As far as i'm concerned the week so far has been pretty much untradeable in PnF terms. 100pips up, 90 down, 90 up, 90 down and so on and so forth. No discernible signals in either direction. I'm talking about EU by the way, in case that wasn't clear.
I'll talk through the charts below to outline what happened today.
EUR/USD 1hr PnF
EUR/USD 1hr HLC
A. This was the first thing I spotted this morning. The potential for EU to push down further (it had already dropped a lot in the morning) and print a staggered triple bottom signal. I set the order but this didn't materialise before it started pushing up again on the next column (labelled C)
B. This is where things get a little bit complicated. It even took me a while to get my head around it whilst looking at the charts. Due to the nature of PnF charts, we can only fill boxes in one direction at any one time. On the HLC chart above you can see the high volume bar that i've marked. This bar is problematic in that it makes a new high which continues the up column (C) but it also completes the reversal amount of 30 pips and makes a new low and lower. The PnF chart has already registered the new high so it can't print the down column. Whilst this bar pushes down, it completes a triple bottom sell - which is where I entered short. It isn't until the next hourly bar ticks over and we have a new low printed that this will complete on the charts. So the bar after the high volume bar ticks over and then we get the reversal printed.*
C. But there's no triple bottom sell on the PnF chart above I hear you say. You'd be correct in that observation. Unfortunately, the bar after the high volume bar goes back up and makes a new high. As far as the PnF charts are concerned, we never actually made that low and the up column at C continues as before. This is a pretty rare occurrence on the charts but it's pretty annoying when it does happen. Unfortunately that's the downside to PnF. Needless to say, I got stopped on that.
I shouldn't have got stopped though and this is where error one comes in. On the HLC chart above, look at the size of that volume on the down bar as well as the close off the lows! This was screaming that some buying came in. My VSA mentors would be ashamed! I was chatting with my Dad on Gmail at the time and even said to him that I should close out. But I didn't. I'm not entirely sure why but I think an element of hope crept in. I need to nip that in the bud straight away.
At the same time as taking this EU trade, I entered long on Swissy.
A similar thing happened on this chart but due to a mistake that turned out to be a blessing in disguise I was stopped for the size of the spread on that trade. So only minor damage on that one whereas it would have been a full stop. I ticked a box and forgot to untick it and it set my stop at the size of the spread, so I was stopped about 45seconds after entering that trade. Duh.
I'll probably take tomorrow off with NFP on the horizon. I've been working on some testing so i'll continue with that.
*I have no idea if this makes sense to anyone but myself.
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