12 Jul 12 - USD/CAD - H1 - Bearish 5-0 Pattern - Type 1 Reversal

I was expecting this week to be a slow week initially but last night, the USD/CAD pair finally completed a Bearish 5-0 Pattern which allowed me to trigger a short on it.

H1- Primary

On the primary timeframe, the RSI was early in this case and it established a bearish RSI BAMM Confirmation before the pattern completed and started trending down after that.

The price action stalled following the completion of the Terminal Price Bar and that was an early indication of a possible reversal at hand. I have also included a zoomed out capture of the chart to show the ration alignment of the pattern.

H4 - Distal

As for the distal timeframe, the pattern completed in the direction of a downtrend and thus I was triggering in the direction of the predominant trend and that put me in a high probability setup.

M15 - Proximate

The trade was executed when after the pattern's completed and it was triggered at 1.02321 with a stop loss at 1.02720.

The basis of execution was for the fact that there was a nice Bearish RSI BAMM on the proximate timeframe which gave this trade a very strong setup signal.

Trade Management

The first batch of the trade was closed 1.01874 when price action reached IPO 1, gaining a profit of 44.7 pips.

The second batch of the trade was later closed at 1.02004 when the price action violated the accelerated trendline, gaining a profit of 31.7 pips.

Reflection

Despite a quiet week, the patience paid off while I waited for nice a setup to present itself as I firmly believe that I will only trigger on high quality setups. Other than the nice setups, I will usually stay away as my focus is on capital appreciation and thus trading on the best setups is one of my most important criteria. If setups do not present themselves, I have learnt to stay away and not trade until they show up. I have reduced the need to trade and sort of built up a new habit of only demanding myself to trade on valid setups and I am truly glad that it has worked out quite well so far that my success rates are much higher than before.

Focus is important in trading and our success is based upon on what we are focusing on as Scott has once told me. Despite a simple advice, his words has turned my trading around and this is one of the greatest gift from my mentor.

Good trading everyone.