Hello everyone ;) I thought I would share what I consider to be the perfect trade setup this morning. You'll see the trade & how it all went down in the chart but here is a brief explanation.
As you may know I have pretty much settled in for now with trading the tunnel method with a 13 EMA filter. The tunnel is constructed of two closing EMAs with values of 144 & 169. These two EMAs form the tunnel itself. The tunnel, as I use it, is mainly used to indicate current direction or trend & the 13 EMA is a filter (ie; ideally price should be below 13 EMA to short. above it to go long). Moving average compression is also obviously involved here. When the 13 EMA is very close to the tunnel the likelihood is that you WILL get price expansion. The trick is of course to try to figure out in which direction that expansion will occur lol
The trade below is a daily chart & shows what I consider to be the perfect trade setup using this particular trading technique.
Please note in the chart the candle close on 02/03/2011 this candle closed below both the tunnel and the 13 EMA on the day. This is a very strong signal so after the candle open and the "stop hunting spike" for 02/04/2011 I shorted it twice..
Unfortunately I panicked when I got up Friday morning and saw that it had barely missed my original target at 1.3413 and bounced so I closed both, early..
EUR/CAD S @ 1.34875 / 1.34539 exit +33.6 2/3/2011 19:18 2/4/2011 08:23
EUR/CAD S @ 1.35065 / 1.34524 exit +54.1 2/3/2011 21:47 2/4/2011 08:24
None-the-less *I* consider it a good trade ;)
Now that several of these have established a down trend (ie; EURAUD EURCAD EURGBP GBPAUD) what *I* intend to watch for are "tests" of that 13 EMA.. Many times these 13 EMA "tests" are perfect entry areas in the direction of the trend.
Happy trading all!
Greg
PS: You might keep in mind also that these same trade rules apply in virtually ANY time frame.. The only difference will be the size of the move and hence the number of pips involved.
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