Anti-market-topping analogs

On Friday, I tweeted a few chart based analogs.

Since this recent 24% or so move on the SPX over the past 6 months has been relatively unusual, I was able to find a few examples that seemed to fit relatively well.  I then used the historical outcome to overlay how the current market would appear if it followed the same path (on a % move basis).

I've reposted the charts below to make it easier to see in one place. But as is the case with any type of technical analysis, there are always caveats to any type of analysis and The Reformed Broker makes a few for chart based analogs.

Why did I do this?
One of the motivations for this was based partially on the "are tops a process?" post earlier, as well as my net short bear call spread positions in my autotrading account (which is taking a lot of heat).  I personally "feel" as though we are very overextended, but my logical side tells me that the trend is still strongly up.

So based on this current "overextended" move higher, I was surprised to see how much similar moves in the past continued to go higher.  Even the move that lead to the 1987 crash eventually recovered and finished higher after a 3-4 years.

As for where this exercise could lead me, @justcharts tweeted to me a few other comparison timeframes as well as other data that could be considered, such as ISEE sentiment and other put/call related data.  Her helpful tweet opened up some new interesting directions based on some limited research I've done so far.

My bottom line takeaway?
If we're truly topping here, there's usually some good signs and a few weeks to exit.  Or, as the charts below indicate, we could just be getting started on a move higher to levels we currently find difficult to even imagine.  Always keep an open mind, the market is always right.

2011-2013 vs. 1993-1995
WEEKLY SPX 

FORECAST OVERLAY BASED ON 1993-1998 
WEEKLY SPX

2011-2013 vs. 1983-1986
WEEKLY SPX 

 

FORECAST OVERLAY BASED ON 1983-1990
WEEKLY SPX

Are tops really a process? Analyzing 25 years of $SPX topping patterns

Anytime we approach new significant highs in the stock market, the Twitterverse lights up with "This is THE top" calls.  Well, I'm somewhat guilty of this, too.  I'm sure it has much more to do with ego -- trying to prove how right you are.  However, I've learned the hard way that being right is far from being positively correlated with profitability.

So let's look at the data.  There's a saying that "tops are a process and bottoms are an event", so I've done a little hindsight-based-K.I.S.S.-back-of-napkin type analysis to take a closer look at stock market top formations.

There's a zillion different potential approaches that could have been taken to performance this analysis, and I just did something I felt comfortable with.  This is not a statistically significant analysis nor an actionable trading system, but for me, this homework helps me to get a "feel" for the data from my perspective and also generates some interesting takeaways.

MY QUESTION

Since "tops are a process" is often repeated as an trading axiom, does there really need to be a big rush to exit a long position (or to enter a short)?  And how much time do I realistically have to act on a topping pattern?

METHODOLOGY

1. Started with a 25 year monthly chart of the $SPX to identify key highs during an uptrend
2. On the monthly chart, down arrows were placed at pivot swing highs based on a high that had 1) two preceding highs that were lower and 2) two succeeding highs that were lower
3. The highs from the monthly chart were then identified and marked on the weekly chart with a down arrow
4. On the weekly chart, starting from the pivot swing high arrow, the next pivot swing low was identified, and the retracement was measured
5. If the retracement to retest the pivot high was greater than 50%, then that point was identified on the chart with a smaller down arrow
6. The number of weeks between the "Potential Top" and the 50%+ retracement was identified
7. And finally, the shape of the 3 legs of the swings, starting from the high, was also drawn on the chart

THE CHARTS
Here's the high level SPX monthly chart going back 25 years (January 1998 to May 2013), with each significant high marked with an arrow:

The following charts drill down to the WEEKLY charts, with each arrow corresponding to the arrow on the monthly chart above.

July 1998 - March 2001

 January 2004 - September 2006

October 2006 - August 2009

February 2011 - December 2012

July 2010 - Current (May 2013)
[Note: significant overlap with chart above]
Doesn't look like a topping process is forming yet.

