A Further Example of How to Use the Trade Focus Number(s) for Reversal Trade(s)

Using the EURUSD as example: Trade Focus Numbers was to buy above 4417 and sell below 4279. See enclosed chart below:

1.    First I establish that we are still in a ST bearish retracement, as the H1 & H4 TFs were bearish while the D1 is bullish;

2.    The initial setup candle broke above 4417 but closed right under it, and the next candle was bearish;

3.    Now I have 4 consecutive lower TFs (M5 - H1) moving in the same direction for a possible buy;

4.    If I decide to take this trade, I should know that it will be a ST trade until the H4 turns bullish for H1-D1 alignment;

5.    A bullish pinbar or hammer shows up after the bearish candle, supporting possible continuation of the bullish trend but I have an MA obstacle above;

6.    If anyone took this trade, they had ample opportunity to close the trade for a small profit or break-even, as PA moved 20+ pips and we had 7 candles above the buy point when PA stated warning us, I am tired and can't go any further;

7.    My next point is the reverse use of the Trade Focus Numbers, and I hinted at this in the May 5, 2011 article - How I Use the Trade Focus Numbers, and you can see bullet point # 7;

8.    Now we have PA unable to make any appreciable progress from the buy point, as it was having problem closing above 4442. After 7 candles, PA dropped; made a low @ 4379; retraced to 4407, not reaching the initial high @ 4442 and we now have M5-H4 (5 TFs) confirming a bearish outlook. The CSM confirmed JPY & USD as the strongest currencies, and EUR & GBP as the weakest currencies;

9.    We now have a better entry point, and I will without hesitation be prepared to short the EURUSD on break of 4379 (100 pips before the trade focus number) with an entry order and my stop at the new swing high @ 4407;

10. PA dropped 25+ pips within the same M15 candle, and continued downward;

11. Stop can be trailed by moving it to the next 2 candle high behind PA, where it was eventually taken out @ 4297 for 82 pips on a slow Monday morning :-)

12. A friend skyped me when he entered at the exact sell point and as soon as PA was 15 pips in black, he moved his stop to BE and eventually closed the trade for 20 pips.

There are several ways to skin the cat, and this is why this service is for "experienced" traders who are just looking for breakout numbers to enhance their entries. It doesn't take much to be successful in this market - 25 pips per day will give you 125 pips for the week; and this will in turn give you 500 pips for the month, which on a 100K account translates to #5,000 (USD or UK STG).

The GBPUSD buy point was never triggered but the sell triggered @ 6353 and made a low of 6269 without threatening the entry at any time!!

I hope you can see the value of the trade focus numbers.

Good trading friends,

George

DISCLAIMER
Please read the disclaimer on the home page