15/09/14 – EUR GBP 240 min – My Stop Loss has been taken out on this trade, giving a 1% loss on my trading account balance. The constant polls coming out regarding the Sottish Independence referendum is playing havoc with any currency pair associated to the British Pound and as such I intend to just be a spectator this week and let things play out. I am also looking at potential Daily time frame trades on some other non GBP associated Currency pairs. Chart As Below
11/09/14 – EUR GBP 240 min – 11.00 – The next bar on this 240 min time frame has triggered this Short trade on the EUR GBP currency pair. As I was in a rush to send out the initial signal by email I didnt include all the observations on the initial chart so I want to briefly put them into this trade diary now and reflect them on this chart below also showing the trigger. After a Bearish Elliot wave movement ending at 0.78903 (wave 5) there has been a Bullish ABC correction with the C Wave topping out in the projected target zone (yellow box). The target zone for the C wave is derived form two Fibonacci extensions, the first is taken from the low of the previous Bearish trend (wave 5) and the first correction wave high (A) and the second is taken from the low Wave B and the Wave A. There are many fib extensions but what I am looking for is a convergence of lines from each extension. In this case the Fib 1.618 line from both extensions were very close and formed a target zone for the C Wave between the prices 0.80548 and 0.80630 (Yellow box). In a high proportion of cases, when a Bullish correction occurs after a Bearish Trend, the price action wants to return to the bearish Trend. In this case the price did in fact break the trend line of the BC movement which just added evidence to the XTL break out setup that has occurred. This is just an observation that gives the trade a higher probability of success but there are many other factors at play in the Forex market at the moment around both the Euro and The British Pound. With lower interest rates in the Euro Zone and the Scottish referendum playing heavy on the currency markets. In these cases most traders may stay away but the technicals are good for this trade so I cant be afraid to enter it. Chart as Below for this EUR GBP Short trade.