Today I found this interesting signal on GBP/USD pair, around 4am GMT. Daily trend shows price action is below both EMA 50 and EMA 200, 5mins chart shows that the price breaks through the PP again. It looks like a down trend. I used to enter trade at this moment when I saw this signal (YES, I was that silly previously!). Now, I feel that I need to add in more indicators to clarify the signal, especially when the Daily Chart shows MACD divergence…

GBP/USD on 14th June - Short Setup

I added trend line in both Daily trend for bigger picture of long term trend, I found that the price action is actually bouncing back from the trend line, thus.. the short term trend is up. We should always trade with the trend, are we referring to long term or short term? Well, I guess that it depends on our setup’s time frame. Now, I am looking for intraday trade. So, another trend line for 1hr or 4hr or even 5min chart might be useful.

So another trend line added into 5mins chart, and… apparently the price action is trending pretty strongly. The price tends to be bounced off from the trend line which act as like support level. So, as a novice. I am going to wait till the price breaks through this support level to make sure it’s down trend, then only enter the trade for short. To make sure I will be trading with the trend. Well, I believe for the more advanced trader, they will be able to benefit from both up and down trend… But, not for me now.

P/S: I found I had made a mistake when I am writing this blog post up to this point… For the DOWN trend, I should use peak instead of trough to form a trend line… Thus, the trend in daily chart is not that accurate.

Another thing is, the PP line seems shifted when I log in again at night… Previous was at 14604 @ 05:00am and now it is 14641 @ 16:20pm. Have to find out why is this happen…

GBP/USD on 14th June - PP line shifted....

……. 00:28am