box trade Tag

As you'll remember in my previous post of 2 Weeks ago I gave details of 5 currency pairs each demonstrating early stages of set-ups I tend to follow before entering a trade. As things stand I've not entered trades in any of them as yet. For one of them I missed the chance as the move began overnight therefore making the risk/reward ratio a little less favourable, one I forgot about, one didn't play out as expected, one still hasn't finished the set-up and one is very close to decision making time.

In all honesty there still isn't much out there that's worth trading based on my low-risk approach but as I've not posted any updates for a Week here's a quick one just to show I'm still plugging away in the background waiting for opportunities. Last Week I mentioned a few trade possibilities and 2 of those played out well even though I didn't take them myself. The 3rd one was AUD:CAD for a swing short from the same 50% fib level in this chart although I did suggest it may take a while to play out.

EUR:AUD has had some interesting moves over the last couple of Years, some of which were technically quite simple to catch and resulted in significant moves. The Daily chart below shows historic analysis that I applied to the chart before trading it and you can see that 4 horizontal lines and 2 vertical lines was all it took! To explain further you can see that between October 2010 and December 2011 price remained range bound in the top left of the chart. When it eventually broke down from this range I made the decision not to trade it until price retested the range. After quite a long wait the re-test came in May 2012 as defined by the first red circle. I call such set-ups "Box Trades" simply because price has retested the annotated box that previously contained price before it broke down.

Presented with little commentary are these GBP:CAD charts showing price testing the bottom of its 3 Year trading range. I've been wrong on this pair before, so I'm not going to say "buy it" because this time could be different, and there's nothing on the chart convincing me that this support will hold. In fact, indications point to a large sell off if this breaks down.... But you need to make the call!

The following is a reprint of a post I wrote on my ADVFN forum, but I think it stands to reason that it qualifies for a place here on the blog. I think learning how to trade from charts is very easy. All you need is some horizontal Support and Resistance lines on your chart, and you buy or sell from them, simple as that. It is our own shortcomings that allow us to lose money in trading, mainly over leverage which I've written about before in this post. Over leverage often means running stops too tightly thus not allowing a good trade to breathe, or, taking profits too quickly because

As there's no new set-ups ready for entry right now (including AUD:CAD detailed in the previous post which still awaits confirmation), I thought I'd have a look through some old trades and found something interesting with EUR:AUD. It was originally taken (see post here) as a "Box Trade" short. Box Trades are fairly rare set-ups, but thus far every one that I've taken has been a success. With EUR:AUD I covered the position at the 61.8% fib (circled) which seemed sensible at the time but re-visiting the chart and I realise maybe