Studying the market for swings
I'll try to anaylze my trades the past week looking back on what I should have done better.
First let's take a look at GBPUSD. I'll start off by opening the weekly chart and plotting the previous weeks high and low.
Let me describe this chart. I have 3 moving average lines 20, 60 and 200 - green, yellow and blue respectively. At the bottom of the chart I have a 12 period ATR whic reads as .0354 so I hope to expect a similar movement this week. For reference the current week's ATR is .0341.
The red horizontal lines are the high and low of the week. Based on the weekly candle, it looks like an indecision candle holding on the 20 week support so we can sort of assume that this week will either be more indecision or a strong push in the earlier part of the week. Let's move in and see the daily chart.
Looking at the daily chart, I'll note the daily ATR is around .014 so a move down or up in 2 days may reverse since the weekly ATR is just around .035. Let me change the indicators, I'm going to replace the Bolinger Bands since I don't like them in Forex and add the Stochastic osccilator.
At the start of the week, we are just rising from the oversold territory from last week so I can assume that we will be rising this week though I am not sure by how much as we are entering the 20 EMA and the previous week's highs. I would assume a push above the weekly high and the 20 EMA means a good potential for the upside.
I believe I should only make trades near critical points for swing trades - support levels, previous week's high and low. For execution, I should also watch the previous day's high and low. Let's move in closer by using the 4 hour chart.
My mistake the past week was trying to short the breakout of the 20 EMA. Clearly the 4hour EMA is way oversold but 4 hour charts can extend for long periods depending on the daily chart. Price breakout will be at 1.538, if price can solidly close at 1.54 then 1.55 is a clear next target.
The past week, it showed a clear push upward the 1.54. By the end of the week, there was a slight fade once price passed 1.55 but it managed to push up to 1.56 before pulling back to the level where we are now.
