Everything began well until it turned bad: I was almost sure of the outcome – A smooth reversal from the support of the symmetry triangle to its resistance. Divergences have always been an important part of my analysis. Though, they often do not appear in most of my analysis, but when they do, they give fine results. It’s a plus perhaps that I could recognize when my analysis had failed and exited long before price made it to my Stop Loss and past it.
The setup began with a symmetry triangle forming on 4-hour time (regard the thick trend lines).
On 1-hour time frame, Megaphone (inverted symmetry triangle – regard the thin trend lines) formed. The megaphone formed at the base of the symmetry which was a good thing. Though price appeared to break out on testing the support of the megaphone, it was followed by a black reversal bar and a bullish divergence (regard line on Stochastic).
I went long immediately after this, set Stop Loss at 1.1252 (30 pips – at the most recent swing low) and target at 1.1365 (95 pips -the symmetry triangle’s resistance).
EVENTUALLY
Price made no attempt to rally afterwards. It was as if it was waiting for me to hop in before declining. After a new bar closed below the break out bar, it was evident that my analysis had gone wrong. I exited. Price declined over 40 pips after I had closed my position.
Profit/Loss: - 21 pips
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