01/12/09 – EURGBP Two bites at the cherry. Scalping and swing, +20 & +26 so far.

After the mischief of last week the markets where somewhat scatty this morning.  I was looking at shorting cable as per my relative strength analysis but I felt that the market was looking to reverse so stayed out of going short. (A good job to as it raced north all day.)

Instead I was looking at opportunities in the EURGBP.  There was divergence on both 4 hour and 60 min and on the daily price was in the 50 – 62% ambush zone.

(I appreciate the colours are different than usual that’s because I used the colour invert button to try and make it a bit clearer from a black background.  Also I had to swap the screendump across to paintbrush to get it moved across so my apologies for the small size.)

So with the aid of a magnifying glass you should be able see from the 240 & 60 min chart that there was divergence, a double top followed by a break of a trendline.  There was now plenty or reasons to take a short in this position. I waited for the 4 hour chart to print s xtbar at 10am and then took a position ccordingly. Placed an order at 9105 with a stop at 9158 with 3 targets.  This is a swing position and is position sized accordingly.

Whilst this order was being set-up I also spotted an opportunity to short the Eurgbp on a intra-day scalp.  See below.

 (Once again apologies for the small scale and colours.  I’ll work out how to ship across better TS screenshots in future.)

If you’re still using your magnifying glass you may be able to see towards the right hand edge that after two pink buyer bars price had retraced to a previous area of resistance and was also getting resistance off the moving average.  Part of my evolution to the next standard of trading is getting comfortable buying or selling the line instead of just waiting for confirmation.  This presented what appeared to me to be a great chance to start doing this in earnest.  So I sold the line high of the bars at 9028 with a 25 point trailing stop loss and decided to just leave it and see how it fared.  Stop was at 9058.

Price  dropped quickly and my 1st trailing stop point was hit quickly and the stop was automatically moved to 9033 so my risk was massively reduced on this particular scalp trade.  Price continued down and the next trailing stop loss point was hit and my now Stop Profit was at 9108 so there were 20 points locked in.  I decided to leave the trade to run with a limit of 9008 and the 25 point auto trailing stop loss in place.

My Swing trade was also enjoying some profit and as price fell it hit its T1 of 9079 for +26 points profit.  I will update on these two trades as the progress over the next day or so.