signals.
I have been following up with my own trading results and realised that the moment I trade with the smaller timeframes, it becomes harder to trade as the markets has been choppy recently and that it was simply ridiculous for me to stay glued to my computer and trade the signals generated.
After doing some thinking, I have decided that I will take away the need to trade (if not, I would consider it an addiction), and respect the bigger timeframes. I do understand that when we go up the the bigger timeframes, there will be lesser signals and this is true. However, on the flip side, when the signals arise, they are usually of a higher probability of success. And this to me is important, I would prefer to have quality trades over quantity as the quantity will slowly kill your account if you take all those small trades that are generated on the smaller timeframes and you will then slowly get lost in the noise.
I would say that despite the news of the Europe region causing all the market choppiness, there are always opportunities in the market, and as traders, we must be learn to master our emotions and be prepared to take action when the market presents us an opportunity. Investing in one's education on trading is crucial if you are new to trading and it will save you tonnes of money and time to get you into the trading business. Just as I have signed up with Scott, the founder of Harmonic Trading, I have never looked back. Then again, this is not a one time education where you attend and make big bucks following the course. You will need other ingredients such as dedication, patience and diligence to make it work coupled with the experience which will require some time.
Good trading everyone.
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