Friday 24 September 2010

Euro$ -Anatomy of a line and a trade



























OK, Here is my long trade on €$ today and at the time of writing (4.29pm Euro/Paris time) i am beginning to worry that we may have a CL failure( see last chart bottomRHS). You can see in the bottom row the CL and fork concerned and i guess we are looking at a trade objective of the 1.3489 area.
This type of price action is excellent for me to trade and i usually look for this price behavior during the London/ Euro session about 8-10am everyday. Nice thick long bars and a fast market.
I went long on a break of an important RL that had held back price since the London highs had been achieved and knew that Europe usually waits for the US open before further direction is seen after about midday.
You can see my long entry in a 5 min chart after the first bar above the RL takes out the high and closes above the RL with good bar/HLOC separation.
Then you can progressively see the market reach each new RL (some are drawn in as dotted lines manually and taken from other charts like Ensign or other MT charts of different TFs) so there is only one yellow ML and the rest are all reaction lines either automatically drawn as deep red or manually as multi coloured dotted lines. The only line that is not either RL/ML is a dotted red line drawn under the base of the RT. Another point to mention is that if P2 was drawn on the incorrect next low pivot the CL intersection with price would be 1.3480 ish as opposed to 1,3490( see last chart at bottom)- however if the correct pivots not used it doesnt matter as if price does not reach the CL related to the true pivots a CL failure will result. Lastly P0 is always the most recent SL not as we are taught by various sites/information the lowest SL. You only have to work with RL's for a bit to see that there is only good interaction between price and the RL using the most recent low P0 even if the low before/preceding it was lower.

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