Revisiting this failed trade idea.
I was so focused on the failure of the smaller H&S that I failed to notice the confluence on the chart suggesting that the inverse H&S would fail first. Identification of this pattern is discretionary, so it makes it a little less clear what actually validates/invalidates them.
The candle denoted by the arrow could have been identified as the swing low of the right shoulder. But this does not matter in the scope of what printed on the chart . I knew this hourly level was important (108.452) from the collection of swings looking left. Price reached for this level during and after the formation of the Inverse H&S head so many times, it's obvious that orders were building up here.
We had two sources of sell side liquidity building up here:
-Stop losses from those who longed the market in anticipation of the right shoulder forming on the inverse H&S
-Sell orders from those who were short the smaller H&S neckline break
This was enough for the market to tell me that immediately failing the inverse H&S held a higher probability than failing the smaller H&S. After seeing the collection of 5 wicks near the end of the dark grey zone, it should have been obvious that the level was going to fail and that the smaller H&S would follow through to the downside. It did not reach the full profit target that a retail trader would go for, so maybe we have some shorts trapped and their stops have been taken out at the right shoulder.
I was impatient and tried to trade the retest of the neckline this morning. I didn't post because I was on my way to work. I lost 1R for following retail strategies instead of waiting for one of my preferred setups.
Looks like we may reach for the head of the smaller H&S after all.
I was so focused on the failure of the smaller H&S that I failed to notice the confluence on the chart suggesting that the inverse H&S would fail first. Identification of this pattern is discretionary, so it makes it a little less clear what actually validates/invalidates them.
The candle denoted by the arrow could have been identified as the swing low of the right shoulder. But this does not matter in the scope of what printed on the chart . I knew this hourly level was important (108.452) from the collection of swings looking left. Price reached for this level during and after the formation of the Inverse H&S head so many times, it's obvious that orders were building up here.
We had two sources of sell side liquidity building up here:
-Stop losses from those who longed the market in anticipation of the right shoulder forming on the inverse H&S
-Sell orders from those who were short the smaller H&S neckline break
This was enough for the market to tell me that immediately failing the inverse H&S held a higher probability than failing the smaller H&S. After seeing the collection of 5 wicks near the end of the dark grey zone, it should have been obvious that the level was going to fail and that the smaller H&S would follow through to the downside. It did not reach the full profit target that a retail trader would go for, so maybe we have some shorts trapped and their stops have been taken out at the right shoulder.
I was impatient and tried to trade the retest of the neckline this morning. I didn't post because I was on my way to work. I lost 1R for following retail strategies instead of waiting for one of my preferred setups.
Looks like we may reach for the head of the smaller H&S after all.
Comment:
Also good to note that both times I’ve made a bad call it’s been because the trade was not planned and it incorporated some sort of retail strategy that I have not personally seen success with through backtesting or learned from a course.