TRADE #4 OF STAGE 2: SHORTING GBPUSD 12 17 2009; 1st T1 HIT 12 18 2009

I am looking at the 4 hour chart of the GBPUSD. Emotionally, I am still boiling from the head fake that I bought into yesterday on the same pair. While getting ready to do a post trade analysis, I am watching the pair come back up to an area of resistance based upon the triangle that is drawn on this chart. http://www.ino.com/ still continues to show that the USD has strength behind it. In my mind, that is counterintuitive to the fundamentals, but I have to follow technicals.

I also know that I am to trade 2 contracts so I am going to scale into this one. Is that a good idea? Hmmm. Another thought to ponder. So after looking at the 4 hour chart, I boiled down to the 15 minute chart to look for an entry. Since the pair is nearing an area of resistance, I am going to place and entry near the resistance. I have drawn another trendline to see what is going to happen here.

So my first entry on the short side was at 1.6207. I am going to wait for the second contract after I see what is going to happen in this triangle on the 15 minute chart.

UPDATE: The 15 min triangle has broken to the downside so I entered my second short position at 1.6183. I am going to set my two targets at 1.6062 and 1.5852. The 1.6062 is the 61.8% extension of the down move and 1.5852 is near the 100% extension of the recent down move. The stop loss is going to be set above the triangle at 1.6277.

UPDATE: 12 18 2009

So my T1 has been hit. This will again make this trade profitable overall leaving me at 3 wins, 1 loss for the second stage of my training. Here is the chart to show how this trade has transpired so far. (click on the chart to enlarge the 60 minute chart) Entry was short at 1.62073. Exit 145 pips later at 1.60620. There is text on the chart to show my next steps. I plan on being patient on this one. Had I stayed in on my EURUSD trade like I had planned, I would have a very handsome profit as my two targets would have been hit.

What I am learning more and more from these trades on the 15 minute chart is that I am relying too much upon the daily trend analysis to enter upon the 15 minute chart. In my course, the instructor had given us directions on how to use multi-time frame analysis to help guide our trading matching a certain time frame on the long term horizon to determine primary trend then boiling down to a lower time from to look for entry. I realized what I am doing is using the daily chart for determining my trend, moving down to the 4 hour to see if it correlates and if it does, move on down to the 15 minute chart to look for entries. So in essence, I am using a tertiary trend and I was letting the daily trend fog the 15 minute trend. Far too often what I am noticing is that the 4 hour chart is correlating with the daily, but my entries on the 15 minute chart seemed to bump me out based upon stop losses as I noticed that I had to have really wide stop losses to accomodate the daily chart. So I went back to my course manual and looked at my notes.

Reanalysis:: I have got to use the 4 hour for trend determining (primary trend) and then use the 15 minute for entry (secondary trend). Two time frames only - forget daily trend since I am entering on the 15 minute chart. Use S&R on 4 hour chart to determine proper entries as I am seeing that S&R is really respected on a 15 minute chart when you draw trendlines on a 4 hour chart. So for my next few trades, I am not going to be using the daily chart. I will use the 4 hour chart for trend determining, S&R, then use the 15 minute chart for entries.

UPDATE: 12.20.2009

I have moved my stop loss down to a few pips above the most recent high in order for me to make this whole trade profitable. My stop loss now sits at 1.6254.

UPDATE: 12.20.2009

This trade continues to do well. I am moving my stop loss down to 1.6168 based upon today's high on the 4 hour chart. It is still looming above my target, but this trade will still be profitable. See the attached chart to see the updated stop loss.

UPDATE: 12.22.2009

Moving stop loss down to 1.6120 to collect more profit if hit. The pair is really nearing my T2.

UPDATE: 12.30.2009

Well my final T2 was finally hit. The whole trade took over two weeks to reach my T2. This shows that I need patience in trading forex utilizing a 4 hour chart.

So here is how the trade panned out.

Short entry at 1.62507

T1 target hit at 1.60620 for a 188.7 pip profit ($1,887)

T2 target hit at 1.58511 for a 399.6 profit ($3,996)

Not bad for a trade. I am realizing that I am going to use my 4 hour chart as my HTF chart and my 15 min chart for entry. Click on the chart to enlarge it and note the text on it. the bottom of the channel was very well respected and my T2 was right on the bottom channel line. In fact it has rebounded off the bottom of the channel line on the last candle.