$EURUSD - stopped out to the tick

After only several hours, the swing short $EURUSD from 1.3231 was stopped out to the tick for a -31 pip loss.  I got the high print of the day so far.  Better luck next time!

EURUSD 1 min chart

$EURUSD charts - short entry at 1.3231

Charts with explanation of short entry at 1.3231:

It starts at the daily chart level, where a confluence of a trendline, 61.8% retracement, and price takes place.

EURUSD daily

At the timeframe to help trigger the order, there's another connect 2 points and extend trendline in confluence with an overbought stochastics indicator.

EURUSD 15 minute

Historically, these swing trades get stopped out more than 50% of the time at my original stop, especially with the relatively tight stops I use in relation to the target objectives.  Since I'm usually targeting a profit of around 10R (R=initial stop loss amount), the numbers work out even if I'm wrong often.

$EURUSD closed +300 pips

Ended up closing the EURUSD trade today that I entered on 2/24.  When it made a new low under my original 1st target of 1.3100 before revising it, I moved the stop just below 1.3150 to lock in +300 pips, which is about a 5:1 reward/risk ratio.  The trailing stop was triggered today, closing out my position.

$EURUSD - 240m - 3/7/2011

I admit, after the fakeout breakout above the obvious 1.3150-60 level earlier today failed (1), and a new swing low below 1.3100 was printed (2), I didn't expect the 1.3150 area to get retested. 

But in this rumor driven market, 50-60 pips can take place within minutes, and my trailing stop was triggered relatively quickly (3).

In hindsight, I should have kept the trailing stop loss order well above the prior day's high, which means I would still be in the short position right now. 

But once I realized that my original target of 1.3100 was retested and failed, I probably got too aggressive with my trailing stop.

Live and learn, but at least this ended up being a respectable swing trade...NEXT!

UPDATE: $EURUSD - thoughts about 1.3150

I read the $EURUSD stream for a few minutes last night on Twitter/StockTwits, and was surprised to see how many people were saying the 1.3150 area was good support, and/or a place to buy on a retacement to go higher.

Not sure why, but it made me think the following:

• We'll never get down to 1.3150, and the EURUSD will head back up  (I was wrong)
  
• If we do get a bounce, it won't hold for very long  (So far it bounced from 1.3160)
  

The first option has already failed, so I'm thinking that the bounce from 1.3160 won't hold for very long. 

Today, the daily 20ema is starting to slope down, and also provided resistance.  The stock market also appears to be potentially slowing down.  Since the dollar and stock market are generally conjoined more often than not, if one tanks, the other will generally follow. 

Tomorrow will be an interesting day, and should help me determine whether I bring my stop loss level down closer to the current action.

$EURUSD daily 3/5/2012

UPDATE: $EURUSD swing short & the neglected indicator

Here's an update on the EURUSD short I entered on 2/24 at 1.3448:

• Original stop was 1.3510
• Original 1st target area was 1.3100, and 2nd target was 1.2800

 Updates since entry:

• On Friday, it hit nearly 4.50:1, reward/risk
• Stop was lowered to 1.3360 (above Thursday's high), locking in some profits
• Revised targets: 1st target area 1.3170-1.3150, 2nd target 1.2800-1.2775
• However, the trend still appears to be up, with a upward trendline support around 1.3150

The neglected indicator - time

I wasn't very aware of why I felt the timing was right to enter the EURUSD short, other than the resistance areas mentioned.  But after digging into my subconscious a bit more, the answer was clear: time. Most of the analysis you see is generally based on price or some derivative of price, as well as volume.  But I don't usually see as many people calling out confluences specifically in cycles and/or time.

This study of time and cycles isn't an area of study that I have pursued much, although I still recall the book I read in the early '90s called Geometry of Markets by Bryce Gilmore.  Not the easiest book to read, but one of the first books that taught me in depth on Fibonacci ratios.  Way back in those days, the 127% and 78.6% levels were still considered a big secret!

Through the years, I've noticed that there's a certain rhythm, cadence, or flow, that each market has under various conditions.  It's like someone you have known for a while, you get to know how they are when they're normal or angry, predict their next action or words, as well as be able to tell when something's bugging them.  Sometimes, you can't necessarily put your finger on it, but we humans can become quite perceptive when something's slightly out of whack with someone.

Same applies to watching the markets and getting to know its personality.  So at the time the EURUSD started to hit the recent resistance levels around 1.3450 last week, I noticed the following tendencies with regards to time for some of the recent moves:

• I went long on 1/13/2012 about 30 pips from the low, and that move lasted about 9 trading days.  I exited a day too late, but still caught 436 pips of that move.
• When I was evaluating the most recent short entry as it was hitting a confluence of resistance levels, I realized that it was about 7 trading days since the swing low -- close enough.
• By nature, I'm usually early to enter a trade and am totally fine taking some heat.  So I knew the next 3-4 trading days after entry might be a bit tough.
• And yes, Renato had his Diamond Setups overnight "Asia and London Levels" with higher resistance around the 1.3470ish area for that day.  He says his overnight levels are generally for daytrades, but if you have a longer perspective I will admit it's very valuable for entry zones.  I truly believe the overnight levels alone are worth the price of his service.
• After the fact, I went in and applied some cycles, and it looks like the EURUSD generally likes cycles based on a factor of 4 trading days.  You'll see the waves generally move over 4/8/12 trading days...at least for now.

EURUSD daily chart 3/3/2012

My current inclination is to possibly take profits if it gets down to the 1.3150 area, since that will be the 4th day of a pullback, with support from the uptrend line and support levels.  But, time will tell.  Yes, pun intended.  :)