April 2013

The first trading decision I made this Week has constantly haunted me since. After 2 Weeks sitting in the NZD:CHF swing long with no results to speak of I decided enough was enough and set the stop loss to break-even. That decision was made around 5 hours before it made a bee-line for my stop loss and then followed it off with a huge rally, the rally I'd given up waiting for. So frustrating!

Just a quick post to make you aware of this set-up if you've not yet seen it. As simple as the set-up looks, its worth watching because such trades can deliver significant Risk Versus Reward ratios based around the ability to quickly spot if the trade isn't going to work out. Any signs of resistance at the re-test of this falling channel should find sellers. If the trade is entered and price continues straight upwards then its best to cut losses quickly and forget about it. Some of my most profitable trades have come from set-ups like this so even if only 1/3 of them play out, they are still worth taking note of.

Sometimes the Markets get the better of me and no matter how much I analyse the situation there just doesn't seem to be an answer that can prevent the same occurrence in the future. Such an occurrence arose today with the NZD:CHF swing long. This is the 2nd swing long in succession on this pair having taken profits first time round only to see another desirable set-up soon after. Having held this 2nd swing for almost 2 Weeks with absolutely no progress, last night I decided it was time for a closer look. The result of this was to effectively forfeit any further risk by setting the stop loss at break even.

It's been an interesting Week that has shown a number of potential medium term trend changes. After shorting SPX at 1596 in a speculative manner based on that huge multi-Month Megaphone top pattern I've since realised there may be more to this set-up than first anticipated. The original analysis can be found here.

Unfortunately I'm too late posting this analysis because much of the shorter term move I was looking for took place before I had chance to write about it. EUR:USD has been on the watch list ahead of a potential swing long for some Weeks now with an ideal long entry to be taken on a retest of 1.3000 from above following a rally from support in the 1.2750 region.

Despite spending most of the Week in bed with the Flu, a couple of set-ups did trigger entries whilst one of my most anticipated set-ups slipped me by. As you'll know from previous posts, SPX has achieved the top of the multi-year megaphone pattern. On its own a megaphone top pattern is not reliable, and there isn't anything else really supporting it (fundamentals aside of course), but in my efforts to be a hero I took the trade anyway entering short at 1596. On the basis that a pattern shown on the Monthly chart is likely to offer a multitude of opportunities for entries, I covered half the position 24 hours later for 14 points which isn't a bad profit for an SPX trade over such a short period and couldn't be ignored. The plan is to keep entering the trade at this perceived resistance, taking profits when they become available but leaving half the trade to run at all times until the set-up either pays off, or fails and proves the set-up wrong.

Although I promised myself the NZD:CHF swing long would not be closed until the 0.8210 target was hit, this mornings rally had a bit of a blow-off look to it and I couldn't resist closing the trade at 0.8064 to bank a 109 point profit. Taking that profit probably wasn't a professional thing to do as it technically makes the risk vs reward on the trade less than 1:1 because the stop loss was around 200 points away. Anyway, its done now and the trade is closed, but I probably wouldn't discount re-entering the position if circumstances become attractive again.