…and yet another Swing Trading journal

[Will Duxon]

Last week I tweaked my method of scalping to get about as close to “perfection” for me as possible, so in the spirit of continued exploration, this week I’m applying a Combination Stochastic-RSI Strategy to my envelopes, adjusting parameters accordingly, to see if I can also come up with a profitable system for swing trading.

Unfortunately, none of the major currency pairs are properly structured at the moment to allow me to enter a position, so here is what I will be waiting for, as conditions currently stand:

To BUY these pairs I need for…
AUDUSD to fall below 0.7478
EURGBP to fall below 0.8480
USDCAD to fall below 1.3004

To SELL these pairs I need for…
GBPJPY to climb above 134.64
GBPUSD to climb above 1.3204
EURJPY to climb above 115.13
USDJPY to climb above 102.82

To TRADE these pairs I need for…
EURUSD to establish a definite trend in either direction
USDCHF to establish a definite trend in either direction

Given my personality, I like to add a little bit of change to my pockets on a daily basis, and for that reason, I’m not, nor do I aspire to be, a swing or position trader. Nonetheless, the illustrations accompanying the description of the strategy I want to explore this week (Combination Stochastic and RSI Strategy) displayed a daily and weekly chart, so I’m going to go ahead and try to use daily charts for this little experiment/exercise.

 

[Will Duxon]

Waiting to sell the yen pairs

USDJPY and EURJPY have now breached the tops of their intermediate (crimson) envelopes, which gives me the go ahead to sell the pairs in conjunction with the next candles to form and remain inside.



I initially planned to place my targets at the bottom of the intermediate channels, but I now think it might be more prudent to use the bottoms of the narrow (black) envelope as a guide for when to lock in gains and the top of the same as a good spot to reenter the positions on pullbacks.

Based on the current location of intermediate envelopes, I have adjusted my "triggers" as follows:

To BUY these pairs I need for…
AUDUSD to fall below 0.7511
EURGBP to fall below 0.8515
USDCAD to fall below 1.3004

To SELL these pairs I need for…
GBPJPY to climb above 133.81
GBPUSD to climb above 1.3160
EURJPY to form a candle inside the intermediate envelope
USDJPY to form a candle inside the intermediate envelope

 

[Will Duxon]

I might be mistaken, but I thought I heard Christopher Lewis say he sees pullbacks as buying opportunities when it comes to this pair. That notwithstanding (the time frame of his perspective is no doubt MUCH longer than mine) I’m anticipating my bias will remain decidedly bearish EURJPY for the foreseeable future. As soon as I get a sell signal, I’m hoping to ride this pair back down to about the 113.00 handle at least. (Arrows indicate where I believe there is resistance.)

 

[Will Duxon]

I'm rethinking this little swing trade adventure in that the idea of selling EURJPY at a given price and then sitting back and watching my gains appear, disappear and then reappear, grates—perhaps even rages—against my nature.

What's more likely to happen is that while keeping the swing trade parameters in mind, I will sell, lock in gains, wait for pullbacks, and then resell, repeating the pattern over and over again all the way down to my target, confident that the pair is ultimately headed south. I have locked in my gains for what I hope to be the first of many legs down and will wait until next week to reenter on a pullback:



Speaking of confident...I'm actually not so positive the euro-yen will make it all the way back down to 112.50 given how it's refused to drop below 110.90 over the last three or four months and the fact that the bottom of my longer-range envelope just turned north, which together have me wondering if the yen pairs aren't teeing up for a full-fledged bullish reversal.

 

[Will Duxon]

Final Entry

My little sojourn into the world of swing trading has come to an end. I'm convinced I could do it successfully using the strategy I looked at here, but it would only make sense (for me personally) if I were a hands-off type of trader.

However, given that I am always at my laptop, I might as well manage my trades and make money each day rather then let myself get caught in a swing trade that's stuck in limbo, or perhaps even experience draw down.

Since I have no motivation to go that route, at the start of this new day (GMT/UTC) here are my thoughts...

I hope to use my best 1-hour multiple envelope chart to enter positions upon spotting my best setup for virtually guarantying trades will end in success by...

Selling AUDUSD, EURJPY, EURUSD, GBPJPY and GBPUSD

Buying USDCAD, USDCHF and USDJPY

And avoiding EURGBP