USDCHF - Bread and Butter Trade

D broke DTL, jaws up
240 jaws up, testing HL 5 bars previously (w HV)
60 MAs flat testing previous HL with vol increase
10 downtrend had increasing vol, churn at lows, DTLB, broke AR with push through at 7pm

This is a best setup (based on high win % rather than R:R) because there is no doubt which way I should trade. Keying off the big TFs I had the momentum and volume in my favor. The concern was in trying a buy so high up on the 240, but I believed I could get a scalp on the pop off support.  I only targeted 32 pips (the highs seen on the 60). The trade was a Set n Forget as I left to football with stop set to BE at 8pm.

My exit was at the highs which then reacted with a brutal sell-off erasing all the gains with high selling volume - a reminder that taking the conservative gain was best rather than trying to milk this for more.  Only the buys at potential beginnings of trends should aim for multiple R targets.

Result: +1R

Losses From Reading Volume 2 (Follow-up)

Yesterday I bought EURJPY after seeing the SOS.  Unfortunately I bought at the 60 min range highs. As mentioned it was foolish to expect my stop to hold if the SM allowed the mkt to drop so they could accumulate lower. Today the mkt tested the lower end of the range and held.

A buy taken at the lows requires a smaller stop and has a greater potential reward higher.  At the time of the snapshot the mkt has reached the 60 min range highs again - 70 pips higher.  Profits could either be taken or stop moved to BE.  This is the proper sequencing for a countertrend buy.

Off My Radar - MASSIVE MOVES!!!!!

GBPNZD has been wildly volatile with mega pips available for anyone willing to trade it.  I have not looked at it in awhile since I reduced my watchlist to a dozen pairs.  Seeing this I will take time each weekend to run through all the pairs for opportunities.

Daily shows a 2200 pips uptrend from April 22 low. MAs are jaws up (obviously).
240 is in a ranging state 600 pips wide!  Either play the shorts off the highs or the buys off the lows (I prefer going with the dominant trend).
60 shows yesterday's pullbacks for buys off the trap box at support.
5 shows 3 possible buys.  The first is a push-through entry as the narrow range was broken, the second was a pb buy to the upward 60 min MA (thick lime MA) and the 3rd entry was a break of the 2-hour long down channel at 9pm.  Any of these entries at the 2.1100 area had 400 pips potential upwards.

What draws me to these trades is not the ease they worked, but the distance they traveled.  Sure we never know how far any trade can go, but the ATR was almost 300 pips indicating the environment was ripe to catch a big move.  There is no point seeking large targets in a mkt that doesn't show ability to move. But choosing mkts with higher ATRs than normal at least offers a chance an outlier can be captured.

My analysis of this market would lead me to stalk buys.  My method could have caught 100-400 pips. This is not typical, but to catch these trades I have to see them.  GBPNZD isn't on my day-to-day watchlist due to it's wide spread (6-11 pips).  However, it is worth trading the large spread pairs when they offer high R setups.

Losses From Reading Volume 1

Yesterday's trade in EURJPY was typical of my last 4 attempts (not shown on the blog).  Basically I have been reading the charts from Daily to 5 min, but making a misstep along the way and not trading with the flow.  The main problem is seeing evidence of activity on the volume and drawing conclusions about it prematurely.

The Daily view is an upward trending state with the past few weeks being locked in an upward channel. This was supported by the jaws up MAs.

The 240 shows the upward channel and that 3 sessions ago the market collapsed hard which I marked as SOW (Sign Of Weakness).  Normally I would try to go with the recent flow and try a short. However, there was no room to target to the downside as the drop had already reached the bottom end of the channel.  This meant I couldn't go short and instead wanted to try a buy inline with the Daily's uptrend.

Looking at the 60 the market had bottomed and made 2 HLs (circled) both had accumulation volume (buying).  I marked the 2nd HL as a SOS (Sign Of Strength) and looked to get long.

The 5 min shows strong pushes up to the day's high.  From 4-6pm the mkt only went sideways at the highs rather than testing down to the lows.  I bought at 135.01 shortly after 6pm and saw a good start to the trade. However, the mkt drifted back downwards to my entry and subsequently to my stop knocking me out at 9:30pm for -1R.

At first glance my sequencing seems correct and that I was right to try a buy.  But just as with the other attempts I was stopped out despite the premises being valid.  The problem is I am too early.  I am seeing things on the volume and drawing a conclusion that SM are going to take it up immediately.

I am aware that even if they are accumulating to take this mkt higher they will only do so once they have adequately built up their positions.  Plus, the mkt is still shaken up by the collapse so I should expect there will be more selling.  Getting long at the top of the 60 minute's range made me a sitting duck if SM allowed the mkt to drop so they could buy more at lower levels.  Today it is at those lower levels (testing the 60 min trap box) and basing looking like SM are continuing to accumulate.

The timing of my trade was superb for a scalp, but trying to time the exact 5 minute entry inline with the Daily is a lot to ask.  I could've taken a scalp win or scratched when it came back at me, but was foolish to take a loss.

I see the main problem with my buy being the drastic jump from 240 to 60 to find a buy entry.  If I took note of the 240 I should have seen the jaws down MAs and expected another attempt lower. If the mkt cannot go lower it will still need to work off the downward momentum by going sideways causing the MAs to flatten.  Then if SM continues to accumulate buys the mkt will steadily drift upward and it will then be safer to try a buy.

I will continue to stalk EURJPY and will update on any re-entry.