In the last couple of days the market has been very very slow. If you try to find trend trades you are going to get burned…
The thing is, as always, you need to adapt to the market conditions.
The key is to find currency pairs (or any other instrument) with a clear range. Once you find it, pay special attention to the the market reacts at both extremes of the range.
If you see either: upward pressure (around the bottom of the range) or downward pressure (around the top of the range) try to trade it!
What do I mean by upward or downward pressure?
Let me show you and example…
This is the USDJPY hourly chart:
I want you to focus on both green rectangles.
On the first rectangle we got upward pressure, which means that the market doesn’t want to continue its way down. Sellers tried hard (making a large candlestick) to make the market reach lower levels, but at some point bulls took control over the market, pushing it back up even harder.
That’s what I call upward pressure.
Now, if we get something similar on the last rectangle, I’ll definitely go long. We could get the same pattern on one or two candlesticks, even three candlesticks.
What if the it continues its way down… that is, if it breaks the bottom of the range?
Well, again… you adapt, you can even take that breakout. SO maybe setting a pending order once it breaks through the bottom of the range is plausible. But we’ll talk about breakouts on another article…
And that’s my trading plan for the USDJPY.
I dont want the market to do “something”, I just adapt, if it keeps trading inside the range, I range trade, if it breaks through the bottom of the range, I take that breakout…
You see the beauty of this way to trade? You don’t expect anything to happen, what ever happens you adapt. You stop fighting the market.
It’s a very simple way of trading, yet very effective.
Let me know what you think about this strategy.
So, what have you been trading in the last couple of days?