T41 – AUD/CAD

IMPULSE – CORRECTION – IMPULSE

download (4)

ENTRY

Daily/4H/1H/30mins timeframe (select only 1)

[1] Price trailed by 30SMA – ensure strength of first impulse wave (✓)

[2] Pullback between 30SMA and 150SMA (✓)

[3] Corrective structure formation with 2×2 touches (✓) Pennant

[4] Stop order at the break of corrective structure with stop loss after swing L/H (✓)

[4] Stop order after price bounce off area of value with volatility stop

Additional confluences: Support or Resistance, ADX33, Linear Trend Lines, Fibonacci Retracement, ATR and Elliot Waves.

1% capital risked for potentially 2.5R

Open: xx | Stop loss: xx (-23 points) | Take Profit: xx (+57 points)

Remarks: Same picture for entry and exit…

MANAGEMENT

Keying in the trade, use volatility stop placed under/above an established swing L/H or moving average cross or estimating volatility using ATR.

Real stop loss placed under/above the anticipated swing L/H using 150SMA as a guide.

Take profit calculated using the length of the prior impulse wave rounded off to next nearest swing point/key level.

Once entry triggered and break out, shift automated volatility stop to real stop position.

At 50% of 2nd impulse or a swing L/H established, shift stop to break even.

At about 80% of 2nd impulse, shift stop to the 50% mark or below/above swing L/H.

If price breaks and closes under/above the 30SMA, tighten stop loss and prepare for manual exit.

EXIT

[1] Initial stop loss

[2] Trailing stop, as mentioned under management

[3] Manual exit due to change of momentum and break of market structure

[4] Take profit

Remarks: Oh well what can you do, traded a continuation pattern in the direction of the trend… It was at daily resistance though, that should have been a factor for the trade to be avoided.

REVIEW

download (6)Another example on why risk management is the most important. That was a weak pennant by the way, only clear on the 15minutes timeframe – that does not meet the criteria for a trade to be taken. DNF

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