FINDINGS

• After a "Potential Top" was established, ALL examples had a bounce from the succeeding pivot swing lows of at least 50% that retested the highs (based on weekly chart)
  
• After "THE Top" (2000 and 2007) was been established, there was adequate time to exit on a retest bounce to highs (a 50+% retracement) within a 2 week period.
• After a "Potential Top" was established (13 incidents), there was adequate time to exit on a retest bounce to the highs (a 50%+ retracement) within an average of 4.5 weeks
• During the last 2 run ups to new all time highs (2000 and 2007), there were 6 significant swing highs (false tops) before the "THE Top" was established
• For both the 2000 and 2007 tops, once the pivot swing low that preceded the high was broken, it potentially indicated "THE Top"
• The 2000 pivot swing low was broken after about 8 months, and 7 months after "THE Top"
• The 2007 pivot swing low was broken after about 5 months, and 3 months after "THE Top"

THE TAKEAWAYS

Long term investor:
Over the very long term perspective (i.e. years/decades) which is the timeframe for the long term investor, the stock market has an overall bias to go higher. 

So unless you have a highly accurate method of picking tops, just wait for some confirmation that the trend has changed before exiting.  Otherwise, you're likely to get many false signals until you get it right.

Something as simple as waiting for the pivot swing low that preceded the high to be broken (blue lines on the monthly chart), in conjunction with other signals seems to makes the most sense.  You get several months to make your decision.

So yes, don't need to rush to the exits.  Based on a longer term horizon based on monthly charts using the break of the pivot swing low criteria described above, the topping process lasts 3 to 7 months based on 2 incidents, over the past 25 years.  This is loosely identified as "Topping Formation" on the weekly charts.

Longer term trader:

If you're looking for a trade lasting up to a few weeks and don't really care about picking "THE Top", then every potential top had a bounce that exceeded 50%. 

That could be a good area to potentially exit long positions or even go short, with a reentry or max stop on short above the "Potential Top."  But all the losses from getting stopped out could likely negate the profits you gain from eventually catching "THE Top."

You can also keep an eye on the monthly/weekly charts to see whether a potential top is lining up so that it can give some bias to the daily chart timeframe.

In the case of the shorter term timeframe, the topping process, where a bounce up retests the 50+% mark to the highs on a weekly chart, lasts on average almost 4 weeks.

Day trader/Swing trader:

Don't even bother reading this, except for entertainment and cocktail party purposes.  (And yes, I essentially fit into this category).

Recap: Week ending 10/19 - Tough week but good finish

The week ending 10/19 was another tough week as I continued my long journey to find my way.  It ended on a good note, but it was full of difficult moments.

STARTED THE WEEK OFF WRONG
I started the week focused on maximizing P&L -- not on my goals to limit the number of daily trades to 3 and to limit my profit targets to +2.00 ES points.  I wanted to CRUSH the markets.  That should have been a big warning sign.  Sure, it felt OK that I ended up making a decent profit to start the week, but in the back of my mind, I knew I fell off the program.  I know was cheating myself.

CRACKS FORMED ON TUESDAY
Whether it was from guilt or who knows what, the cracks started to form on Tuesday.  Just prior to lunch, I called it a day barely exceeding my # of trades goal and although it shouldn't matter, I had a slight profit.  Nice job, I'm getting back on track.  But...in the final hour, I went on tilt.  I took what I thought was solid setup to end the day on a really good note, only to realize I totally read it wrong.  Yes, got greedy, got stopped out, revenge traded, and ended down a few points.  Ugh.

MONKEYS RAN AMOK
So when Wednesday came around, the monkeys ran amok.  Shortly after the NY open, I already had 3 losses in a row and it was all downhill from there.  My initial thought was, "We just opened!  How could I stop trading so early in the day?"  My will was weakened, I took one more trade, realized I did something I shouldn't have, which then snowballed into "what the heck, I blew it", and my behavior for the rest of the day ended up being yet another big ding to my psychological capital.

RADICAL SHIFT / DO SOMETHING DIFFERENT / DO WHAT WORKS
Just around that time, I realized that the S&P was in overbought conditions based on the interpretation of the daily charts that I have used for many years, primarily on the forex charts.  The high probability setups only happen once or so a month, and I just don't have the patience to simply wait only for those signals. 

$ES_F - daily chart - 10/19/2012

But I needed to do something different to change my ways and make new habits after a rough start to the week.  Swing trading has worked well for me in forex products, so why not try something similar to that in the ES?  And when I am swing trading, the setups are very infrequent, so it's much more difficult to get into the rhythm of impulse trading -- another plus.

THE PLAN
So Wednesday night, a plan was made to establish a swing short in the ES, very similar to what I do with the forex trades.  A couple indicators I use on the daily timeframe showed a nice clean overbought condition, so it was time to find a good short entry.  My target was 1425-35 area.  I entered the short Wednesday evening and by Thursday morning, I was up over +5 at one point.  But then came the big Thursday morning grind up where I got stopped out just 1 point before the erroneous Google earnings release that spooked the market around lunchtime.  It was tough to get stopped out so close to the highs, but I followed my trading plan and felt good about that.

