Monday 8/3/10 – Fighting Back on the EURJPY – +17

March 8, 2010

FX Trading, Trading Set-ups

Overall last week was a positive one….though I’m starting to investigate my reasons for trading the first week of the month.  More on that another time.

 This morning has been an interesting one.  I started with some standard early morning breakouts on Cable and EURJPY, both went long and  both went positive…..before falling back and hitting my stops for a loss of 30 pips in total.  Not really surprised as after Fridays NFP announcements there are always a day or two of shenanigans as the big boys reposition themselves.  But the systems set-up and I took the trade in accordance with  my plan.

 So two trades down, two losses and down 30 pips for the day so far.  Over the last few weeks I would have just left it at that and moved on.  However as I edge my way back towards my normal trading style I was happy to trade on.  Both of those trades were system trades as opposed to discretionary trades.  There were now a couple of opportunities setting up and the EurJpy was beginning to interest me.

1.   Here is where I traded long on the original breakout which failed for a loss.  However looking at it through discretionary eyes I was able to see that we had a false breakout occurring.  There was the candle patterns at a level of resistance which price had failed to close above and there was also divergence on the MACD.  I was happy to place a trade to break the bottom of the seller candle.  This broke and I was entered into the trade at 123.62 with a stop loss above the recent high and a target of the gap from the previous nights open.

2.  Price drops nicely and breaks the supporting trend line.  It moves down and hits my Break even point.  My stop loss is moved to entry and I’m now in a risk-free trade.  I watch as price starts to base at around 123.30.  I’m expecting a pullback (price never moves in a straight line) so I don’t close out, I just sit and wait.  Price moves north, but ends up forming a couple of hi test bars on the 5/15 & 30 mins chart (sorry the wicks don’t show up in wordpress).  After re-tracing, price does eventually continue it’s drop.  At this point I am only comfortable with the trade, not confident, otherwise I would have used this pullback as a means to add to my trade.

3.  Price eventually continues its drop and moves down nicely through the Pivot Resistance levels and hits my target of 123.15 for a profit of +47 points.  I placed my target at around the opening of last nights price action.  Even though I suspect that price will fill the gap and continue down I’m not interested in being greedy and trying to squeeze out every point of profit.  I’ve planned my trade and traded my plan.  I’m happy.

 So overall that’s three trades.  Two expenses and one profitable trade.  The final trade cancelled out my losses both in terms of pips and P&L and made for an overall profitable morning.  My learning point is that I could have used the opportunity to add to my trade on the way down, but overall I’m cool.

 What can I say?  I love trading false breakouts!  I think it goes back to playing as a winger in football, swerve one way….then drop the shoulder and go the opposite direction!  I’m always looking for the market to move one way and then drop its shoulder and turn on its heels!

 Trade Well!

 FXTrader Paul

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About FXTraderPaul

A professional Trader and Coach, FXTraderPaul blogs about his adventures from the front-lines of FX Trading. A Trader and educator who can walk the walk as opposed to merely talk the talk!

View all posts by FXTraderPaul


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