Market Recap for 12th Dec 2012

Took 2 trades yesterday. Both entry bars boxed in green.
The earlier one was not really a good trade because i was entering in the middle of a range. The distance to the bar 2 high was less than 1 X  my risk. I could instead enter a buy limit order below the low of bar 3 since market has reversed 2 times earlier at the same area.

2nd trade was a buy limit order near the same area of support in the range.
I think the premise for the trade was quite valid but i could have decided to close my trade after the market went to make 2 attempts at the EMA and formed a bear bar. At this point the market might try to make one more push down especially after the 3 push Double top pullback (Bar 5, 6) that led to the sell off to support.
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Bar1 set up a H4 long in a tight bear channel ( bear channels often end with a H4)

Bar2 was the 3rd push up to resistance and also formed a Double top with the last swing high.A sell limit
or even a sell stop would be Ok since I stand to make more than 1 X risk to the bottom of the range.

Bar3 was big. No stop order should be used in this case since that would mean buying in the middle of a range. A buy limit at support or the last low would be a reasonable decision.

Bar4 was an Outside down bar at resistance. Bulls who were long from support should seriously consider closing here.

Bar5 was a Low2 short at resistance. It acted as a pullback and 2nd entry short from the earlier 3 push pattern.

Bar6 was a lower high pullback from the bar 5 entry.

Bar 7 was a second push up to the Ema. The first push was 2 bars earlier, the bar went up to the Ema then down on the next bar. The bear bar after bar 7 was a short entry after 2 failed attempts up however it was not an easy short because it was so near to support. Bears who shorted here were aware of the possibility of the market forming the 3rd push to complete a wedge buy setup.


Bar8 broke above the bear channel but the move up to bar 9 seemed more like a leg in a trading range then a trend. The bar before bar 8 was a small bull flag, 3 bars before bar 8 was a doji and 2 bars after bar 8 was another flag with a bear body. All this justified shorting bar 9 without actually waiting for a second entry despite the steep rally that preceded bar 9.

There was a gap between the close of bar 10 and the open of the bar following it. This gap was tested by bar 11. Smart traders probably anticipated this and placed buy limit orders at the gap.

Bar12 was a H2 long at the Ema. The bear bar before it set up the entry at 1 pip above its high.

Range Study_01

EURUSD 27th and 28th Nov 2012 

Bar 1 defined the upper boundary of the range. It was also an L2 short the bear bar 3 bars earlier was the L1. It also came after 3 pushes up and so gave sufficient reasons for a short.

Bar 2 was a second entry pullback from the Bar 1 signal and it was a L2 and an Outside down bar.

Bar 3 was a 2 bar reversal that overshot the bottom of the earlier range (blue line). Ranges are rarely perfect so i should not be overly dependent on a perfect Double bottom in reaching a consensus for taking up a position.

Bar 4 set up a L2 short at 1 pip below its low. The last 25 bars or so all traded  below the EMA and bar 4 formed the first Double top that broke beyond the EMA so there is bound to be more bears than bulls below bar 4. Since market is clearly in a range (Buy low sell high scalp), Bulls who entered at bar 3 should consider taking profits.

Bar 5 follows a 2 legged test of the last swing low and set up a H2 long at 1 pip above its high. Nearest target would be the bar 4 high.

Bar 6 was a 2 legged move up to the bar 4 high and set up a L2 short at 1 pip below its low.

Bar 7 was an outside down bar following a 5 bar bear spike selloff from bar 6. The market made 2 attempts up on the previous 2 bars. I could make a decision to hold a portion of the position to see if market would break the bottom for another leg down based on the strength of the selloff and the 2 failed attempts up. However if Im flat i dont think i would be entering a short at the bottom of a trading range.

Here is the same chart with a trend channel line drawn across. Its clear that the institutions were paying attention to them and trading off them.

Trade 13_191112 Profit

 Setup : IDB 3 push DT L2 Short at the top of a range

Some good setups that happened near my entry:

Bar 1 was an outside up bar and the first double bottom following a market that was mainly trending above the EMA.

Bar 2 was a micro DB, H2 and a 2 bar reversal . The 2 tails (circled) showed that the market has made 2 attempts down at that level and failed.

Trade 12_191112 Scratched

The context and the signal bar were both good for this trade.Signal bar setup a H2 long at the EMA and it was also a test of the bull TL.

Despite that, i started to get nervous when I saw the DT forming at the resistance level (refer to below chart) and closed my trade. The selloff from the previous swing high also seem to have alot of strength but i should have trusted my initial entry and held long based on the reason that there was no prior significant bull TL break in the move up to resistance.

Got out with a few pips profit.

Trade 11_161112 Stopped out

This trade was even worse than the previous trade because it was a "revenge trade". I was not psychologically ready after the large loss sustained from the previous trade and was not being objective. I didn't know what i was doing and i just reversed to Long at market shortly after getting stopped out of my previous short.

My entry bar turned into an outside down bar, a great signal for the bears given the reasons stated in the previous post.

This trade made me lose my psyche and disrupted my "trading bearings". I will not put myself in such a situation again by clearly defining my risk before i commit to take up a position.
I will only proceed if I have 2 reasonably sound reasons for entering a trade. 

Trade 10_161112 Stopped out

This was just a really bad trade. I thought i was shorting a Gap 2 above the EMA, which was a valid reason, but i failed to realize despite having my trend channel line drawn, that there was a break of the bear trend channel line. Usually this should alert me of a possible test (or perhaps even break) of the opposite side of the channel (bear TL). Even worse, i calculated my risk wrongly and ended up risking more than i was comfortable with.. This led to further mismanagement and a lot of hoping. I could have closed the trade when the market formed a DB and a H2 long signal, but i was no longer objective and continued to hold on only to watch my stop get hit.

Here are a few setups that were reasonably good.

Bar 1 was a L2 short (2 bars earlier was the L1), an EMA test, trend channel line test ( a parallel could be drawn mirroring the line drawn below the last swing low) and a breakout pullback short (break below an earlier range)

Bar 2 was a Double top and set up a L2 short at the EMA and trend channel line. Especially great when market is trending below the EMA throughout the last 40 bars.

Bar 3 was an Outside down bar. Here the context for a short was especially good given the break of the bear TCL (line below bars) followed by the break of the opposite side (line above bars).
The ODB was also a 3 push pullback although this was not so obvious.

Bar 4 setup a L2 short following the 5 bar bear spike from bar 3. It also formed the right shoulder of a head and shoulders pattern.

Trade 09_161112 Scratched

I thought i was buying a wedge bottom but i realized soon after entering the trade that the market has been consistently trading below the EMA. Besides that, the 3 push pattern was not the best looking I've seen.I would prefer to trade a countertrend 3push if the third push is an overshoot of a trend channel line or if the 3rd push touches an area of support.

I was better off looking for shorts near the EMA on such a day. 

Managed to close with a little profit of 6pips.