At 81.77, CADJPY is going to be my experiment for today. The slope of the yellow brick road, its relationship with the center of the green momentum channel, and the deepness of its last pullback all give me reason to conclude the pair might be turning bearish. However, according to the analysis/evaluation I performed earlier, the slopes of the longer-term trend lines and their positional relationship with each other signal a need for exercising extreme caution in shorting the pair. But of course, these two longer-term moving averages are much more subject to the problem of lag. So, the question I need answered is: What happens the next time candlesticks begin forming below my trusted twin moving averages?
The signal to sell CADJPY did not come until the rate fell from around 81.97 down to around 81.86. That was higher than I was expecting and suggests giving the longer-term trend lines the most credence. Now I need to see how far the rate falls before turning north again.
This would not have happened had one of your conditions for entering positions been to wait for rates to deviate at least 0.15% above or below the yellow brick road. On the other hand, this is never going to happen when the slope of the road is too steep, so use the amount of separation between the road and the longer-term trend lines to gauge when the trend is so strong that this condition should no longer apply.
CADJPY fell no lower than 81.84 before again turning north, so I really must give the most credence to the longer-term trendlines.
My setup is back to looking like a confusing mess, but as long as I understand what is going on and am able to decipher the haphazard scrawling, with the end result being a daily success rate somewhere between 90 to 100%, I’m not going to argue with it. It shouldn’t take more than a day or two for me to determine whether this is the situation. The main things for me to remember to keep things straight is to look to the longer-term trend lines for the market's "inclination," but to rely on the positional relationship between the center of the green momentum channel and the yellow brick road to forecast what is most likely to happen in the immediate future.
USDCHF has been on a southbound trajectory (overall) since the middle of November. Keep an eye on it however in that, at the moment, it looks to be poised for the possible formation of ascending wave. The yellow brick road has been gradually making its way north for the last 24 hours or so and has now crossed above one of the longer-term trend lines, with the global trendline, a mere 20 pips away. If price should happen to pull back anywhere below 0.9806, consider watching for an opportunity to enter a long position. (The main note of caution is that the center of the green momentum envelope keeps snaking [or sidewinding] its way above and below the yellow brick road rather than maintaining a relative position above or below it.)
That’s fine, but don’t overlook also maintaining awareness regarding whether the trusted twin trendlines are above or below the center of the green momentum envelope.
I was able to make up the loss from the USDCHF trade, but the ratio of average profit trades to average loss trades was bad, and in reviewing the choices I made, I realized that I did not abide by my plan to only enter trades where rates deviated at least 0.15% above or below the yellow brick road. Then again, if I had, I would not have made any additional trades at all, since the market was kind of dead last night. Things picked up this morning, but it was while I was still asleep. The only opportunity left to test my 0.15% theory once I woke up was selling EURAUD at around 1.6058. It looked like a good move given that the yellow brick road was below the longer-term trendlines, the relationship between the two longer-term trendlines had reversed from bullish to bearish, the global trendline was pointed south, and the two longer-term trendlines were below the global trendline. Most importantly, candlesticks had begun forming beneath my trusted twin moving averages, which had hooked southward. But as good as these two indicators are, they WILL repaint as additional candles form, and the hook disappeared as newer candlesticks formed ABOVE the twins. I will therefore have to adapt how I implement my system by entering trades after one or two candles open and close below the hook on a HIGHER timeframe chart. As for the advice I gave myself to not overlook maintaining awareness regarding whether the trusted twin trendlines are above or below the center of the green momentum channel, this recommendation is being reinforced by what I am seeing this morning. Consider the possibility that when rates deviate more than 1.15% (i.e., 1.50% or even 1.70%) above or below the yellow brick road, that added "safety" of waiting not only for a hook in the trusted twin moving averages with candlesticks forming to the inside of the hook, but also for similar developments with respect to the center of the green momentum channel, might be worth a few missed opportunities and/or the loss of a few potential pips profit.
Even had I waited and shorted EURAUD with perfect timing, there was still no escaping the shenanigans of the market hunters who go hunting for stops just before they commit to taking an asset in the opposite direction. So in this case, it wouldn't have mattered.
No one was hunting stops. This advice might be demanding even more respect: "That’s fine, but don’t overlook also maintaining awareness regarding whether the trusted twin trendlines are above or below the center of the green momentum envelope."