I ended up taking a few solid day trade setups to end the day with a slight profit.  And after the market close, the daily charts looked just as bearish, or even more so than ever.  So Thursday night, I reentered the short, utilizing some good resistance areas from earlier in the day.  That short ended up being 1 tick below the high of the night and following day.

PATIENCE IS TOUGH BUT WORTH IT
At the Friday NY open, something strange happened.  The market gap opened below yesterdays close and ended up having an "opening drive" lower.  That means it sold off strongly after the open with very little rotation/swings higher.  This was very unexpected based on pre-market action as well as other factors. 

A very key point to remember is that when there is an opening drive, there's about a 50% chance for a trend day.  Since trend days generally happen < 20% of the time, those are pretty compelling stats.  As the ES tanked and continued to fall with minimal rotations higher, I knew there was a good chance it's going to be a trend day, and that trend days generally end at the extremes of the day -- in this case, the lows of the day. 

$ES_F 30m  10/19/2012

I couldn't be near the charts for very long, since the temptation to exit would become stronger, so I took frequent breaks.  Having patience to just sit on your hands on trend day is tough. 

But I ended up exiting once the market started to consolidate a couple hours before the close, weary of a reversal bottom that would rip higher into the close.  And most importantly, it was right in the middle of the 1425-35 range that I had targeted for profits.  I followed my plan, although it happened 1-2 days quicker than I expected.

As it happens more often than not for trend days, the market did end up closing at the lows.  I left about +6 ES points on the table, but I'll consider myself fortunate that I was able to book almost +24 points.

RANDOM QUESTIONS AND THOUGHTS
The week ended on a good note, but I still have many questions and issues floating in my mind that I will need to evaluate and address.  This last trade hardly resolves my many challenges.  So although both my financial and psychological capital have been somewhat replenished, there are still a lot more obstacles to overcome.

• Over the past couple years, I've been successful at simply swing trading, so why do I keep trying to trade more like a scalper that goes for big wins?
• Oh, but what would I do during most days just waiting for a swing setup?  One part of me likes the "action" of daytrading!  [** Flashing lights and "Danger Will Robinson!" alerts going off **]  Trading should not be something you do to help pass time.
• Ending the week on a strong note is nice.  But this only means I need to be extra careful not to be overconfident on Monday.  And how will I feel if the market tanks another 20 ES points...without me on board?
• Am I getting closer to the point where I will stop chasing success?  The pieces of this trading puzzle seem like they're starting to come together, but I've said/thought that many times before.
• Cough medicine and the recent correlation to trading performance, so strange.  But correlation is not causation!  Or maybe not?  If so, what does this really mean?
• Why is limiting myself to 3 trades a day so tough?  Sounds so easy, doesn't it?  What if I had originally set the daily trade goal to 6, would that have made any difference?
• Although I have my fair share of really tough days that have hit my psychological capital hard, I still believe from my core that my dreams of trading success will become true.  It's only a matter of time.

Back to the drawing board

Well, that didn't last long.  My plan was to focus strictly on only two simple metrics: 1) A max of 3 trades per day and 2) limit profit targets to +2.00 ES points.  P&L wasn't supposed to matter.  I didn't even last 2 weeks before I had a big blow up of my goals.  I had a couple days last week with around 30 trades.  What a disappointment.

Week ending Oct 12 / From Tradervue.com journal

It was like asking someone who loves and eats a chocolate bar every day to suddenly being allowed to eat only 1 tiny square after getting a job at a chocolate factory surrounded by thousands of bars.  Or someone who drinks 3 cups of coffee a day, to cut back to 1/4 cup.  And whatever other example you can come up with.  Not impossible, but very difficult.  And very much subject to the binge effect.

Then there are those days, like Friday, when I felt I was in such tune with the markets under unusual conditions.  I had barely 4 1/2 hours of sleep and felt emotionally "hollow".  I was also on cough medicine, both huge warning signs.  However, the lack of sleep and cough medication was a strange combination -- one which required me to only interpret and act based on what I saw on the charts, with very little emotion or mental chatter. 

Instead of looking only for setups, I also kept talking about the markets from a "story line" and "contextual" perspective, from both the bull and bear viewpoints.  That was different.  For example, when the better than expected Prelim U of M news came out at 9:55 ET on Friday morning, the market moved strongly higher with initiative buying. 

