Friday, October 4, 2013

4th October 2013: Trade #1

SL = 7.1 pips
TP = 7 pips
Transaction cost = 0.55 pips

Net loss = -7.1 - 0.55 pips = -7.65 pips

This trade was originally intended as a long scalp. As you could see, higher lows and higher highs were being made during the Asian session. The higher lows were interesting, as they signified a buyer's auction market, where buyers were bidding up prices as the supply of EURUSD became depleted. I anticipated that the big money was accumulating longs for the European session. When I saw a high volume, bullish engulfing bar, I decided to buy here. 

I had originally set a 5 pip TP. While price did edge up to my TP, it got thwarted every time it got close. However, there seemed to be maniacal support around 1.3623, which kept me in the trade (my original SL was at 1.3621). Every time price hit these levels, volume would shoot up and we'd see a rejection. Again, this told me that the big money were buying and I should remain long. If we look towards resistance at 1.36300, there didn't seem to be a real defence of this resistance level. Instead, we see volume drop, as if the bulls intentionally surrendered. Again, this convinced me that the big money is bullish, and perhaps they were setting up a trap for bears, or wanted price to fall so they can re-accumulate longs at a better price.

Eventually the London open came. I moved my TP and SL to 7 pips to account for the extra volatility but the open took my SL out. I'm not bearish. I do believe the European session will be bullish, based on the price action I've seen during the Asian session. 

I don't think I'll do any more trading today. Got my teeth knocked out too many times. But, this volume analysis has made chart-watching more interesting. I'd like to see if my bullish prediction will hold. 

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