SELL: DESCENDING TRIANGLE ON USDCHF (Closed)

It's been quite some time since I traded descending triangles. After a good trade on EURUSD sandwiched in between two bad trades from yesterday, I think a pattern, especially one which comes as beautiful as this, should make it even.

Descending triangle was spotted on 4-Hour time frame but on 1-Hour time frame, it looked like symmetry triangle. Whichever way, the approach to this is to use the symmetry triangle formed on 1-Hour as an entry point and set Target as if one is trading the descending triangle. Trend lines were drawn using the Close of the swing highs on 4-Hour and 1-Hour time frames which gives a cluster. The selling zone is the cluster.

Eventually, price traded into the cluster and formed reversal bars and a bearish divergence (note the line on Stochastic), so I sold. Stop Loss was set at 0.9752 ( 26 pips away from entry); Target at 0.9601 ( 124 pips away from entry). The confluence between the horizontal line (the base of the descending triangle) and trend lines is the first target. I'm skeptic about whether or not price could summon that much power to break through that level given the amount of activities there but if it did make it past there which I think it will (as oppose to hope), 0.9601 should get hit. The logic behind this is that several lower highs and lower lows had formed in the recent past which justly beckons one to think the downward move may continue.

EVENTUALLY

As much as I hate to admit, this trade disappoints me. But on a brighter side , I stuck to my trading rules (and plan). A few hours after I triggered a sell position, price declined to the confluence between trend line and horizontal line. I had noted my doubt as to whether price could break through the cluster but with the thickness of the bearish bars I had an impression that it would break through and head down to my target. But it didn't. A bullish bar formed exactly on the cluster. In accordance to my exit rule, I had to wait for a Market Structure Low to form -- it did form-- and price reversed afterwards. Good thing my Trailing Stop had locked in 34 pips before it was taken out. If I had targeted the confluence I would have bagged 60 pips and now I have just 34 pips which leaves a sour feeling. It is easy to feel this way when things didn't entirely work out as wanted, but I was thorough in every aspect of this trade.

Profit/Loss: + 34 pips

About Moshow

Oseni Moshood ( Moshow) is a physicist, a blogger and a spot trader with years of experience. He trades only price actions partly because he thinks Economics is boring; or, probably because he failed Economics; and he loves fine artistic works.