Critique of EURJPY setup requested

[_coda]

Hi

I have the following setup based on the attached daily, 10 min and minute charts.

1. Daily Downward trend is starting.

2.a We've had a downward trend which started at the week's open, with price trending downward in a well defined channel.
2 b Looks to be the start of a possible sideways channel between 161.60 and 161.27

3. As yet I don't know which trend (if either) is going to prevail.

As a result I have taken a short position at 161.40 which allows me to continue with the downward trend and also bail out for a small gain at the bottom of a sideways channel.

If the trend should reverse, I will have to exit at 161.70, which is my R.

Comments pls

[Mod. Please move this thread if you feel it should be in another forum]

rgds





Date: 20070925-1040

day, 10 min and 1 min graphs are shown in the attached image

 

[_coda]

After the above post the real world of course continued, and the one scenario I didn't want, a reversal, took place that reached 161.80 and blew out my stop.

Well, it should have, but I didn't have it in place, so I'm still in the trade, despite myself. Lucky maybe, but I consider this a serious mistake.

I still feel that initial analysis was a valid and was actually quite proud when I was able to get my target position at 161.40 exactly where I wanted it.

After the fact it's easy to rationalize that the stop was obviously too low, but that wasn't in my original plan.

Any feedback would be appreciated on the initial setup analysis above. If possible, ignoring what happened subsequently.


rgds

 

[rjc]

Hi Coda,

I'm probably not that qualified to give you a decent reply but in the absence of any other feedback here goes, as I have been trading this pair myself recently:

I'm not sure where you see the daily trend is turning down - I see the eurjpy in a daily downtrend since late July /early August and if anything it is now starting to turn up. Price is now creeping above where it was 50 days ago. Also, it looked to be breaking out of the down channel (an upwards break is more likely I believe) on your 10 minute chart, but personally I don't use anything less than 4 h at the moment. But idf you're playing the channel boundaries then a short there wpould have been acceptable i guess but with a definite hard stop above the channel at 161.60/70 area.

The 4 hour chart is and has been in a strong uptrend for the past week, so imo you were trading against the main trends. As I say, take all this with a pinch of salt, but I found folowing the daily/4hr trends have helped me enormously.

 

[_coda]

Hi rj

Thanks for the reply. As things turned out, my analysis was a complete cxxkup. The lesson from this was extremely valuable, and I hope I've learned a bit.

I'm trying not to shoot from the hip when I place a position, but to have a reason for whatever I do, even if it turns out to be wrong.

Hi Coda,

I'm probably not that qualified to give you a decent reply but in the absence of any other feedback here goes, as I have been trading this pair myself recently:

I'm not sure where you see the daily trend is turning down - I see the eurjpy in a daily downtrend since late July /early August and if anything it is now starting to turn up. Price is now creeping above where it was 50 days ago.

I agree with your statement. I was referring only to the near term. The lh chart shows the current month, which is going up in the 2nd half. The middle chart shows the current week, which was heading down. My mistake was thinking that a day and a bit of down made it likely to continue.

Also, it looked to be breaking out of the down channel (an upwards break is more likely I believe) on your 10 minute chart, but personally I don't use anything less than 4 h at the moment.

I also saw the breaking out, but thought it would either go sideways, or else resume it's downtrend. My big mistake. So I chose a position where I could cover either a sideways channel, or keep going down. I have discovered the uses of the 4h now.

But idf you're playing the channel boundaries then a short there wpould have been acceptable i guess but with a definite hard stop above the channel at 161.60/70 area.

The 4 hour chart is and has been in a strong uptrend for the past week, so imo you were trading against the main trends. As I say, take all this with a pinch of salt, but I found folowing the daily/4hr trends have helped me enormously.

Thanks for the feedback. I've learned quite a bit from it. Main lesson is that there is a lot to learn.

rgds