But something happened.  The market could not continue higher and began to stall.  Price action didn't jive with the better than expected news.  So when one of my favorite bearish chart pattern appeared, it screamed SHORT! 

There were many of these types of moments on Friday, and maybe that's one of the reasons why I keep trading with hope. 

Trading only a single contract, my MFE (Maximum Favorable Excursion) for all my trades on Friday was almost 28 ES points, double the RTH daily range.  Yes, it's not very likely to close out anywhere near 100% of your MAE.  But I ended up with about 1/3 of it which is so-so, but came oh so close to booking about 1/2 of it of my total MAE. 

Something was definitely different about Friday and I really hope it wasn't due to the effects from my cough medicine, because I'd rather not become some sort of cough medication addict to improve my trading!  So was it just a lucky day?  Was it just some false hope, like a slot machine that pays off just enough to keep you sitting around longer to ultimately lose everything?  Or was it an glimpse of more progress to come?

This weekend, I went back to review my blog entries from a year ago.  At first, it was disappointing to see that I've been essentially working on the same key issues back then as I am now.  Same story over and over and over again.  I feel like I've been spinning my wheels for an entire year. 

But the successful method I've been using for my forex swing trades have essentially remained unchanged.  And on another positive note, I do believe I'm wiser and better educated now from regarding trading methodologies vs. a year ago.  However, being smarter means nothing when a weak mental game prevents proper execution of trading methodology.

All of this raises even more questions.  I'll take some more time reviewing my journal entries from a year ago, to help understand what I did or did not do over the past year to address and take better control of my issues.  It's back to the drawing board.

In the past year, I also realize that my psychological capital has been hit much harder than my financial capital, but my will to succeed continues to burn strong. 

Update $AUDUSD: Out +10 pips

I woke up this morning thinking I was still in the AUDUSD long trade, but found out my breakeven stop was triggered last night.  However, it was interesting to see that since my stop was placed at the exact low of a sharp move, I ended up getting a positive +8 pip slippage, resulting in a +10 pip gain.

This trade eventually went on to go about +87 pips from entry (~3.3R), hitting the first target of .9800.  So the takeaway is that when taking a counter-trend trade based on the higher timeframe (daily chart in this case), exit (or perhaps large scale out) at the first clear target area (.9800 as mentioned earlier).

AUDUSD 15 min

Back on the grid...back in $AUDUSD...and archery

After being mostly off the grid for the past week, it's good to be back.  But since I'll be in single parent mode for the rest of the week, my trading related activities will be significantly curtailed until next week.

Trading SIM on ES
I'm continuing to trade the ES on SIM, since I realize that I haven't yet completely bought in and committed myself to a specific trading plan that meets my personality and style.  That's probably one of the biggest factors of why I'm having discipline issues (i.e. overtrading).  Therefore, I'm back to the basics, doing homework, trying to figure out what type of timeframe, setups, style, etc., work best for me.  This may continue for quite a while.

Trading live on AUDUSD
However, I'm much more comfortable on the swing trading forex side, and I posted the observation last week of watching the .9665 to .9700 levels for AUDUSD, which continues to be respected.

The entry
After seeing a good setup on AUDUSD earlier today that took place above the .9700 level, I entered a long position at .9716 with a stop at .9690.  At this time, the trade is nearly 2R and once it approaches 3R, I will consider raising the stop to b/e or another appropriate location.

$AUDUSD 15 min

The target(s)
My target is still TBD, although I see some significant levels at the whole numbers of .9800,  .9900, and 1.0000, so I will watch the price action at those areas.  However, I realize that this is a contra-trend trade going against the bearish trend, and that any pullback higher may be very short lived.

$AUDUSD 4 hour

Archery and Trading
While on vacation, I took a short introductory class on archery.  What's very interesting about archery is how similar it is to golf as well as trading.  It's not a reactive sport, so it's up to you when you choose to engage.  But it was pretty clear to see that after you learn the basics and master the fundamentals, the biggest obstacle is then mental.

So when I asked the instructor how critical the mental game is to archery, it wasn't a surprise when he said it's the most critical component during competition.  He brought up an author named Lanny Bassham who wrote a highly rated book called With Winning in Mind: The Mental Management System.

Lanny competed in the International Rifle Shooting event in the 1972 Olympics and came up short with a silver medal.  So he spent the next few years studying Olympic gold medalists, developed his mental management system, and won the gold medal in 1976. 

