The first trade I took this week was a long opportunity on EURUSD, due to a demand zone that had formed on the 30 minute timeframe. The plan was to wait for price to enter the demand zone before setting a buy stop above it, with my stop loss going below the zone and my target going past resistance. This was because I was expecting price to create a higher high.
Price fell nicely into the demand zone before rallying and hitting my target for a profit of 45 pips and 2.25R. Definitely a great way to start the week in our Trading Room, considering that this trade didn’t take any heat.
The next trade I took was a short on USDCHF due to a supply zone. The reason why this was considered a supply zone was because price had broken a bullish trendline with strong bearish candles, suggesting that if price were to return to that area, it would be met with sellers.
The trade ended up a loser but as much as possible, I would like to explain why it went wrong. You can see that just before price entered the supply zone, it reversed for a bit. What I realise is that when price does this (reverses for a bit before entering a zone), the trade more often than not ends up as a loser. The supply zone identified was valid as you can see that when price entered, it struggled to close above.
In conclusion, this was a 20 pip and 1R loss. Definitely a lesson learned. If you see price reverse before entering a zone, that should be a red flag.
My final and best trade of the week, undoubtedly goes to this short on AUDUSD. The reason why it’s the best trade? Not only did I get a perfect entry, but I also got a perfect exit. I shorted this pair as price had just broken out of a rising wedge. “But that doesn’t explain the entry,” you’re probably thinking. My entry for this setup was a confluence of 2 things: resistance and the extended bottom trendline of the wedge. I had set a sell limit set where both coincided in the future. Luck? Yes, trading involves a lot of luck, and from past setups with perfect entries, I must be pretty lucky.
Price triggered my sell limit and fell quickly towards my target. The reason why I had my target there was because there was support in that area. More often than not, price will try to push past areas of support or resistance before reversing. In the second image, you can see that once my target was hit, price immediately reversed.
In conclusion, this trade ended up a 60 pip and 3R winner. We’re back in profit for the month so let’s do our best to keep it running. Well done on a good week traders, enjoy your weekend and we’ll see you next week!
Psst…we’ll even throw in a discount to get you started!