Looking at a market profile view of the GBPUSD you will immediately notice that price has been trading in a range smaller than the single range of last Friday.
The double inside day usually means when we do break out of the existing range, we could be in for some pretty big moves.
It is also of interest that today’s high was right at Friday’s VIRGIN POC and with 30 minute tweezers. That first time virgin bounce was good for about 50 pips, but never made it down to the virgin created yesterday at 1.5431. That with todays action created a virgin at 1.5479 creates a nice trading range between the two virgins
I think virgin POC’s are good complimentary indicators so look for whatever system you use to give entries around 1.5431 and 1.5479.
First, if you don’t know what I’m talking about when I say “Quarter Levels” then you need to go over to my good buddy Mongolians thread on Forex Factory. The thread is “Make Money Everyday: A Guide To Short Term Trading” – brilliant concept.
I have incorporated the quarter levels into my trading and am amazed at how price respects these psychological support and resistance levels. Mongolian advises in his thread to just use the levels to scalp 12 pips all day long, which I have done and I must report is very doable. However, I never being settled, have been tinkering with a way to stay in trades longer…so I have been toying with a few indicators to the pure price action method Mongolian uses.
I have been playing with a system called “Forex Gold H1″ on a 5 minute chart. I have not tested it out with cold hard cash so I cannot offer you anything other than my observations.
Ok, I went back to my beloved pivot points to find a good place to add onto my swing trade. In previous posts I have talked about how I like to use pivots as guides. In a downtrend, I like to short near R1. Well today R1 is approximately 1.5892. Even though it is after my normal trading hours, I am going to take a low risk entry short. I got in at 1.5887 with a 10 pip stop.
Now I don’t normally swing trade – I am usually a day trader, closing out all my positions by the end of the European session.
Recently, I have been experimenting with taking profits at predetermined price points with half of my position and then moving my stop to break even (+spread) and seeing where the “free trade” will take me.
As you know from my last post, I took profits on half of I trade I initiated at 1.6007. The other half has seen some turbulence, but now offers a profit of about 220 pips. I said I was going to let her run to support, so I still have about 400 pips to go.
I also stated in the last post that I would be adding to my short position at key levels. I was stalking 1.5888 right after the London open last night and lost my internet connection! No add on trades as of yet, but stay tuned as 1.5750 looks like a nice area of support. Once pierced I will look to enter short on a retrace.
My absolute favorite candle formations are tweezers! When I see tweezers I get excited! As long as I am patient and wait for the second candle to close, I am almost always guaranteed to get a minimum of 21 pips and usually 50+.
I dont know how other people define a tweezer, but I define it as two adjacent candles with matching wicks that sorta resemble “tweezers”.
tweezers on the 30 min chart
On the example to the right I was actually watching the pair utilizing TEB’s MA system. I was only supposed to be looking for long entries, however, I saw the tweezers forming and decided to be a contrarian. The pound has been in a steady up-trend for the better part of a month so going with the theme “the trend is your friend” one should have been looking for pullbacks to get long. But, again tweezers make me change my mind about everything. So I went short (a little early to lower the risk) at 1.6007. I took half off around 1.5967 and moved my stop to break even + spread for a free trade on the second half. I am going to let the second half ride for a while….
Now if we take a look at the daily chart you will see why I am willing to hold this trade for a few days. At the beginning of August the pound hit some stiff resistance at 1.6000 and sold off for the next month until finding support around 1.5400.
the pound is going down!
It’s a trading range! Being lucky enough to get into the range at the top, I am going to hold on and see if I can ride her down to the bottom. So, setting take profit at 1.5407 – lets see what happens.
I’ll do a better job of keeping you up to date on this trade. If the trend does indeed turn down, I will be looking for places to add to my short position.
It is also of interest that today’s high was right at Friday’s VIRGIN POC and with 30 minute tweezers. That first time virgin bounce was good for about 50 pips, but never made it down to the virgin created yesterday at 1.5431. That with todays action created a virgin at 1.5479 creates a nice trading range between the two virgins
