The CHFJPY Offers Short Trade on Bear Flag
The CHFJPY has been trending very nicely since the end of January when price found resistance at the high of July 2017 just short of 119.00. Price has since fallen circa 800 pips taking price out of an area of consolidation.
I have drawn in the support zone that was acting as the base of the consolidation. In March, we have seen a classic break and retest of this support zone as resistance followed by a breakout in the form of a bear flag.
Bear flags are the preferred chart pattern for trend traders as they create linearity in the trend and offer excellent entry points into the trend. They are a strong suggestion of a continuation of the trend. We have mentioned in our previous blogs that new traders should focus on trading breakouts first as they are far easier to recognise. Trading pullbacks require a deeper understanding of trend structure and support and resistance.
Looking across all 3 timeframes:
Monthly - Inside the annual levels of 2017 but 400 pips to the 2017 low.
Weekly - Trading below the 200SMA and the 50SMA. However, inside the D52 but 400 pips to the low.
Daily - Trading below the 200SMA and 50SMA.
There is a very neat and linear trend in progress as well as alignment between the moving averages on the weekly and daily timeframes. But given that price is inside the annual levels of 2017 and the D52, trades taken should be at reduced risk.
Full risk: 2%.
Reduced risk: Less than 2%.
Our trades have been placed.
We have done our analysis and identified our edge, we have identified a high-probability setup in accordance with our trading plan, we have placed an entry and stop-loss according to the characteristics of the chart and we have allocated risk according to the strategy being used. We also have a very clear idea of how we will compound into the trend if it starts running a profit, levels that we would like to see price move towards as well as how we will follow with a trailing stop-loss and exit from the trade.
We have managed all that is in our control. It is now down to the forces of the market as to the outcome of the trade which is 100% unknown and out of control. The outcome is simply down to random statistics. But by being able to identify and repeatedly trade on a proven edge, the profit from winning trades will absorb tiny losses, be generous and life-changing.
The key is to follow the process and the let the profits flows.
Sublime Trading
I have drawn in the support zone that was acting as the base of the consolidation. In March, we have seen a classic break and retest of this support zone as resistance followed by a breakout in the form of a bear flag.
Bear flags are the preferred chart pattern for trend traders as they create linearity in the trend and offer excellent entry points into the trend. They are a strong suggestion of a continuation of the trend. We have mentioned in our previous blogs that new traders should focus on trading breakouts first as they are far easier to recognise. Trading pullbacks require a deeper understanding of trend structure and support and resistance.
Looking across all 3 timeframes:
Monthly - Inside the annual levels of 2017 but 400 pips to the 2017 low.
Weekly - Trading below the 200SMA and the 50SMA. However, inside the D52 but 400 pips to the low.
Daily - Trading below the 200SMA and 50SMA.
There is a very neat and linear trend in progress as well as alignment between the moving averages on the weekly and daily timeframes. But given that price is inside the annual levels of 2017 and the D52, trades taken should be at reduced risk.
Full risk: 2%.
Reduced risk: Less than 2%.
Our trades have been placed.
We have done our analysis and identified our edge, we have identified a high-probability setup in accordance with our trading plan, we have placed an entry and stop-loss according to the characteristics of the chart and we have allocated risk according to the strategy being used. We also have a very clear idea of how we will compound into the trend if it starts running a profit, levels that we would like to see price move towards as well as how we will follow with a trailing stop-loss and exit from the trade.
We have managed all that is in our control. It is now down to the forces of the market as to the outcome of the trade which is 100% unknown and out of control. The outcome is simply down to random statistics. But by being able to identify and repeatedly trade on a proven edge, the profit from winning trades will absorb tiny losses, be generous and life-changing.
The key is to follow the process and the let the profits flows.
Sublime Trading