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Confirmation Entry Short On The USD/CHF 28/03/2011

March 28
20:42 2011

Here is another great example of a simple fx trading strategy that we have been using with great success. As I said in the previous post I will updating the recent forex trades section of the website with confirmation pullback entry trades that setup each day. Some may be trades we actually took in the room, while others may be trades that occurred outside the trading sessions.

In this screen shot we have a 15M chart of the USD/CHF. As with any strategy I use the market needs to be at some level of support or resistance and this trade was no different. If you look back on today’s session you will see that where we took the entry the price was stopping on a previous support level that was broken and was now acting as resistance, which what I call a breakout continuation forex trade setup. Once we reached this level of resistance the market then began to form a confirmation pullback entry.

Step #1 – The market formed a reversal candle at that resistance. (This candle is marked by the blue arrow with the #1 next to it)

Step #2 – Two candles after the reversal candle we had out confirmation candle down. Remember in order for a candle to be considered a confirmation candle it must close below the body of the reversal candle in the case of a short setup. In the case of a long trade setup the confirmation candle must close above the body of the reversal candle. (This candle is marked by the red arrow with the #2 next to it)

Step #3 – After the confirmation candle closed and the next candle opened we went short when it made a small pullback. The pullback candle and area of entry is marked by the black circle. Normally in the case of a short setup as we had here you would wait for the pullback candle to get all the way back up to the body of the reversal candle to take the short but on this trade we entered before that. The reason I did this is because the GBP/USD and the EUR/USD had already given a confirmation entry up and were running to the upside. After seeing this I thought the USD/CHF would start down without giving the pullback so I just decided to enter. Still and all from where we entered a 20 pip stop was well above the highs.

You can see here that from the start of the reversal candle it took 4 candles to actually complete the confirmation pullback entry. The reason for this is because the candle that immediately followed the reversal candle did not complete the criteria to be considered a confirmation candle….that is it did not close below the body of the reversal candle. I mentioned in the forex training article covering the confirmation entry that I prefer to see this setup take place within 3 candles, however there are times like we saw with this trade where it takes 4 candles to complete the trade setup.

Our entry in the live forex room on this trade was .9194 and our take profit was .9154 Our take profit was hit by .2 pips and we are currently out of this position for a +40 pip profit. See you all for tomorrow’s session, and again I will update a new confirmation pullback entry after tomorrows NY session.

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About Author

Sterling Suhr

Sterling Suhr

Hey everyone, my name is Sterling Suhr. You and I more than likely have quite a bit in common when it comes to Forex trading. Like most, I started trading Forex and thought it would be rather easy.Everything I read said it would make you profitable so why wouldn't I believe it Forex trading was easy? The unfortunate part is that belief, and the hope that goes along with it pushed me into buying every scam Forex product there was. I've tried every EA, software, strategy, chart pattern, candle pattern, signal service, etc, all with negative results. The bottom line is mainstream Forex trading strategy will continue to fail retail traders. It wasn't until I realized this point did I begin to see success.On a personal note I currently reside in South Western Michigan. I personally love this part of the country and enjoy having a taste of all four seasons. I was recently married in May of 2012 and Chad has given me a stiff warning to not have children:) As a personal hobby I enjoy aviation and really anything to do with the outdoors.

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