Price was in a clear downtrend and had pulled back to and consolidated around the most recent Swing Low.
Coupled with a "trendline break retest", the market conditions looked very good.
However, not visible in the 5m chart picture (but can be inferred from the 1hr) is a 1hr support area (the swing low on the 1hr chart). We will need to watch for possible reactions/reversals from this area.
When it came to entering, I was regrettably late with the Engulf execution as I was looking at the US100 chart. If my entry had been quicker/tighter, we would have had a successful 1RR. But price did indeed react at the suspected support and we were stopped for break-even (this actually marked the start of a big uptrend)
As noted in the previous trade, price reacted to the support and began an uptrend.
The downtrend line was broken, we were breaking swings and making new highs.
The key level used for this trade was the 5m micro-swing just outside the downtrend, and the trigger was the break of the Tail Bar. Unfortunately, this possible support was strong to protect from US news and US pre-market open - I certainly should have been aware of these factors.
The candle that stopped me out actually provided another signal at a stronger key level (1hr swing). But there was still some recoil from the failed trade and I didn't take it out of fear. I had I done so, that would have been a clear 2:1 winner - recouping my losses and putting money in the bank.
Stop letting failed-trade-fear prevent you from taking the next trade. This has happened several times before.
I took this Tail Bar at a 1hr Key Level believing that the sell off from pre-market news was a sign of things to come around open.
I thought that the sell-off was the real intent of the market and that price was filling a liquidity gap and was searching to fill more orders.
I was very wrong though!
I recall becoming frustrated and impatient because I had missed an opportunity to go long shortly after 15:00 when price had returned to the pre-market open price.
Despite feeling that way, I'm still quite content with the reason for this next trade. The break of the consolidation trap at resistance was a good move BUT I was quite late on the entry…and I don't know why.
Because of my lateness, we have to overcome that resistance to hit a 1RR. If the entry was sharper, we'd be quite a bit below it.
Out for Break Even on this one. Price started struggling around the resistance and looked like a H&S was forming on the 5m. Price was also flirting with breaking a 5m trend line.
Personal Note: good call. Would have been stopped for another loss had I not clocked the reversal signs.
My favourite trade of the day in regard to the confluence lining up.
At 15:00, price had reached a resistance area that had survived a barrage of touches since the week
began. A nice looking Tail Bar was formed but I wanted more than just a candle here; the uptrend was strong and I wanted a clear reversal sign.
Price ended up selling off very sharply, showing a clear supply area around the resistance. It also broke the uptrend line with conviction.
Price corrected back up to that supply area. The ideal entry here would have been a Limit Order but my confidence had been shaken from the rest of the day's trades, and I was certainly living in fear right here.
My entry was the break of the solid candle, with the Stop Loss at the top of the supply area. This also began to show the beginning of a Double-Top, so another reason to go short.
In hindsight, that was probably far too wide a Stop Loss for a candle entry. Perfect as a Limit Order stop, but perhaps too much for the a candlestick.
My initial profit target was the most recent swing low but was happy (and hopeful) of a return to support.
In the end, I closed manually for 1.5RR at the second black arrow. Price had been consolidating just above the previous low, and although it was making new lows
it was struggling to close below them. Most recent candle had just been shy of touching it before seeming to reject it.
While I could have had the whole lot if I had simply let it ride, I don't think that would have been the right thing to do.
- We were rejecting from an area of support
- Candles were printing new lows but "couldn't close"
- Time of day
The time of day was an important one. Not only because UK market had closed and this was post-market trading, but my boys were back home and I wanted to go play! :D
The point of my trading is to free up my time to do exactly this sort of thing!
End of Day notes
There was only a single day in August that I took more than 1 trade, and even then it was only 2 trades.
This is my 5th trading day of September and my trade counts are 3, 3, 4, 3, 5 There is still half
the month to go but, as it stands, it looks like I will struggle to match August's profitability.
At the end of this month, compare the quality of August's setups to those you took this month.
Were all of September's trades good quality?
If they are, then fair enough. But if not, consider reviewing your criteria for entering a trade.
More trades does not always equal more profit.
Should I consider only taking 1 trade each market for the rest of the month? HA! That comment had made me go and check…with the exception of just 1 trade, all trades were made on the US100.
This month has seen attention split equally between US100 and UK100. Is this one of the causes?
Let's get a bigger sample size (at least until the end of the month) and see how it goes.
I've added a note to my EOM Recap to remind me to explore this.