NZDUSD
I have been watching this pair for most of the week and been watching the lack of movement in the pair and wondered if the consolidation area had been soaking up buy orders as it was reaching levels where I would be interested in looking for shorting opps. Once I saw price breakout of the consolidation and close straight back in that was my confirmation so I pulled the trigger which was on Thurs night.
Leading into NFP I was in the money but not by much, it was going in and out by 20 or so pips so I decided to close out 2/3 of the original position size which pretty much covered the stop should I have been spiked out from volatility. Of course its always the way that the position that gets scaled or closed out goes in your favour and then when you hold you get stopped but Im actually fine with the way I played as I took the conservative approach and I believe this is the best way to play.
One other thing to note is also where price stopped and reversed or at least had a reaction. This is the line I had marked on my charts as the scale out level had I been playing full position size.
J
Hi Jay,
ReplyDeleteWow i really like your entry on this one.
I'm currently looking at a similar trade on the AUD. I have a similar box drawn, but waited for the break out and retest. I will be placing a sell stop order on the break of the bottom of the low (H1) and TP 10 pips before parity.
Looking at your trade though you will already have plenty of pips in the bag before i even enter.
Are there any rules you follow when playing such an early entry on a consolidation breakout?
Hi Benny,
ReplyDeleteWhat I look for when playing a consolidation like this one is for price to break out of the consolidation (in this case long) then close straight back inside the consolidation. This was what I indicated as my confirmation, some people call it a fake out break out. Once I see this I open the position not expecting the high (or low if breakout is down) to be taken out.
One other thing to note is the length of time of the consolidation. The longer the better I do believe.
J