USD/CHF Long – Day Trading Confirmation Entry 26/04/2011
We had a nice trade on the USD/CHF this morning in the forex room….could have taken a bit more out of it, but I tightened the stop loss to break even a little to quick and the last half of this day trade got closed out at break even with the first half gaining +10 pips. Overall for the day we were +5 pips. Nothing spectacular today, but the market really didn’t give up any large moves during out 3 hour NY trading session.
The trade setup in the chart above was a standard day trading confirmation entry. The market came into support from 2.5 hours earlier and then closed as a reversal candle. In order for a candle to be considered a reversal candle, it must touch support and then close above it in the case of a long trade setup….that is the only criteria. Candle #1 satisfied this criteria. After the reversal candle we then wait for a confirmation candle.
Candle #2 closed above the body of the reversal candle thus meeting the criteria for a confirmation candle. Candle #3 is what we call the pull back candle, however there was no pull back on this day trade setup. Because we look at other pairs for correlation (EUR/USD, GBP/USD, USD/CHF) we took the entry without seeing any pull back. If you go look at your charts, at the same time you will see that the GBP and the EUR were both moving down nicely already and therefore I did not expect the USD/CHF to pull back. Correlation is a must when day trading forex with the confirmation entry. It keeps you out of bad trades and gets you into others you may have missed.
I noticed today that I don’t have any forex trading education on how to use correlation effectively. So….I’m gonna go ahead and do an article and video showing how I use correlation to take better trades. I think correlation is a majorly overlooked sector of forex trading among the average retail trader. Hopefully that forex training video will be of some use to you all, and if nothing else with give a bit of insight as to how and what I look for in regards to correlation trading. I should have that posted on the site by tomorrow. See you all after tomorrow’s NY session!