EURUSD#3

Another back-dated post, on what happened on 3 June 2010.

I label the current EURUSD chart as the following, on 3 June night, it's about the second candle after the yellow B:


Knowing it's very likely to be a white L1 wave down, I want to look for an opportunity to enter the ride.

Both 1H and 30m charts have price action and Chikou Span moving above the very thin cloud. It has been a steady trend down from the Yellow B point, the possibility of price piercing through the cloud was higher than the cloud bouncing the price back up. Furthermore, in 4H chart the Chikou span was also already below price, a sign or bearishness.





Price briefly tested kumo on the 30m chart, but it closed some pips above it, which cause the Chikou to pierced through the cloud, it sent my pulse running of course, but I told myself to watch the next candle. That was rather typical "fake move"? Not sure. Come the next candle, it broke the cloud quite convincingly (note: what does it mean "convincingly"?? was it my own subjective interpretation? psychology? biased judgment? or maybe all of the above. Surely not based on experience 'cos i have none) so I entered the trade @1.2219 (green line), SL @1.2234 (red dotted line). The reason of the tight stop loss was, it was already quite a big candle when I entered. So if it pulled back to my SL point, there's a possibility of forming a long hammer-like candle, which might mean another fake signal. (note: of course, it can swing up and down a few times but still form a big black candle in 30min!)

Anyway, once the downtrend was confirmed (big long black candle finally completed, closed way below Kumo), I continued to watch the movement (note: as an inexperienced player, that's the way I feel "secure").

I referred to the Slow Stochastic movement to decide whether I should come out of the trade. there was one white candle, one black, and another white after the big black candle, but the Stochastic was still going down steadily, so I let it ride. Until the hammer formation, which coincide with the turning of the Stochastic, so, closed the trade. My first winning trade :) cheers.

Some side notes:
When I was sitting on some floating profit, I was thinking about moving my SL or maybe put a trailing stop (as it was late at night, I didn't think it was a good idea for a noob to sleep with an open position).

Then there were some scenario:
1. Assume the ride from Yellow B to the hammer as a motive wave, the immediate Fibonacci retracement level (1/3) would be around 1.2206. I could move the SL there, but then it's just 13 pips from my entry, and with my initial SL of about 14 pips, it didn't even make a 1:1 trade! So I decided against it. (note: reviewing it now, it really retraced about 1/3 before a even bigger rally down)

2. Maintain the stop loss. Again, to have an open position wasn't cool. (note: review again, if I maintained the SL...IF...BIG IF....)

3. Close the position, call it a day. Yes, I thought it was a good learning trade, so I closed the trade a while after the hammer was formed.

My first winning trade, but I won't say it was perfect because several things could have happened and to take note:
1. If the initial price swing was bigger, I could be stopped out before it continued it's downward rally as my SL was very small.
2. Was it wise to close the trade instead of maintaining the initial stop loss? (put aside what happened after that, but simply, what was better? Close trade? Keep the trade?)

~~