Recall in one of my earlier posts on technical analysis, I mentioned that technical analysis is not supposed to work. There is no obligation for it to work. It is simply used to predict the market and help you plan out your trades. If price crosses a critical support or resistance zone or breaks out of a trend line, you may look to close out your trade. That trend line isn’t guarantee to hold, but you will know what to do depending on how price reacts on it. Yes, fundamental analysis is important. It captures the expected long run appreciation or depreciation, but misses the finer details.
My recent posts have been focusing on the GBPJPY and here is the result.
Like I mentioned, I missed the gap down trade so I scaled in at a later time. So far, it looks like I may have closed out this trade prematurely at the first possible demand zone. I decided to close it out to be on the safe side. My close was based off of the 3 hourly time frame.
While this demand zone isn’t “fresh”, I felt safer to close it out here as the market open gap down barely enters this zone before massive buying occurs. The plan was to scale in on another trade if the price penetrated this zone. I won’t be posting the historic plot as it was a scalp trade. With the Yen predominantly and another demand zone coming up, it is probably better to hold off on selling despite my daily retracement target. I was also surprised to see the USDJPY take a nose dive. The end result? A 166 pips gain plus another 31.6 pips scalp trade.