Anyway by the time i was in the office price had then risen slowly -almost sideways- and then passed upwards through several resisting reaction lines. First price passes through the thin RL that carried the Euro down this morning in the euro session. This is important but it does not indicate what strength/energy or future direction price has accumulated during its sharp passage downwards.
Price then breaks above the first thick down-sloping RL at 1.3488 (which was also an entry point but with greater risk as the trend at this point was still weak and undetermined). Price then gets up & over the horizontal RL which lies a whisker above the important 1.3500 level.
The behavior of price at this second d-sloping is very important. If you watch and look at price behavior at other RL's you will often see price drop sharply and 'shrink' away and retrace down below the RL ,then it will often try one or more approaches and may either fail or break just above and then still fail. We never know what will happen but I can surmise the highest probability future scenario. In this case price 'hugs' the RL but does not drop away from it. This is important and although it is carried back about 8 pips from 1.3515 to the .13506 it still maintains contact with the line.
Because one can never tell if price will succeed in crossing up through the RL i choose the 1.3500 level with the horizontal RL just below which offered support. Long at 1.3509 with a tiny tight 5pt stop.
Now lets look at what the indicators showed me below? In the 5 min ADX shows a strong trend over 40...mainly thanks to some nice bars with good separation in the previous 30 mins since the break over the previous RL at 1.3485. This is important for me.
Maccy'd' is fine but of little use in this case. RSI was also below 50 in the 1 min and 68 in the 5min ( it is collapsed/unseen in the indicator sub-window but is there).
The B-Line stochs show the ribbons in a good steep angle of ascent and also and more importantly the B-line slow stoch (in thick cream-yellow) is also ascending sharply.
The Bolly bands (in the 1 min) show the central middle band pierced at the critical 1.3506 touch ( & held) on the horizontal RL as with this bar price pushes then above the RL and I now have an open position with my stop in place a whisker under the RL. If price fails i want to be out/flat as there is no way of evaluating how far price could have fallen and my loss is approx 60 bucks per contract only.... simple...It either works or does not. This is why strength of trend is so important for me to judge correctly.
Now i hold my breath until a new high bar and new high pivot( look to the far left) is made and then price runs bang into the thin blue ML from the dominant fork in the 60 & 240 min charts (P0 1.3757 27/Jan, 1.3860 2 Feb & 1.3568 on 31/Jan). This CL is as good an indicator as you can get and a failure here would have the alarm bells ringing. Price finishes it 'cycle'..the stochastic ribbons fall away from the B-line as does price.
Now i start to worry ... price is over the RL but is the trend finished? . .Will the horizontal RL hold price above 1.35 figure and more importantly above my stop at 1.35045.
The answer is yes...just. Price comes back to the RL and is supported but trades down to 1.35058 ( which is actually a retouch in the 5 min and larger TF's) a hairs breadth away from the stop. Then the BB's contract and price finally breaks up.
Lucky? Not at all..if the reaction line works that's what we expect to see with a small margin of error of a couple of points (max) and that is exactly why I put the stop just below it.
The trade was closed at 1.3550.
Some time later price has made its first attempt at 1.36 and is trading between the two horizontal RL's between 1.3544 and 1.3575. The trend looks intact but price will move sideways before another break out...If it holds above the lower RL ( above the 50% RT level) it should break up.
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