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I just entered a short position on the Euro-Australian dollar currency pair. Even though i was not for the idea of entering a trade late on Friday afternoon because of the possibility of holding the trade over the weekend and having to deal with market gaps, i decided i was just going to take the risk because i had been working on my mindset for a while now after having been out of the markets for some time past, and therefore, i just opened my forex position calculator and punched in the numbers for a 2% risk trade and clicked that sell button on my MetaTrader 5 platform. I must say i had to film myself shortly after that so as to try and document myself for a future review of how i manage my emotions whilst i’m in a trade. I got this idea from TraderNick’s YouTube channel and decided to adopt it. I opened this trade yesterday (Friday, 24 April 2020) and the numbers below represent my entry, stop-loss and take-profit figures:
Entry: 1.69908
Stop Loss: 1.70027
Take Profit: 1.66908
Below is the daily chart with my forecast (blue bar pattern) on the overall direction of this pair (EUR/AUD). I expect the price to ultimately fall towards the 1.5500 price level in the medium term:
EUR/AUD Daily Chart (Copyright: Elliott M. Zvavanyange)
And below is the 1-hour chart i was looking at just as i entered the trade:
EUR/AUD 1-Hour Chart (Copyright: Elliott M. Zvavanyange)
You can clearly see from the chart above how price broke to the downside out of what looked to the whole internet like a “double-bottom structure”. Shortly after that, it made a correction and i decided to take a risk-entry on the third touch of the top of the correction structure. You can clearly see from the above picture how the market has been in a free-fall, and the momentum is clearly to the downside.
Since the markets are closed, i have decided to share with you the current status of this trade for review and assessment purposes. I have moved the stop loss to a few pips below my entry, therefore, it is now a risk-free trade. That is all for now folks.
MetaTrader 5 platform (Copyright: Elliott M. Zvavanyange)XM MT5 Android platform (Copyright: Elliott M. Zvavanyange)
It has been quite an interesting couple of days for the markets with the US election certainly increasing uncertainty in the already difficult financial markets.
With the investment banks (Goldman Sachs particularly) having a bearish stance on the dollar in the anticipation of a Biden win, the technical analyst has been left somewhat unsure of what to make of all that. With the dollar previously making somewhat of a double –bottom going into Tuesday, we saw the markets somehow oppose the budding rally as the fundamentals were being discounted and new information sought after. With this in mind, I decided to ignore any prospective trades involving the dollar and look further EU.
The first interesting set-up I stumbled upon was the UKX or FTSE UK100 index (UK100Cash) and I was immediately presented with a double bottom pattern in the making. This is what I saw at that particular moment:
Figure 1: UK100 Index 4-hour chart, Saturday 31 October 2020
Figure 2: UK100 Index 1-hour chart, Saturday 31 October 2020
Evidently, the double bottom pattern (V-pattern/W-pattern) was not yet complete with its completion set at 5632.0 as shown on the 1-hour chart above.
Day 1, US Election, 03 November 2020
I decided I’d rather not wait for the completion of the double bottom pattern and entered a long position at 10:36am on Tuesday 3 November, US Election Day, as we all know that a double-bottom pattern is a bullish reversal pattern. I told myself I’d rather trade the US election by diversifying my bets and entering into European markets. To me, it was better than being out of the markets totally, and yet, with an assumption that the European markets were not going to be as brutal as any asset/pair with a US denomination.
This is what the UK100 index looked like on the same day:
Figure 3: UK100 Index 4-hour chart, 03 November 2020
Figure 4: UK100 Index 1-hour chart, 03 November 2020
Figure 5: UK100 Index 30-min chart, 03 November 2020
My trading card also looked like this;
Ticker: UY: UK100Cash
Type: Buy
Ticket number: 321162838
Size: 0.1
Entry: 5 743.97
Take Profit: 6013.25
Profit/loss: R85.79
My order was filled at 2:44am the following day (4 November) with a profit of R85.79. Even though I had had floating profits of more than R150, I decided to sleep and let the stop loss do its work. Hence I was taken out of the trade for a profit when there was a small retracement.
As part of my market analysis, I also saw similar set-ups on some European and other indices. Most of them showed similar double-bottom patterns and bullish momentum as shown below:
Figure 6: DEU30/DAX/DE30 Index 1-hour chart, 03 November 2020
The above chart has interesting bullish flag patterns, which are part of my favourite tools in chart/technical analysis.
Figure 7: Japan 225/ JP225 Index daily chart, 03 November 2020
Figure 8: Japan 225/ JP225 Index 1-hour chart, 03 November 2020
Similarly, the Japanese index also showed some bullish momentum with clean bullish flag patterns.
Figure 7: Hong Kong 50/HKDHKX Index 4-hour chart with hand-drawn double-bottom structure, 03 November 2020
The double-bottom pattern on the Hong Kong 50 index was not particularly clean, however, I was constantly checking for bullish momentum after momentary corrective pauses.
Day 2, US Election, 04 November 2020
This is what the UK100 index looked like on this date:
UK100 1-minute chart, 04 November 2020
What particularly motivated me to include this 1-minute chart was that it looked similar to the daily, 4-hour and 1-hour timeframes. I agree that the notion of a 1-minute chart seems quite radical but I included this particular one to confirm what I already knew; that technical analysis is the same and works on all timeframes. Some minutes later, this is what the UK100 index looked like on the 1-minute chart:
Magic right? No. It’s pure behavioural analysis. Chart patterns work because traders are constantly looking for them and trading them.
I must note that I did take two more trades on the UK100 index and the trading cards looked like this:
Ticker: UK100Cash
Ticker: UK100Cash
Type: Buy
Type: Buy
Ticket number: 322098332
Ticket number: 322296478
Size: 0.2
Size: 0.1
Entry: 5 840.12
Entry: 5 884.94
Profit/loss: -R116.43
Profit/loss: -R11.33
Filled: 16:37, 04 November 2020
Filled: 20:08, 04 November 2020
It must be noted that the second trade with the 0.2 lot size was in profit for some moments, but I lost my internet connection as I was also busy with my day job away, therefore I couldn’t bag my profit. When I got home, my stop loss had already been hit and I recollected myself like a Marine hit by an Afghan mortar.
Trading is indeed a tricky game and you cannot afford to be caught on the wrong side of the market with poor risk management in place.
All chart images and trading cards belong to Elliott Zvavanyange
I am a student of the markets documenting my experiences and storing them in an internet time-capsule to be retrieved by my future self ages from now.
I traded the oil crash that started in October 2018 and ended in December 2018 and made myself and my friend some small profits just by using the power of trendlines and checking the crude oil inventory levels. I also traded the gold rally of January 2020, around the time when General Qasem Soleimaniof Iran’s Islamic Revolutionary Guard Corps (IRGC) was killed in a US drone strike near Baghdad International Airport.
I also just recently traded the crude oil crash catalysed by the price wars between Russia and Saudi Arabia which contributed to that bear market. This on-going bear market, recently catalysed by the excessive crude oil inventories resulting in a lack of storage space due to the lack of demand caused by people staying at home amidst the novel corona virus, or technically the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) restrictions, recently took West Texas Intermediate (WTI) crude oil prices to the zero ($0) price level and i honestly thought that the markets went bananas (crazy).
I am currently trying to earn my stripes amidst this novel corona virus global scare and tame the markets in order to survive this recession. So join me as we make moves in these financial markets.
Elliott zvavanyange 