I have not read the book yet, but I have seen some summary notes online.  It appears that many of the exercises and theories are very similar to what you commonly read in the trading or other sports psychology type books.

I'm getting to the point where everything I read regarding performance psychology makes me feel as if I'm walking around in a big circle -- been there, done that.  Everything is a variation of a few key themes, presented in different ways.  Nothing I read now seems to be truly new or groundbreaking.

So whether it's archery, golf, trading, or any other performance field, there are no secrets on what it takes to become an elite performer. However, just because I know a lot about what I'm supposed to do to improve my mental game, doesn't mean that I'm doing what I'm supposed to do.  There's a big gap.  So it's time to start planning and executing.

$AUDUSD: I'm watching 0.9665 - 0.9700

AUDUSD - Monthly chart

Although I'm on my self-imposed time out and then a family vacation for the rest of this month, I'm still following the markets with at least one eye.

Here's something interesting.  With AUDUSD continuing to drop like a rock, I wanted to take a look at a much higher timeframe to see if there's anything of interest.

Well look at that on the chart to the right, the 0.9665 level on the monthly chart seems to stand out going back years.

AUDUSD - Weekly chart

And 0.9665 seems to hold well even after you drill down to the daily or weekly timeframe.

What's also interesting is that the 0.9700 level is also the 78.6% level of the most recent swing low to swing high. 

It seems like the most interesting action lately has been taking place while I'm asleep, but while I'm awake, I'll be watching the price action around .9665 to .9700 level closely if it decides to get there. 

If the .9665 area holds and a bottoming formation and/or retest of the .9665 level takes place, that might indicate a short term bottom and long opportunity.

Otherwise, a decisive break of the .9665 area and a pullback/retest back up to that level may indicate an opportunity to short.

Belated update: $AUDUSD stopped out -10 pips

Here's a belated update of my AUDUSD short from 0.9945 last week. 

$AUDUSD 15 min chart as of 5/18/2012

• I was stopped out pretty quickly for a -10 pip loss, since I lowered my stop way before I was supposed to.
• Not sure why I lowered the stop, since it was already pretty tight at -25 pips.  But I suspect there was bad mental spillover from my ES daytrading gone bad
• The trade has gone as much as +150 pips, which would have been about a 6R return.
• It's time to take a little break from trading to revisit my plans.

$AUDUSD short at 0.9945

Short AUDUSD at 0.9945, with stop at 0.9970. 

The chart to the right is a 60 min timeframe, in order to show the origination of the trendline. 

It looks like a bottoming formation is setting up (higher pivot low) so it doesn't look like it may run far. 

But if it breaks under the lower trendline of the triangle, it might have a shot at retesting the lows around 0.9870.  So I view this as a potential 3R trade, not a big runner.

$AUDUSD - one that got away

Family duties have kept me a little busier than expected lately and away from the markets, so I realize that I will miss my fair share of good setups.  So when I do come back to see a good setup that got away, what I will do is to acknowledge that the setups are still taking place, and that there will be many more in the future.  Because the markets are not going away anytime soon.

Here's a setup that took place earlier today that I wasn't around to take.  And although it wasn't a textbook perfect setup, there were enough elements that came together that would have made it worth taking.  Since my stop would have been around 15 pips, it went over +60 pips (around 4R) at one point.

There will also be some high impact AUD news in less than 2 hours, so it'll be interesting to see how it will impact the currency.  At this point, the trend is still down on many timeframes, so I would be assume the market is expecting that the news will likely be more negative than positive.

Update: $AUDUSD 15m trendline holding

As long as the this down sloping trendline holds, the trend on the 15 min timeframe will remain down.  Once this breaks, or I see consecutive higher swing highs and swing lows, then I will start considering an exit point to cover the short from 1.0125.

A couple short setups today on $AUDUSD

I am already short AUDUSD from 1.0125 from several hours ago, but here's another simple trendline and stochastics setup that just took place.

$AUDUSD 15 minute

Will we hit 1.0000?  My original target for 1.0000 was made on March 28th based on my short from 1.0521, although I was expecting reach it by April -- so my timing was off.  However, we're finally at the point where it seems does seem quite realistic to achieve.

Attempting to slow down -- Resulted in +8.50 $ES_F

Since I've discovered that my wheels have the potential to wobble and fall off when I trade $ES_F more than several times a day.  So I'm taking a hint from my forex trades and cutting back on the number of trades (being more selective), and then going for longer duration moves (letting them ride).

