Datetime: 21 Feb, 2018, 19:09 Berlin Time
What is the current state of price movement in the trading time frame (4H)?
The three legged uptrend was stopped by a sudden and vicious downward momentum at the important level 9426.5. MACD has a significant new low, indicating that the uptrend has stopped. But the previous low of the uptrend is yet to be taken out completely.
Possibilities for the future include a downtrend or a range. Continuation of the uptrend is extremely unlikely.
What is the current state of price in the higher time frame (1D)?
In the higher time frame, we were in a downtrend. The current action looks like sudden upside momentum. MACD shows a new significant high as well. However we still haven't taken out the previous high.
Another explanation is that the current action is simply a pullback in the downtrend, even though the probability of this being true doesn't seem high. But if so, the pullback broke out of the upper trendline briefly, forming a Wyckoff upthrust, indicating that a continuation of the downtrend is most likely in the cards. Yet, the breakout has not failed completely yet.
Most likely, the first explanation is correct. In this case, we will see a continuation of the current uptrend or a range.
Less likely scenario: the second explanation is correct and the downtrend will continue.
What is the current state of price in the lower time frame (1H)?
In the lower time frame, we are in the second leg of a downtrend. Currently, the market is in the pullback following the second downtrend leg. The pullback started when the price hit the descending trend line from the higher time frame.
Most likely, the downtrend will continue since it has impressive downward momentum.
What is most likely going to happen in the trading time frame?
Let's start from the higher time frame. It seems like a continuation of the uptrend or a range is in the cards. If the uptrend continues, then the downward momentum in the trading time frame is the sign of the start of a pullback. The pullback can be a range or a downtrend in the trading time frame. If it's a range, price will most likely chop back and forth between 8181.1 and 9426.5 (in fact, it looks like this is already in motion in the higher time frame) . If it's a downtrend, then it should turn back from either the descending trend line or the level at 8181.1 or the level at 7418.1.
So with high probability, we should expect another downtrend in the lower time frame and a reversal from 8181.1 (most likely) or 7418.1 in the trading time frame.
What signals could emerge which falsifies some of these conclusions?
If the level at 7418.1 is breached, this indicates that the downtrend in the higher time is still in place and we are experiencing the next leg of the downtrend.
The descending trendline could prevent another downtrend leg in the lower time frame by acting as support.
What trade is reasonable, given these conclusions?
A with-trend trade from the last low (8425) of the downtrend in the lower time frame seems reasonable. The target should be the level at 8181.1.
The stop is more problematic. The antithesis of the trade is that the descending trendline continues to act as support. What can we expect if it does? We can expect that it will get rid of the previous high of the downtrend. So this should be my ideal stop, even though the reward risk ratio isn't so great.
Trade that I executed:
Trade type: Margin
Direction: Short
Leverage: 2
Entry: 8452
Take Profit : 8200
Stop Loss : 9180
Time of entry : 21:00 Berlin Time
Results will be posted when the trade concludes.
Disclaimer: If you trade based on these ideas, you are solely responsible for any profits and losses that result.
What is the current state of price movement in the trading time frame (4H)?
The three legged uptrend was stopped by a sudden and vicious downward momentum at the important level 9426.5. MACD has a significant new low, indicating that the uptrend has stopped. But the previous low of the uptrend is yet to be taken out completely.
Possibilities for the future include a downtrend or a range. Continuation of the uptrend is extremely unlikely.
What is the current state of price in the higher time frame (1D)?
In the higher time frame, we were in a downtrend. The current action looks like sudden upside momentum. MACD shows a new significant high as well. However we still haven't taken out the previous high.
Another explanation is that the current action is simply a pullback in the downtrend, even though the probability of this being true doesn't seem high. But if so, the pullback broke out of the upper trendline briefly, forming a Wyckoff upthrust, indicating that a continuation of the downtrend is most likely in the cards. Yet, the breakout has not failed completely yet.
Most likely, the first explanation is correct. In this case, we will see a continuation of the current uptrend or a range.
Less likely scenario: the second explanation is correct and the downtrend will continue.
What is the current state of price in the lower time frame (1H)?
In the lower time frame, we are in the second leg of a downtrend. Currently, the market is in the pullback following the second downtrend leg. The pullback started when the price hit the descending trend line from the higher time frame.
Most likely, the downtrend will continue since it has impressive downward momentum.
What is most likely going to happen in the trading time frame?
Let's start from the higher time frame. It seems like a continuation of the uptrend or a range is in the cards. If the uptrend continues, then the downward momentum in the trading time frame is the sign of the start of a pullback. The pullback can be a range or a downtrend in the trading time frame. If it's a range, price will most likely chop back and forth between 8181.1 and 9426.5 (in fact, it looks like this is already in motion in the higher time frame) . If it's a downtrend, then it should turn back from either the descending trend line or the level at 8181.1 or the level at 7418.1.
So with high probability, we should expect another downtrend in the lower time frame and a reversal from 8181.1 (most likely) or 7418.1 in the trading time frame.
What signals could emerge which falsifies some of these conclusions?
If the level at 7418.1 is breached, this indicates that the downtrend in the higher time is still in place and we are experiencing the next leg of the downtrend.
The descending trendline could prevent another downtrend leg in the lower time frame by acting as support.
What trade is reasonable, given these conclusions?
A with-trend trade from the last low (8425) of the downtrend in the lower time frame seems reasonable. The target should be the level at 8181.1.
The stop is more problematic. The antithesis of the trade is that the descending trendline continues to act as support. What can we expect if it does? We can expect that it will get rid of the previous high of the downtrend. So this should be my ideal stop, even though the reward risk ratio isn't so great.
Trade that I executed:
Trade type: Margin
Direction: Short
Leverage: 2
Entry: 8452
Take Profit : 8200
Stop Loss : 9180
Time of entry : 21:00 Berlin Time
Results will be posted when the trade concludes.
Disclaimer: If you trade based on these ideas, you are solely responsible for any profits and losses that result.
交易結束：目標達成:
The trade closed at 11.20 Berlin Time when the price reached the Take Profit level.
Profit : 5.96%
Comments: While the trade was successful, I think I still made a mistake by not waiting for the pullback to fully form. I thought two tiny green bars was the pullback, but it was not. The pullback formed after I entered the trade. The previous pullback was 8 bars long. So I should have expected this pullback to be that long too.
Lesson: If we are in the second trend leg or further, expect pullbacks to last the same time scale as the last pullback.
Profit : 5.96%
Comments: While the trade was successful, I think I still made a mistake by not waiting for the pullback to fully form. I thought two tiny green bars was the pullback, but it was not. The pullback formed after I entered the trade. The previous pullback was 8 bars long. So I should have expected this pullback to be that long too.
Lesson: If we are in the second trend leg or further, expect pullbacks to last the same time scale as the last pullback.
