PnF Short Update

by Liam 11:20 0 comments

One thing I didn't mention in my post yesterday was that I was aiming for 1.2870 on my PnF short. As you can see, it was just shy of reaching this, clocking 1.28801 as the low (which means the 2880 box wasn't filled)

As we hadn't had a 3 box reversal at any stage of the move I was a little unsure about where to put stops. I was gradually moving it down and locking in a bit of profit as we probed this 2880 - 2900 area for the better part of two to three hours. Eventually we got some big volume coming in at the lows and even bigger volume as we started to push up, for me this meant only one thing, that there was too much demand at this level and the high volume on up bars was absorption. So I decided to get out at around 1.2903 as it pushed back up. This turned out to be a good decision that i'm happy with. This trade including the small overnight fee covered the loss from Monday and a small profit. So I can't complain.

It's also worth noting that the down move stopped on the high of a 1hr volume zone that has been important for a while, not to mention a support area to the left.

One more thing I want to mention, this straight down and straight back up formation on PnF is known as a pole. I was reading about them in the PnF book the other day. It didn't even cross my mind yesterday but this is one type of formation the book mentions as not needing to fully develop as a set up. It can be a good idea to buy (or sell) as the reversal side of the pole hits the 50% mark. In this case, funnily enough, that would've meant a buy at around 1.2940, my original entry price!

EUR/USD 1hr PnF

Pres78, who has mentored me through this whole trigger / fib zone / volume zone process and is a member of the VSA forum i'm on put a nice chart together showing these S/R areas. I hope he doesn't mind me using his chart.

Pres78 EUR/USD 1hr S/R

I've marked five volume zones on the 15min chart below. The main area i've been talking about is the high volume zone at A and the inevitable high volume that appeared in the area of E. There is always the chance that it is going to push through this area. After all, these aren't concrete areas and turning points, merely areas to watch. With this in mind, it was never going to push through easily. As it turns out, it didn't find it easy at all and this turned into a reversal point.

EUR/USD 15min

Hope you followed all of that!

Cheers,

Liam