Skip to main content

Could This Be a Great & Extreme Reversal?

The EURGBP has been on of the best currency pairs to trade since the referendum. And it looks ready to kick off again...

False Break Reversal

The FBR is one of the great reversal patterns. They show up time and again but can catch us out because we've been conditioned to stay with the dominant trend.

It started last Friday with the Harami, inside day. Monday broke lower following through, so it seemed, with the down trend running since July.

By the end of the day, it had reversed, leaving behind a long wick that turned the day's trading into a Hammer, one of the best price action reversal candles.

Tuesdays price action confirmed the FBR. The rule is that when price comes back above the high of the downside breakout candle, the FBR is set. Earlier sell trades closed and then reversed.

That's exactly what we have done.

Hikkake

An added technical reversal is the Hikkake. It's formed by at least three candles, starting with the Harami. Following the break lower, recovery on Monday and the break above the high of last Fridays Harami, a bullish Hikkake is triggered.

The Wave count...

Counting waves can be confusing, they don't always follow the rules! This one was clearer with five waves up, and the same down. A reversal was due but the trend could have run on, as it appeared to on Monday morning.

Fifth waves end with reversals and by the end of the Monday, the Hammer confirmed it was time.

My new course goes into detail but you can view my YouTube primer on Elliott Wave here. Make allowances for the poor sound recording.

Price action is THE most important indicator as shown on the daily chart. It's also extremely stretched to the downside, just ready for a snap back, Catapult trade.

Back that up with the weekly wave count adding to the evidence that this could become a significant reversal. At the very least it has been an excellent trade, so far.

As ever, markets will catch out the majority of traders, the majority of the time.

"Never let a profit become a loss"

Will this trade work?

As stated above 'Price action is everything and THE most important indicator there is!' Price must follow through and keep moving to new daily highs. If it doesn't, and does the opposite, breaking below it's last higher low, what do you do. Cut the trade!!

That's it. Don't wait for it to recover or drop into thinking, it'll come back. They rarely do. Take the first loss, it's always the smallest one. Then move on and trade it back into the dominant trend.




Source by George Hallmey

Popular posts from this blog

Virtual Currency Games

Every little boy's (and many grown men's) dream of making a living by playing video games is edging closer to reality. The recent release of HunterCoin and the in-development VoidSpace, games which reward players in digital currency rather than virtual princesses or gold stars point towards a future where one's ranking on a scoreboard could be rewarded in dollars, and sterling, euros and yen. The story of the millionaire (virtual) real estate agent... Digital currencies have been slowly gaining in maturity both in terms of their functionality and the financial infrastructure that enables them to be used as a credible alternative to non-virtual fiat currency. Though Bitcoin, the 1st and most well known of the crypto-currencies was created in 2009 there have been forms of virtual currencies used in video games for more than 15 years. 1997's Ultima Online was the first notable attempt to incorporate a large scale virtual economy in a game. Players could collect gold coins

The Basics of Cryptocurrency and the Way It Works

In the times that we're living in, technology has made unbelievable advancement as compared to any time in the past. This evolution has redefined the life of man on almost every aspect. In fact, this evolution is an ongoing process and thus, human life on earth is improving constantly day in and day out. One of the latest inclusions in this aspect is cryptocurrencies. Cryptocurrency is nothing but digital currency, which has been designed to impose security and anonymity in online monetary transactions. It uses cryptographic encryption to both generate currency and verify transactions. The new coins are created by a process called mining, whereas the transactions are recorded in a public ledger, which is called the Transaction Block Chain. Little backtrack Evolution of cryptocurrency is mainly attributed to the virtual world of the web and involves the procedure of transforming legible information into a code, which is almost uncrackable. Thus, it becomes easier to track purchases

How to find the Right Currency Trading Course

A currency trading course can be an excellent way to learn the fundamentals needed to become a successful trader. It can potentially provide you with a solid base on which to build your trading future. However, what you get out of it will depend on how much your really commit to the learning experience and how much you end up applying it to you future trading. A currency trading course can come in various formats including books (both electronic and hard-copy), video, webinars, and live trading rooms. They can also vary a lot in cost - some might be free but others could be several thousand dollars. The key is to find the right type of training for your personal circumstances and your level of trading experience. What To Avoid Not every currency trading course will be the same. You can check on the major forex forums or portals to get people's recommendations, although often someone's opinion of a particular course will be influenced by how profitable their trading