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Yesterday, I stated I would be looking to enter the market at 2.0225 on the GBP/USD because of the support there. I mentioned that it was important to look for an entry pattern on the 4 hourly chart due to a) the fact there was further downside potential to about 2.0195 and b) It is always possible that the trend is not going to continue (although the rule that the “trend is your friend” is a good one.
This turned out to be the perfect opportunity to trade. Why? How? Firstly we did see the overnight move extended down to 2.0213. This can be seen by the first (black) candlestick highlighted on the forex chart I have provided below.
On the open of the next candle, there was a further extension to the downmove down to about 2.0195 but then the crucial pattern happened. 2.0195 held and the price came up to beyond the real body of the previous candle.
This move was a double bottom (you can see that 2 bottoms are formed on the 4 hourly chart). It was not a perfect double bottom - the bottoms were not at exactly the same price: the second candlestick extended lower than the first. However, the fact we had already found the support at this area and were looking to take longs at 2.0225 and that this was the confirmation level meant I entered at 2.0225 with a stop of 2.0213 and a limit order of 2.0250.
In fact, the market went up to 2.0335, but I was very happy to get well ahead of my plan for the week and take out 25 pips from the market throughout the course of today.
You can see my trade below. The entry is at the real body start of the second candle, with a stop below 2.0215.
If you had been tipped off on the ISM coming out as it did and went for the 2.0275 target (or even 2.0325) then I am very happy for you. This was an original plan, but I had not got enough evidence that the USD was likely to lose ground at this afternoon, although thinking in hindsight, the trade was there in the back of my mind (Trade 2.0225 stop 2.0190, TP 2.0275).
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That’s all for today. I think this post and the last post - http://www.sambeatson.com/?p=53 could be invaluable to your trading.
I am deeply indebted to many traders and mentors who have helped me to refine my own methods for trading the forex market and taking me from knowledge to actually applying and winning money with the information I share with my members and that which I publish on this forex blog. Not least, Mr G. Kolitsopoulos who is a successful investor and has many clients who he trades for - http://www.phanesfx.com and Mr. Andy Shearman, http://www.traderhouseglobal.com and who have got me to the level where I take on my own students now and show them how I trade forex.
If you want to meet with me one to one, via skype and get access to a copy of all of my courses, plus mentoring via email, you would do well to consider my members program. The link is http://www.fasttrackforex.com/special
Wishing you all success,
Sam
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