Today, this "slow down" strategy worked for +8.50 ES points over 2 trades, both winners.

What part of this is due to luck?  I don't know, but although there was some luck, I know there is definitely room for improvement upon review after experiencing some unlucky situations today.

On my long 1360.00 trade, I was not lucky to reach my profit target at 1370.75 by 2 ticks, and ended up closing the trade for +6.50 (instead of +10.75).  There were some signs that the trade was no longer working, and I believe I could have saved a couple handles. 

Last week, I had my first > +10.00 ES day and it was also based on a slow down/let it ride strategy.  Maybe I'm on to something -- a method that's a better fit with my style and personality?  Although my desire is to be able to scalp my way to consistent profitability, maybe because it "feels" more like work with less potential boredom. 

But the slow down strategy seems to have a lot less wear and tear on my psychological capital due to less decisions that need to be made during the day.  And most importantly, if it turns out to be profitable, then why mess with it.

I'll continue to take this current overall strategy and mindset, especially the "I really don't care unless I see a solid setup" attitude, and see how long I can consistently follow this current path. 

$AUDUSD stopped out swing long, -34 pips

Well, that didn't take long.  Stopped out of $AUDUSD swing long from earlier today for a -34 pip loss.  There was a news release tonight at 9:30 PM ET regarding the Australian trade balance, and it came in worse than expected. 

$AUDUSD 15 minute

There were a few signs that the trade wasn't going to hold up.  Some key tells were:

1) The upward trendline and a revised trendline weren't holding
2) There were no longer new swing highs and swing lows on the 15 min chart (indication that the upward trend was over).

Now back to waiting for the next solid setup...

Long $AUDUSD at 1.0207

I exited the $AUDUSD swing short late last week, and ended up missing a decent chunk on the downside -- since I was partially biased/scared off by the oversold conditions on the daily chart.  But I need to remember that just because something is oversold, doesn't mean it can't go down much much more.

But it looks like we're finally getting that oversold bounce, and although I admit the overall longer term trend is still down, it looks like there might be an opportunity for a few hundred pip bounce.

So I went long today at 1.0207 with a stop loss currently at 1.0175, based on the charts below. 

The daily chart below shows the potential targets.  There's currently quite a bit of confluence and symmetry/structure in the $AUDUSD.

$AUDUSD Daily chart

The trigger to enter was based on the C2E setup on the 15 minute chart (below), which is simply based on the trendline and stochastics -- get on board in the direction of the trend on a pullback.

About half of these setups will get stopped out, and assuming it does go in my favor, I will only consider moving the stop once it goes 2R or 3R (2 or 3 times my initial stop amount) in my favor.  So mentally, I consider this trade is pretty much done/gone, and will start looking for the next opportunity soon.

$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.

Closed $AUDUSD for +207 pips

After nearly 1 month, the AUDUSD short I entered on 3/26 was exited yesterday for a profit of +207 pips.  Based on my initial risk of 40 pips, this trade returned about 5.1R. 

The 1.0250 area provided solid support, even after relatively bad economic news released late Monday night, which indicated to me that there was a decent amount of strength supporting this pair.

While the +207 pips initial sounds like respectable outcome, this trade was held for nearly a month, so another way of looking at this is that it didn't quite average +10 pips a day.

Update: $AUDUSD short from 3/26

Hard to believe I haven't been shaken out of the $AUDUSD swing short at 1.0521 from 3/26, but assuming I don't jinx myself due to this post and get stopped out within minutes once this post goes live, I'll continue to hold this until I get a clear signal that the move is over or until it approaches one of the targets in my original post.

$AUDUSD - 240m chart

One thought I had based on the chart above is how relatively large the swings have been (> 100 pips) since I entered this trade (nice opportunity), vs. the absolute P&L I currently have.  On a risk/return basis, I'm over 4R on this trade (currently about +175 pips, original risk = 40 pips) and was as high as 7.5R at one time.

When I look at all the swings, they add up to well over 1,000 pips, so I can't help but think what if I was able to capture just 25% of those moves?  Yes, probably faulty thinking, especially since I could have been stopped out within minutes once I entered this trade, or perhaps this could have dropped nearly straight down to parity instead of going somewhat sideways.  But I can't help but imagine the possibilities.

UPDATE: $AUDUSD - possible short exit and reverse signal

Will watch $AUDUSD closely today to see if the lows of the day hold.  This might be a signal to exit the short from 1.0521, and possibly go long.