This is why it is necessary to analyze the situation in terms of the relationships between a number of factors, including the overall trends in multiple time frames, average price ranges in multiple time frames, reoccurring price patterns, and horizontal support/resistance levels. It is also why it is important to use precise, carefully selected moving averages and their corresponding envelopes. By the time price returns to more typical deviation levels, the trade is already over, or soon will be, in that such levels more typically constitute take profit targets:
Over the last couple of days I’ve been analyzing my unsuccessful trades in an effort to refine the decision-making process I use for entering positions. I’m hoping the insights I’ve gained are valid, and based on this refined approach for selecting to execute trades when the probability of realizing a positive outcome is at its peak, I’ve opted to short GBPUSD here as it is falling below the 1.3423 level.
The refined set of criteria I’ve begun using for deciding when to enter trades is simpler and more clear-cut than the previous. GBPUSD worked out fine, so I’ve purchased USDJPY based on the same set of requirements. AUDJPY as well, except that I got in about six pips later than I would have liked.
After waking up this morning, I was able to adjust my targets to milk a tiny profit out of AUDJPY, but I probably would have been stopped out of USDJPY had I not provided for a generous amount of “breathing room” before retiring to bed for the night. In other words, things definitely did not develop in the manner I anticipated, so in comparing these two trades to GBPUSD for a possible explanation, the evidence suggested to me that my simpler and more clear-cut set of criteria for entering positions was insufficient, and such factors as the day-to-day trend, the relationship of price to the intraday trend line, and the slope of the intermediate trend still needed to be taken into consideration.
I bought AUDUSD on the downswing instead of on the upswing, so I’ll need to work out a better timing mechanism.
AUDUSD is not panning out, but maybe it was just a fluke, so here's a second test: You see, this is the type of price action I expected to get out of AUDUSD (see below), but in that case, it never developed...
No (my broker's platform said "off quotes"), but I WAS set up to catch the pop from EURAUD 20 hours ago, except my stop loss was at 1.55509, and the market makers took price STRAIGHT down to 1.5481 before sending it STRAIGHT up to 1.5585—those little mischief makers! I use one-minute charts to enter and exit trades like the NZDJPY trade pictured in the post directly above, but five-, fifteen-, and sixty-minute charts for overall structure and possible trade setups depending on how big of a picture I want to get.
I made a successful trade by buying EURAUD about three hours ago, and I’m now trying to do the same thing again. It’s taken me roughly three days, but I think I’ve just about got the puzzle all put together now. Had CHFJPY not jumped down at the start of the Tokyo session, or had my broker’s platform been responsive at the time so I could have seen what was going on and managed the position accordingly, I would not have experienced any losses so far today (since that was the only trade I couldn’t exit while conditions were in my favor). I’m also shorting AUDJPY…