STRONG 198 PIPS ON THE NZD JPY BREAKOUT
Another great trade was provided by my Methodology to Subscribers towards the end of November. As the NZD JPY broke out of the large Daily Pennant Consolidation, we spotted the Entry Signals on the Daily & 4 Hour Charts that allowed us to capture a large trading gain of 198 Pips within 6 Days.
The Charts below show the setup that I had seen on the Daily Chart. As you can see in the first Chart, the we were currently at the Outer Uptrend Line following the temporary Downtrend that broke the Inner Uptrend Line.
At this point, the market could either continue its bearish momentum in favour of the Japanese Yen below the Uptrend Line or rally to resume the major Uptrend. Usually when we have these types of situations, the market will spend a lot of time moving sideways to reflect the indecision of the market. This often leads to the formation of Consolidations such as the one formed there.
After spending a lot of time in this setup, the market eventually revealed its intention. A strong bullish breakout started to signal the start of sharp gains for the NZD as the market began to resume the Bullish Trend.
Taking a closer look, you can see the Daily Signal that indicated that it was time to start trading Long. The Signal came after an initial break from the Resistance and a temporary pullback. This pullback included the volatility related to the Trump victory in the US Elections.
The next step as you would recall from the Trading Manual, involved going down to the 4 Hour Chart to look for an Entry Setup. This provided a strong Pennant Setup that had recently been broken, which also provided us with a strong Stop Loss area.
After confirming that the overall trade complied with the rules in the Trading Manual, a Trade Signal Video was sent privately to Subscribers indicating that I was going to make the trade. The Holding Period for this trade was set for 7 Days. (later uploaded to YouTube after trade was completed)
As you know from the Manual and description of the Methodology on my website (www.drfxswingtrading.com), FXCM Charts are used to get our Entry Signals because they use the most accurate New York Close of the Daily Chart. This is crucial to Price Action Strategies such as mine. So my signals from the FXCM Charts are sent to you/my Subscribers who can execute their trades on any platform they choose. In my case, I do my Live Account trades with FxPro (better Customer Support, Platform).
At the end of 6 Days, the market continue the bullish movement as expected, provided us with the strong trading gain.
Below is the Video Analysis of the trade.
The trade was executed on both the FXCM Demo Account used for signals and my Live Account (slight 4 Pip difference in trade result). The reason I trade both is that FXCM platforms allow me to check on the trade to make sure it is still open, without being able to see the Floating Profit of the trade. This is not possible with FxPro and other platforms which allow you to see everything as soon as you open the platform.
In order to remain objective while your trade is still open, it is crucial that you do not see anything related to the trade that will lead you to make an emotional decision. So this is why, when I check on the trade at the end of each day of the Holding Period, I only need to see the Tab on the FXCM Platform that says whether the trade is still open or closed. By not seeing the profit or the chart itself, I prevent any emotional decisions that can affect profitability when it comes to Live Account Trading.
This is the beauty of my Methodology and Swing Trading. Once you are confident that the trade will hit your target, you just need to execute the trade and leave it. The market has a natural dynamic of moving erratically up and down before it reaches its destination and by looking at the market while it is heading towards our targets, we run the risk of interfering with the trade based on these temporary pullbacks. By staying away, we allow the market to complete its natural dynamic and hit our trading target.
So in summary, this was a trade where we took advantage of a Consolidation Breakout on the Daily Chart, based on the Signals and Setups on the Daily and 4 Hour Charts. The key was to determine that the Daily Signal was strong enough and that we would have a strong Stop Loss Area on the 4 Hour Chart to protect the trade.
Most important was the patience and the discipline to hold the trade. This is a lot easier when we know how long most of these trades take to hit these 200 Pip areas. You can be therefore be more relaxed in the knowledge that the market will hit these targets most of the time, without the need to interfere.
1. Consolidation Breakouts
2. Pennant Setups
3. Downtrend and Uptrend Lines
4. 7-Day Holding Periods
5. Patience and Discipline
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(M.Sc. Economics, B.Sc. Management and Economics)