The first setup that I identified this week was a short on USDCHF. The idea behind this setup was quite simple: to short at resistance. Considering that price has been in a downtrend prior to this, the resistance (red line), gave me a decent shorting opportunity. Moreover, price was moving up considerable quickly, and from my understanding of market psychology, this move was not sustainable in a downtrend.
The plan was to short slightly before resistance, because from my experience with setups like these, price tends to not reach these levels before reversing. I more or less had a perfect entry as price moved towards my target where I took a profit of 55 pips and 2.75R. In hindsight, I could have held on for longer as price went down to retest the previous lows but I’m complaining.
This short on EURUSD was my best setup of the week. The selling opportunity came from a supply zone, which was demarcated by 2 horizontal blue lines. If you went on the 4 hour chart, it actually looks pretty obvious, but I was using the 30 minute chart to refine my entry as much as possible. I had set a sell limit at 1.16397 with my stop loss going above previous highs and I was targeting 60 pips, giving me decent risk/reward of 60.
Thanks to my understanding of market psychology (once again), I had a perfect entry as price filled my sell limit and immediately rejected that area, falling straight towards my target. Another reason why this was my favourite setup of the week was because this winner means our Trading Room has won the past 7/7 trades on this pair. Seriously, check the past Week in Reviews out!
I’ll be honest with you, this was an ambitious setup. But the risk/reward was worth it. The selling opportunity came from a supply zone. The plan was to wait for price to enter the supply zone before setting a sell stop at 111.312, with my stop loss going above the supply zone and my target was 75 pips.
Price entered the supply zone, fell down and triggered my order before stopping m out in a matter of hours. In hindsight, I should have invalidated the setup as price had closed above the supply zone indicating its intention to move higher. I was stopped out for a loss of 25 pips and 1R.
This was a selling opportunity that came from a bearish Cypher pattern. I was looking for a more conservative entry instead of the textbook D completion. I set a sell limit at 129.635 with my stop loss above previous highs and I was targeting 135 pips for a good risk/reward of 3. This was a trade that took a lot of trade management.
Price triggered my order beautifully by immediately rejecting my entry, dropping a good 80 pips. Price then retraced towards my entry before dropping again. This time, price couldn’t put in a lower low. This put me on alert that price might not hit my target. Price spiked towards my entry (the candle with the long wick), before making a higher high. This was when I decided to close the trade for a whopping 9 pips of profit. This was the right decision as price went on to hit my stop loss and make even higher highs.
Can we….not look at this trade? Oh well, here goes nothing.
This was a selling opportunity due to supply zone. The plan was to wait for price to enter supply zone before setting a sell stop at 79.398. Not too ambitious with this as I was risking 25 pips to make 50 for a risk/reward of 2.
As you can see, this was a textbook supply zone setup, as price immediately rejected the zone. Price fell quickly towards my target before reversing. 0.7 pips away from my target. 0.7 pips. 0.7. Yes, you read that right. But it is what it is. The market is always right, so my exits in this setup was definitely not optimal. Price reversed, retested my entry before putting in a higher low. Price then went on to hit my stop for a loss of 25 pips and 1R.
In hindsight, I should have closed the trade for half of the profit. I should have also identified that my target was at a demand zone, and if I had known, I would have had a more conservative target.
Nevertheless, still a good and profitable week. Enjoy the rest of the weekend, traders, and we’ll see you on Monday!
Psst…we’ll even throw in a discount to get you started!
Case Study: A Textbook Flag Pattern Winner on NZDJPY In this article, we will be sharing our top-down analysis on a bullish flag pattern that