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Over the past week, It may appear as if I haven’t been trading, but I’ve just been babysitting this slow-moving GBP/USD short positions. This trade is similar to my last USD/JPY trade in the sense that I was taking a more risky trade, by trading against the major trends. This put me in a very cautious mindset for this position, as at any given moment we could break out and hit my stops. Overall on these positions, I closed at one position at 21 pips profit and the other at 43 pips profit. Which is great, but I was up around 100 pips on each at one point.
The daily time frame played a big role in allowing me to identify a potential reversal on the currency (shown by the first and second massive bear candles) and then aided me in closing out of my position as the market broke out of the slight downtrend we were in after forming a bullish engulfing. I didn’t have an upper zone drawn here, but my stop losses were above the wick on the second red day, which served as my “resistance zone”.
The 4h wasn’t very important to me on this trade, the rest of my ideas came from this 1h time frame. The first thing first was we were in an overall uptrend but started to show the potential to break market structure. We did so on the 22nd and started forming a downward trendline. Also on the 22nd, we had a massively poor news event associated with the GBP which sank the currency very quickly. This is when I entered because the market had already shifted into a downtrend, we had ranges to fill, and we had momentum and fundamentals backing up my ideas. The following few days we started to fade up, but as long as we didn’t break above the trend line I was okay holding to Stop loss, we held. The following day is when we tanked and I was up over 200 cumulative pips, which I didn’t close as I was getting slightly greedy. Then into Friday, Monday, and Today when I closed the markets faded up and then finally broke the trendline. This gave me the signal to close my position (with the daily bullish engulfing) as it was signaling a potential continuation move to the upside from our last few weeks of bullish trends.
I think that on this trade, I could have gotten away with closing sooner and walking away last Friday when the markets started to really slow down and show consolidation. Other than that, I think I entered this position great, managed it great, and closed it great.