Welcome to this week’s Week in Review, one of the slowest and most frustrating, I must admit.
I started off the week well with a winner on GBPUSD. This was actually a pending order held from last week which only got triggered on Monday. It was a buying opportunity on GBPUSD due to a demand zone. This is ElementaryFX’s ideal supply and demand setup; something we like to call “The Wiggle Theory.” We’ll explain that more in future webinars.
Basically, the plan was to wait for price to enter the demand zone before placing a buy stop above it. As you can see from the slides above, we more or less had a perfect entry. Price entered the demand zone to the pip before rallying towards my target for a 70 pip and 2R winner. In hindsight, I could have held on for more than 4R as price rallied more after. Neverthless, it was a good setup.
The second trade I took was a short on AUDUSD. This opportunity was presented due to resistance which price has been respecting several times before. The plan was to wait for price to hit resistance before setting a sell stop below it at 0.72281, with my stop loss going above and I was targeting 50 pips. The risk/reward was a decent 2.75.
The trade was promising as price retested resistance and dropped a few candles. Unfortunately, the bearish move could not b sustained as buyers entered the market and stopped me out for a 20 pip ad 1R loss. A better setup would have been to long the breakout.
This was a very ambitious setup, as price was falling quite aggressively and I was trying to catch a falling knife. The plan was to wait for price to go past support, which could mean that price was overextended, or that it had intentions to make lower lows. In this case, I gambled on the former. It was quite promising as the candle that triggered my order had a long bullish wick and price subsequently rallied about 15 pips.
At this point, I moved my stop loss to breakeven as I felt uneasy due to the bearish trend. My decision paid off as price fell hard. Therefore I was stopped out at breakeven. The lesson here is to never catch a falling knife and that you should always go with the trend.
This concludes this week’s review. Definitely a week to forget, despite being in profit, as it was difficult to identify setups. The positive thing I can take from this week, besides 1R profit, is the fact that I stayed disciplined and not force any trades. Our Trading Room still has a pending EURUSD order but it’s unlikely to get triggered before the market closes in 2 hours.
Enjoy the weekend and we’ll see you for a better week on Monday!
Psst…we’ll even throw in a discount to get you started!