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
Interpretation 1: H4 boxes is down, pending WR towards downside
Interpretation 2: Price at strong support from daily chart. Currently price is supported by previous h1/h4 boxes high
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.
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