Saturday, November 26, 2011
I entered my short trade once we got a solid close back under the 50 MA on the 4 hour chart. I enter my positions based on the 4 hour chart. I use moving average envelopes of .25% deviation which helps me determine the strength of the move away from the moving average. I usually aim for 200 pips while risking 75-100 depending how much support/resistance my stop is below/above. I noticed .3450 was particularly a solid support area that I wanted to see break before any attempts for price to continue down.
Looking at that monthly trendwall on the weekly chart, we can see that last weeks price action down leaves the trend line exposed to AT LEAST be tested. It looks like I will reach my target and I will most likely close the rest of my position at that point. By that time, the 4hr RSI will be oversold and the Daily RSI will be at a value really close to 30. Therefore, I'm going to expect a pullback that I might be able to ride up before another move down. If I can get a long entry at a good price once I get a close above the 50 MA, I will have a very strong support area for my stop loss to be under. After all, I will be doing what every trader does, buying at support and selling at resistance in which this case I will become a buyer. Hopefully my first blog entry was helpful and understandable, for you will read a lot more from me.