Browse Stacks: Other: Blanks of the trader

The only anticipated setup from last week got busted out for -41 pips net on GBP/USD. As it very often happens later on, market went the "right" direction at least for some time hitting 0.382 fib retracement, that would likely to be target 1 for this setup. There was a rumor of "Fat finger" order pushing the price lower towards 1.655's at the time, which happens occasionally, however overall there would be not much difference later on as FOMC decision took this pair much more lower by the end of the week. Although the reasoning might be correct it actually does not matter at the end as all those events are represented on price chart. Will go much more into details on this below

The issue with higher time frame analysis is that very often Daily or 4 Hours candles hiding a lot of information in it, that could potentially prevent losing trades or provide much more validated entry points. Usually for advanced patterns trading LIMIT orders are used to enter position. These type of orders usually catch "falling knifes" type of action where price ideally stops and reverses, which is ideal textbook execution scenario. Unfortunately very often there is much more to it that has to be taken into consideration before entering position based on the fact that price reached certain price level or advanced pattern had completed. Coming back to last weeks GBP/USD example, see the events described above on the chart below.

This is 4 hours chart candle that took many traders stops initially for entries @1.66 even handle number, however on lower time frame chart there is much more useful information that could contribute to better decision making in this case. 

The same price action is presented on 5 mins chart above in yellow. Areas of support on 4 hours chart were not respected initially. Having an eye on lowest low on 4 hours @1.657's, looking at 5 mins there was potential better entry at lower levels as long as 1.657's was not broken on 4 hours. The area in green was the one where market started printing local reversal candles in the higher time-frame context. This technique could be a way for less aggressive traders that require more confirmation with AT THE MARKET orders to be utilized for this type of entries. 

With many setups still emerging across the board, hope that this drill will be a value for traders looking to diversify and make their entries more precise.