How to Take Advantage of Both Market Directions?
Today we will talk about a very common situation that occurs in the vast majority of traders (if not all), especially when we have just started to get into this bussiness.
There is a consistent struggle between convictions, ego, and market views or analysis. This generates that we try to see in our analysis what we want to happen, or what we need to happen, and ultimately this the only thing that generates are psychological issues on the trader.
The best way to remain calm and be able to trade in a cold and consistent way is to plan in advance all the situations that may occur in the scenario we are analyzing, and how we would act in front of them. In this way, we do not allow ambiguities and we will only take positions if what we are waiting for happens. And, covering both directions, we will not feel that we are missing something if the movement is the opposite of what we expect (as it would happen in case of analyzing only in one direction).
In this case we will analyze AUD/JPY to show you how we carry out this analysis:
🔸First, we are going to detail our vision of the daily graph that is the one shown in the publication.
🔸As we can see, the price is in a clear uptrend, and when faced with the Resistance zone it began to consolidate for several weeks.
🔸From there, we didn't see a clear direction. When we detect that there is no type of trend or clear behavior, we stay out of the market and wait for an opportunity to happen where we can establish a clear horizon.
🔸What we propose to trade this pair is that there is a brekaout. It can be in a bullish or bearish direction. In case of being bullish, it must be from the Resistance zone and in case it is bearish it must be from the trend line.
🔸We are going to decrease the timeframe to show exactly what we expect:
🔸In this image we see the 4H chart.
🔸Basically what we detail is that we expect a break and then a retest / corrective structure. This is because it is a security add-on to avoid potential fakeouts (the trade can fail anyway, of course).
🔸Once we see the retest, we will have a new swing or structure to be able to position our entry and stop loss safely, with a favorable risk-benefit ratio.
🔸The targets are: Resistance zone in case of bullish breakout, and Support zone in case of bullish breakout.
There is a consistent struggle between convictions, ego, and market views or analysis. This generates that we try to see in our analysis what we want to happen, or what we need to happen, and ultimately this the only thing that generates are psychological issues on the trader.
The best way to remain calm and be able to trade in a cold and consistent way is to plan in advance all the situations that may occur in the scenario we are analyzing, and how we would act in front of them. In this way, we do not allow ambiguities and we will only take positions if what we are waiting for happens. And, covering both directions, we will not feel that we are missing something if the movement is the opposite of what we expect (as it would happen in case of analyzing only in one direction).
In this case we will analyze AUD/JPY to show you how we carry out this analysis:
🔸First, we are going to detail our vision of the daily graph that is the one shown in the publication.
🔸As we can see, the price is in a clear uptrend, and when faced with the Resistance zone it began to consolidate for several weeks.
🔸From there, we didn't see a clear direction. When we detect that there is no type of trend or clear behavior, we stay out of the market and wait for an opportunity to happen where we can establish a clear horizon.
🔸What we propose to trade this pair is that there is a brekaout. It can be in a bullish or bearish direction. In case of being bullish, it must be from the Resistance zone and in case it is bearish it must be from the trend line.
🔸We are going to decrease the timeframe to show exactly what we expect:
🔸In this image we see the 4H chart.
🔸Basically what we detail is that we expect a break and then a retest / corrective structure. This is because it is a security add-on to avoid potential fakeouts (the trade can fail anyway, of course).
🔸Once we see the retest, we will have a new swing or structure to be able to position our entry and stop loss safely, with a favorable risk-benefit ratio.
🔸The targets are: Resistance zone in case of bullish breakout, and Support zone in case of bullish breakout.