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It’s impossible not to know direction of currency with Boxes – illustrating GBPCAD

Yesterday, during preview, a potential client talked to me about his problem. He had hedged his positions (basically both long and short at the same time of same currency pair) and asked me for my opinion.

I was unwilling to answer, because whatever that I’ve said will be in different context from his understanding. Ultimately he arrived at a conclusion “maybe he should cut his positions with losses and start all over again”

I made a comment: Doing so will not solve your root problem. Starting over again requires a plan. Do you know your plan? 

There was no answer. I guessed I’ve said the truth. But truth is always unbearable. He left without signing for the course. I wish him good luck.

Let me present my plan on GBPCAD. Everything must act within plan. Nothing left to randomness.

Big picture planning

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Fibonacci Retracement Confluence

 

Interpretation 1: H4 boxes is down, pending WR towards downside

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Interpretation 1

 

Interpretation 2: Price at strong support from daily chart. Currently price is supported by previous h1/h4 boxes high

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Interpretation 2

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Interpretation 2: lower timeframe analysis

 

Well, now we have 2 scenarios. All within our plan. We know exactly what to do.

Plan 1: if price closes below and WR boxes high, then interpretation 1 is true.

Plan 2: if prices closes above the h1 1234 as shown around 15850, then price have potential for further upside. Thus interpretation 2 is true.

Both scenario will have a potential upside of 130-150 pips.

Everything under control and within our plan. I love it. 

 

Update on 22 Jul 2.18pm

Received questions from students regarding GBPCAD. The purpose is to illustrate the need to have a plan in trading and the need to know what’s up in your trade. Personally, I don’t believe that retailers are able to do a perfect hedge and spot fx is just not the instrument for hedging.

Most important, is to let you have an idea why sometimes I see up and sometimes it’s down. It depends on where price eventually move.

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On chart above, recent price high is a Fibonacci Retracement 3 level. However I also drew in 2 horizontal lines (these are lines which are also included in charts found on top). The idea is unless these 2 lines (supports) are broken, then I will always assume that the recent break above these 2 lines is true and price is currently supported. Recency effect

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12 thoughts on “It’s impossible not to know direction of currency with Boxes – illustrating GBPCAD”

  1. Shao Guoyong says:

    Thx Shifu for showing both plans!
    Plan 1 cuter with the thunderstorm :)

  2. Desmond Zhi Wei Goh says:

    Enjoyed going thru & digesting the post, thanks!

    Yea, was wondering how come plan 2 got no thunder and lightning! Is it plan 1, if it happens, more powerful?! Hahaha

  3. Khoo Kian Weng Irwin says:

    Thanks for showing “two sides of the coin”. For me, I tend to the “downside” more. With the bigger downflow, the “smaller” upflow seems like a mild retracement and of course many people trade such patterns. Chances of a lower high forming on the daily TF is almost probable.

  4. Jacky Chen says:

    Hi Shifu Binin,I have one question which is my most confused part . On daily chart, could we say F3 and F5 also forms a resistance zone? If we extend F3,we can see it acts as a support in June and resistance in both Feb and Jan.why do you think the price is supported instead of being resisted by F3?
    For big planning,I always get confused if the price comes to one zone which I could find both support and resistance line.I don’t know which one I should pick up.Could you provide any tips ? Thanks.

    1. Binni Ong says:

      see my reply on updates on 22 jul

  5. Kenneth Ong says:

    Is gbpcad a trade now? Close above 15850!

  6. Glendon Goh says:

    Hello Binni, for trade mgmt, how would you set your stops and TP levels?

    1. Binni Ong says:

      stops on pt4 +/- 15 pips
      TP on FibE, but also note recent highs/lows placing in as resistance. In current market conditions, i prefer to lock in profit gradually

  7. Chee Wee says:

    Hi Binni,

    Why don’t you long when H1 wash and rinse and closed at 1.5835?

    You are waiting for price to break 1-3 trendline (estimated at 1.5850)?

    If wait for trend line breaks and closes above, there is a candle which closed at 1.5859. Do you long from there?

    If yes, how do you get the 130-150 pips at 138.2%? Only 100 pips. Will be 130 pips if we long earlier at 1.5835 which is the WR.

    If we long at H1, does that consider a counter trend since higher timeframe (H4) has boxes down?

    For a short, we will wait for H4 candle closes below 1.5749 (lowest green line)?

    You will take at fib 0% (130 potential pips) because higher timeframe (D1) is uptrend (double Fib conf u drew), thus H4 is considered counter trend?

    Thanks.

    1. Binni Ong says:

      Why don’t you long when H1 wash and rinse and closed at 1.5835?
      –> 15835+15 pips = 15850. This is a buffer to enter a WR is fully completed. It is safe.

      You are waiting for price to break 1-3 trendline (estimated at 1.5850)?
      –> Again I want to make sure we have a WR and also 13TL. Safe entry

      If wait for trend line breaks and closes above, there is a candle which closed at 1.5859. Do you long from there?

      –> my exact price was 15862, which is around there (buffer is spread)

      If yes, how do you get the 130-150 pips at 138.2%? Only 100 pips. Will be 130 pips if we long earlier at 1.5835 which is the WR.

      –> as a reference, for both long and short, around these pips. Again, how to determine TP is taught. Therefore, pls refer to what is taught

      If we long at H1, does that consider a counter trend since higher timeframe (H4) has boxes down?

      –> yes, but most important, the blog post in GBPCAD is to illustrate and clarify certain concepts, it is not a suggestion for trades

      For a short, we will wait for H4 candle closes below 1.5749 (lowest green line)?

      –> lowest green line is drawn as a reference to a box high. pls measure that in your chart

      You will take at fib 0% (130 potential pips) because higher timeframe (D1) is uptrend (double Fib conf u drew), thus H4 is considered counter trend?
      –> no, i’m looking at recent h4 boxes, therefore current trend is down

  8. Kent Wei Chia Cheong says:

    Hi binni, i have 1 question.
    I thought most broker since 2 years ago already don’t allow retail traders to do hedging? Or maybe they are only hedging using 2 different pairs instead of the same currency pair?

    1. Binni Ong says:

      well, i do not know which broker he is using, he might be using 2 different brokers. but for sure he is hedging on same currency pair e.g. short/long eurusd.

      however, key takeout, trade like him in long run will be negative.

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