Hope you caught the 155.70 scalp line trade on GBP/JPY that I blogged about at the start of the week. However, there were two more trades this week that together made a minimum of 100 pips.
Reversal Trade
If you have read the free e-Book then you should know how to trade reversals. I traded this one live, in the chat room. It was a great little trade and it made me 50 pips. Let’s dissect it for all you newbies who haven’t done much NickB reversal trading. I won’t explain the basics as you can find them in the free eBook:
As you can see, we had a very strong bullish move that broke our scalp line and made us 50 pips. As soon as the rallying bullish candle closed, we had a reversal candle close and bounce off the high of a previous candle. The next candle was a reversal candle too. This looked like a very strong possible reversal for a few reasons:
1. The reversal candle did not make a new high past the previous candle. It is always good when the reversal candles does not move higher than the previous candle (or lower if it’s a bullish reversal).
2. The second reversal candle closed with a bearish body and again did not move higher than the previous candle.
The lower highs suggested to me that the bulls were losing power. The bearish body of the second reversal candle came close to confirming that loss of power.
The next step was to pick a line to trigger the trade. This was easy as I picked the low of the first reversal candle. I always look for a minor (sometimes a very minor) S+R line as a trigger. This just confirms in my mind that it is a real reversal. The fact that the bears manage to break this minor lines tells me that they really have taken control. This trade was quite easy and it was over in 20 min.
Entry was 158.25 and, because it was triggered in the slow moving Asian session, I made my target 50 pips. I always lower my targets in the Asian session. Reversal trades taken in the London session I target up to 100 pips.
Yearly High + Scalp Line
This one was really easy and, even though I did not blog, it you should have got this one. The 159.20 line was a yearly, high scalp line just like the 155.70 line we had earlier in the week. The 159.20 line was stronger though, as it had two bounces. Check it out:
The break of this line created a very nice bullish rally. I missed this trade since I was asleep, but I would have targeted 50 pips on this one. Just a simple line break. I have shown how to trade these in the free eBook a dozen times.
You may have noticed this was also a master candle break on the 1hr and 4hr charts. If you don’t know about master candles read about them in my free Master Candle eBook.
This was a very easy trade, yearly high + scalp line + master candle. If you didn’t see this line YOU NEED PRACTICE!
If you caught this trade leave a comment on the blog!
{ 16 comments… read them below or add one }
Thanks for the reversal explanation. I don’t trade reversals yet, don’t feel entirely confident, but will start studying them more now I am getting the hand of the scalps.
Thanks for all your hard work! :)
Nick,
How do you know we’re not in the middle of forming a grouping pattern. It could spike down bellow the level you mentioned and continue forming the 5 or more candles for the grouping pattern.
Nick,
I actually set a long pending order for the high of the master candle + spread + 5 pips cushion against false breaks. 6 candles later, I got filled at that price but the price soon turned around – false break.
While I did manage to catch the real break of that line, how can I avoid such things from happening? I already factored in spread and a 5 pips cushion which I believe is quite generous. Is there anything that can be done? Or is this just part of the business?
Thanks in advance for your reply!
Nick,
I would have caught this one, and for all the reasons you stated. I told myself that I wanted to see another bounce off of the line as of 10:00 PM last night, and didn’t set a limit order to go long at 159.33 as I was planning to if I saw a bounce overnight. I even saw that it would have been a 1 HR master candle break, too (there were 5 candles enclosed as of 10:00 PM CST last night).
Chock it up to jitters with my first week live, I guess.
Thanks for all of your help, and your detailed explanation of the reversal trade you took too.
Cody
Hi Nick,
Got the 3 trades, thanks to your learnings. Thank you so much for everything you do!
The blogs, ebooks, videos are very helpful and very much appreciated!
Cheers,
MiG
thanks nick, i can tell u i have just finished reading your free e-book and i applied the principles learnt from the book to demotrade this breakout, and i got a total of 107 pips in both trades.
thanks a lot, you’re God sent to humanity, particularly in the forexworld. i say more pips to your credit
Nick, I took the trade as the price clear the 159.20. I went down to the 10min chart to make sure the move was strong. There was an Engulfing Candle at 1:30am indicating that the move was strong and I entered after the 20 was clear. The price stalled in front of 1.5900 (psychological number) and the Engulfing Candle at 1:30am clear this number and thus confirmed the strong move.
Working on the Reversal.
Thanks for making your system available.
OT
Thank you Nick, that was a very clear and easy to understand explanation of the trades. Unfortuneatly i didn’t get to trade these due to other reasons.
Thanks Nick. Your explanations are always helpful :)
I was going to go in on the 159.19 for 50, but wasn’t sure because of not enough experience with the method yet. I entered, then deleted the trade when I couldn’t be by my computer to watch the price action.
At least I’m starting to see the same things as other nickb method traders.
Missed the reversal too, as I’ve been focusing just on line breaks.
What do you think about 153.44 for a line break trade later in the week or next week nick? Scalp for 50 or a strong line for 100? Or none of the above?
Nick thanks for info, I did not see the reversal but went long at 159.17 on demo ,50 pips
I have not worked on master candles yet as there is loads of other info. to take in yet,
I will study this reversal to make sure I understand?
Best and thanks again.
Damien
Thanks for the info Nick. Briefly in the chat last night you also mentioned that there was a possible short opportunity at 157.70 that came to fruition last night. Big fall from that level 50 pips would have been an easy target on that trade also.
Hi Nick,
Thanks for the breakdown, very informative and helpful to us Noobs. And yep, I took the 159.19 on my Demo a/c and was wondering if you take any patterns into consideration on your trades? Looking back over the wins/losses in my somewhat miserable trading diary I seem to make the most consistent calls after a period of consolidation showing up in triangle formations. For the 159.19, I ‘read’ an ascending triangle with 159.19 as the top line so stayed in the trade manually, watching it make 100+ pips and closing the trade when it re-traced to about 80 pips. Still, 80 pips after my recent shocker of a losing streak was worth a post!!! Just wanting to know if triangles (or other formations) feature in your decision process, either as part of an entry/exit strategy or the number of pips sought from a trade.
Thanks,
Andrew
Nick, My platform is FXDD. On my 4H chart, the second reversal was the same size as your 4th reversal candle. No trade here. BigE
Nick, in your ebook you talk about trading reversal patterns that form on SR lines. In the example above, is the top of the bull candle at 159.19 acting as an SR because it is a yearly high?
I caught the break of 159.2 but I had a 20 pip cushion, probably a bit overcautious but I got burned last week cos of insufficient cushion.. As for the reversal I didn’t even think to look at it, something I gotta work on I guess!