FX TRADING STRATEGy
had no SRVs in the upper reaches of this huge move – typically we place 4 to 5 primary SRVs above and below the price at the time we create the chart. Huge moves like that of Sunday evening usually blow past the many SRVs.
But huge
moves in one direction often are followed by significant moves in the opposite direction – such as in this case.
Smart traders stand aside when these events hit the market and wait for the market to return to its normal music. In this case it did not take long. By Monday the market intensity was back to near its launching point of the huge move up and by Tuesday the music was looking normal again.
A quick visual analysis on Tuesday morning revealed that the primary SRV at 106.656 was
the turning
point for the large down move. The primary SRV at 107.736 is a reasonable target for the move
68 FX TRADER MAGAZINE January - March 2012
We see at least two good trades for the conservative trader (that’s us) and others possible for an aggressive
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up assuming the SRVs in the mid range of the Bollinger Bands can be breached. The difference in price value for these two SRVs is about 1100 pips so 70 to 80% of that value is a good profit margin.
Later we saw that the SRVs in the trader - in the above chart:
1. Enter the market at about 9.23 Tuesday morning, 11-1, when price has failed to close below 106.656. Our stop is just below 106.656 and our initial goal is to penetrate the primary at 107.026, which happens in about 30 minutes. Our other indicators (trend, over boug ht/ove r sold, and momentum tell us to stay in the trade – and by 2:30 we get our exit signal when the price fails to close above the primary SRV at 107.736. A nice trade netting about 800 or so pips.
We have never seen a market that does not exhibit a rhythm, tempo and intensity – just like music.
middle of the move, a primary at 107.242, a secondary at 107.156 and another primary at 107.053 slowed the move considerably but were eventually breached. The move indeed went to our target SRV of 107.736.
2. O u r mo me n t u m i nd ic a t o rs keep us from
shorting at this point but a new long trade presents itself Thursday morning, 11-3. Price has twice failed to break below 106.656. We get our entry at about 9:30 at around 106.850. The move took us all the way back to the primary SRV at 107.736 and we would exit here because the time is 2:41 and we don’t want any part of holding into the late afternoon or early
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