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NY Reversal Continuation Trade – May 22nd 2012

In the Daily Market Review last night I mentioned the 1.5839 level on the GBP/USD and called attention to the clear accumulation that was occurring after the 3rd cycle down. As with any accumulation area the safest trades are stop run reversals at the range high or low. This was exactly what we got in the Pound during the London session. Congrats to those in the training room today who mentioned they took it.

Given the fact that smart money took out the stops high I had the belief that this move would continue to the downside. Therefore I was treating any move up as a possible entry short. When I saw the price push through 1.5800 (psychological barrier) and then get rejected I thought that was it and took the short. Unfortunately I ended up taking a -20 pip loss on this trade from point #1 seen on the chart.

Point #2 was the deeper retracement area we were mentioning in the room. This point was the 61.8% retracement, daily pivot, 200 EMA, and a “20 level” I talk about on the Pound. Notice how the price moved through all those points just mentioned before turning back to the downside. After seeing this stop run through that point of confluence I  wanted to see a topping formation. As you can see the price ran off without giving that opportunity. Those that took the more aggressive entry did well on the second entry so congrats on that.

I hope this trade example and break down helps. Happy trading!


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  1. Guy Weston
    Guy Weston May 24, 10:00

    How can we interpret this chart if there’s only 1 level label on the y axis?

    Reply to this comment
  2. Chad
    Chad May 24, 10:34

    Hi Guy

    Its better if you look at this day on your own charts if it helps to see all the prices. The point here is that the first trade that some members in the London room took (I did not) was mentioned in Sterlings Nightly Review that he does during the Asian session long before hand.

    The NY reversal is more of looking for the stop run during the first few hours of the US session

    Im sure you will see it clearer when you compare your own charts.

    Hope this helps

    Reply to this comment

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