Some prove to the strategy…:-)
This morning I saw a nice opportunity on the GBP/AUD. The Daily chart showed a rise in strength (ADX) from yesterday and price finding support at the Daily 20 EMA. First looked at the higher timeframes (1H and 15M), checking for volatility and whether the pair is spiky or not. It wasn’t, so I decided on the 5 minutes timeframe.
Reason for entry: at 08.00 hours (CEST) I saw my DMI+ and ADX both went up. I admit, it was a bit an early entry, I should have waited 2 candles, for my ADX also crossing the 25 (dark blue) horizontal line of my indicator. But given the time, opening of Frankfurt, and the long down movement of the ADX, I took my chances.
Stop below the low of U-turn. On the red line I got out. Not because there was a real sign from my indicator, but I knew price was hitting resistance on my Daily chart, the 200 SMA. Situations like these, I like to wait and see what price will do. The last attempt to push through the Daily 200 SMA failed, so who knows what it will do now and whether this was a right decision to make.
Result? A nice 76 pips win.
If you have any comments, questions or examples of a good/bad trades, please leave a comment or shoot me a PM @ firstname.lastname@example.org.