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.