DislikedYea. That is why I do not like to trade when PA does not bounce before reaching 21EMA. Sometimes there will be no retracement when it does that.
The 1st and 2nd retracements are more reliable as well. If I miss the 2nd one, I will be more careful especially if it is an uptrend.
War zone is between 10 and 21 EMA, right? Instead of the middle point of the war zone, I feel more safe if PA bounces back in the war zone closer to 10EMA side. What do you think?Ignored
Your comment/question:
War zone is between 10 and 21 EMA, right? Instead of the middle point of the war zone, I feel more safe if PA bounces back in the war zone closer to 10EMA side. What do you think?
My opinion:
1. It all depends on the speed of the market which will determine where the bounce is likely to occur:
1.1 Fast market - the bounce is usually off the 10MA. Very tricky to trade as you don't know where to place your SL.
1.2 Meduim market - the bounce is usually off the 21MA (also usually within the war zone). Best option to trade because there is usually enough pips to the previous swing high or low for a nice profit).
1.3 Slow to choppy market - the bounce is usually off the 50MA. Very risky to trade
2. The pullback into the war zone and bounce back is just one of the signals. I will look for other signals such as candle formations (e.g.tails), price patterms (e.g. pennant, flag, 3 little sisters, 3 big brothers, triangle), my significant levels (horizontal), my small intra-day trendline. The setup should have a confluence of signals (where a few signals appear close to each other). Only then would I be interested in the trade. How many signals? It will depend on the setup.
3. I'll also look at the longer time frame charts for an indication of the market rhythm - very subjective.
Now you know my style of trading - in a nutshell.
Enjoy the trading.
Willem
Forex recipe for success = Patience, discipline & hard work.