A Bit Of Clarity

by Liam 17:37 0 comments

Trin Café was good enough to drop me an email with some observations on my sell from yesterday's post, outlining a few things like the support right below the area I sold at.

The reply got fairly lengthy so i've decided to post my charts up here for everyone else to see as well.

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Just so it's clear, I look for the highest volume bars on the 1hr bar chart, put a fib covering the high, low and 50% of the bar and carry these fibs on to my 15min / 5min EU charts as well as carry them over to my 1hr Point and figure chart. I then look to trade within, into and out of these zones, treating them as S/R. On the chart I mentioned 2 shorts, one nearer the high and one right at the low which is the one you're referring to. I'm happy with the first short I took as it's a reaction to and sell away from the high of the zone. The zone is marked on the 1hr HLC chart below.

I mentioned in my post and as a follow up to your comment that It was a contentious area to be shorting. I should have known better really as there was considerable support as you had pointed out from your chart and from mine based on the volume zones.

I've annotated the charts so they're a bit easier to follow. Most people I speak to don't get PnF charts!

Before A I was already short with a target of .3250 based on a Point and Figure Target count, much like the pink areas you can see, just not marked on the chart.

EUR/USD 1hr HLC

EUR/USD 1hr PnF

A - Respected for the first time

B - Second time

C - I'd moved my stop above the column between A and B and got stopped on my first trade for a small profit.

D - Same formation as my first sell and I thought we were breaking the support. Entered as the lowest O filled, at 3260. Despite shorting at support, another error was shorting ten pips away from the target price that I had attained from the high. Initial stop above C.

E - Respected again.

F - Break upwards and through my stop which had been moved above the column after D, essentially the same price as the high at C. Another mistake was being in bed so I didn't see that this in fact formed a triple top (inverse of the two sells previous) and was a good buy, I should have been stopped and had an order to buy at the same time.

Basically, in a nut shell, I was aware of the support that was there before taking the trade but chose to go with it in anyway. Paid the price and it's another lesson to add to the pile.

Cheers,

Liam