I just want to start by having a quick look at the ‘strength meter’ of yesterday and comparing it with today. Yesterday it clearly shows the market in ‘safe haven’ buying mode, the Dollar and the Yen were the master currencies. With this type of pattern we certainly wouldn’t be looking to sell USD or JPY so our probability of winning has just increased. As a purely technical trader I am less worried with the why, and more concerned with being aware of what’s happening and acting upon it.
Today we can see them both weakening a little. Notice that the Yen leads the way, it is much more volatile than the Dollar, this is one of the reasons I enjoy trading with that currency. Put two volatile currencies together like the British Pound and the Yen and you have dynamite. Yesterdays day range for that pair, a jaw dropping 374pips, now that’s worth trading in my book. My loss for not taking it on.
So another two successful high probability trades today, the first is really just continuing on this recent Sterling weakness against the dollar. Exactly the same breakout of price from a consolidation condition.
This one shot away and I thought I’d missed it, but the retrace came back nicely into the zone and I was able to get in with the risk that I wanted. Had it gone without me I would have left the trade alone as I would not be able to trade on my terms, that’s to say being in control of the risk. This could have easily been a false break, and had I chased after it I would have been left hung out to dry. Whenever your confronted by this type of situation remember to tell yourself that it doesn’t matter, leave it, there will always be a next time. 50pip target reached with one lot, plus 15pips for the SL lot, that’s the kind of risk reward ratio I like. The second trade came later on trading the EUR/JPY.
Again just observing what price is doing, recognising the condition of the market, and being ready to apply the breakout strategy to that market pattern. Here the consolidation zone was around 50pips, price is not making higher highs or indeed lower lows, it’s going sideways. The higher probability was that price would look to continue it’s move up as that’s what it was doing before it started ranging, it’s just a higher probability not a guarantee. I closed out the trade at the target of 50pips, but I also had a red flag waved by the long wick on that candle which signaled a possible pause in preceedings. The price then changed condition and went into a consolidation range of around 20pips. I started to write up this post for the blog and wanted to explain on the chart the possibility of entering in the same manner using this smaller consolidation. After I had finished I checked back on the live charts and surprise surprise……..
….. another 50pip breakout just as I had described lol.
So anyway there we have it for today another 135pips. The real bonus this week is the markets are on the move and I haven’t encountered one false breakout, that makes trading a pleasure but lets not get lulled into a false sense of security and throw caution to the wind. The market will very quickly teach us the meaning of respect if we start to get to arrogant.
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