Create Your Own Trend, Then Trade It!

Create Your Own Trend, Then Trade It!

There’s so little to swing trade at the moment and even less to talk about so I’ve resorted to creating my own charts just to spark up some discussion!

Ok, this idea really doesn’t appear to offer much value ahead of a prospective trade, but on occasion if I’m considering a trading idea, I’ll add some candles to a chart just to see if the potential trading idea looks “right” on the chart.

I’ve been watching GBP:USD for the last few days as detailed over the Weekend in this post.

On the daily time frame there are similarities in the current price pattern versus the Candle pattern seen at the previous swing high. Smaller time frames seem to have a bullish bias but haven’t displayed enough in the way of confirmation to commit to a swing long trade.

Here’s the daily chart as it stands now showing support from the 20 MA underneath today’s candle, but that awkward look about it that doesn’t yet inspire confidence for continuation to the upside, particularly as MACD has formed an identical pattern to that which was seen at the previous swing high:

So how would the chart look if we do break up and create another leg to the upside?

Maybe something like this:

Although perfectly possible, it doesn’t look a very likely outcome from the current consolidation.

So, how about a break to the downside?

Here;s the bearish version:

Ok, this is all a bit of fun and you can’t seriously make trading decisions based on this alone, but it has to be said the bearish outcome looks pretty good, good enough in fact to have me on the short side quickly if the chart shows any signs of weakening from current levels.

The idea is, if a particular scenario looks to be playing out, having these pictures in mind could potentially support your entry into a move quicker than maybe otherwise.

I’ve messed around with a number of charts in this way over the years and have only ever taken action based on these predictive outcomes across 3 trades, but those 3 trades turned out to be some of the best swing moves I’ve ever traded, one of which was from the 2011 high on FTSE, ahead of it’s 1300 point crash over the following 4 Weeks! Yes, I was initially laughed at for that prediction too!

Changing the subject somewhat, SNB announced tonight:

“Swiss Franc should depreciate on it’s own.”

That I think is a big statement, and possibly the biggest hint we’ve had that SNB is not going to continue to support the Euro Peg. This potentially adds a huge safety net to trading the long side of CHF, and the charts are certainly encouraging, though a little oversold for me to enter positions at this precise moment.

1 Comment
  • RS2OOO
    Posted at 18:40h, 29 February

    Today’s candle is starting to look exactly like the candle posed in the “bearish version” of the above chart.

    I’m currently short from 1.5946 and very unlikely to hold overnight, but it has got me thinking about this potential leg down!