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It has not happened often in the last couple of weeks, but here is my 1st trade today during the Euro session
Market is in a downtrend, 377 chart ZigZag makes a higher high which is negated by the Stochastic divergence. I wait for a candle to close below the cloud.
I wanted to short that area, but I interpreted it a bit differently. I was looking for a Double Top once that HL printed on the 377. Once the HH came, I was looking to see if it would print the Top on the other side(H&S).... along with either a standard or hidden divergence.
I understand your thinking there. look at this 377 chart see the 4 red arrows I put on price and the Stochastic. this is looking beyond the ZigZag swings and looking at price
At 1st you have the standard divergence on the high, then notice as the Stochastic really makes a triple divergence see how the candles are making double tops as the Stochastic continues to weaken
The minor PA gets my attention especially as the candle bodies are making equal tops, and then when you get the triple divergence it adds more confidence on the trade as shown below
Just curious, did you change your rules ? Your rule says a HH on the 377t if we go short must be taken if we get a DT with divergence. Also, did you not write in the PDF that we should exit if price closes within the cloud or you reach your profit target? If you had followed your rules this trade would have lost. When you did your tests, which rules did you use ?
you did have the divergence, you had 4 candles with equal body highs forming a nice top coupled with a tripling Stochastic Divergence on those highs.
A candle closing below the cloud knowing you are in a downtrend gave me the confidence to take the trade
If trading was based strictly on rule 1,2,3 I would program my computer to do it on auto and go fishing. Look at the chart and read what it is saying. Yes there was a candle close back inside the cloud, look at volume it is declining showing no strength in the retrace on both charts. granted i was watching that retrace like a hawk but I gave the 55 MA on the 377 and the 50 & 13 MA a chance to hold. Would I have taken a bigger loss if they had not - yes - but thats trading is it not
I have presented in this forum a simple method that can give you and edge to make some money, but it takes more than a 27 page manual to trade successfully. After each trade I ask myself why did this trade or that one not work, there are reason why they work or dont and it takes screen time, and more time to see the whole picture.
I took a trade just like this yesterday and it lost and after the fact I study it and saw why it lost - thats what you have to do
