$800-50 Club

Trade 1 - GBP/NZD Long

Step 1 – Start with 4H Big Picture:

  • Start with a naked 4H chart
  • Naked means no indicators (do no worry about indicators for now)
  •  

Step 2 – Notes from 4H Big Picture:

  • You can see that the price recently was in a down trend and is now in a range of consolidation.
  •  Yellow arrows show the price was going down and is now going sideways
  • This pair is set up for a move up or down.
  • Other terms for up and down
    • Up – long, north or buy
    • Down – short, south or sell

Zoomed In 4H Chart

Zoomed Out 4H Chart

Step 3 – Zoom in on 4H Chart:

  • Now we can start to decide if we think the price is going up or down when it breaks out of the area of consolidation.
  • I think this price is going up (Why?)
    • If you look at the Zoomed out chart you can see that this pair has not reached the 1.98943 price since March 20th.
    • There is another price action hint that the price will go up.  Ask me about this when we have our next live session.
  • Now we look for the Entry and Exit price which is a combination of a Buy Stop, Take Profit and Stop Loss.
  • This is called Price Action Trading.  We are trading on the fact that the last two times the prices reached this price, the price went up.
    • There are no guarantees that price will repeat itself.  We are just trying to increase our predictive odds.

Step 4 – Zoom in on 1H Chart:

  • Decision Time on Buy Stop, Take Profit and Stop Loss.
  • We have to consider that we only have $16 to risk.
  • There are two primary types of breakout strategies
    • Initial Break Out – The initial break out would be on the initial break of a resistance price.  Higher risk trade.
    • Retest Break Out – The retest break out would wait after the initial break.  The Buy Stop would be placed after the initial resistance price is tested as a support price.  Lower risk trade because previous support price of upper channel is now a support price and will prevent the price from going back into the channel.

50 Pip Channel Inside 150 Pip Channel

Point & Figure 20×3 Buy Stop Confirmation on 150 pip Channel.  Triple Top Pattern

Step 5 – Zoom in on 15M Chart: (15 minutes chart)

  • We can see that on the 15M (15 minute chart) a smaller tighter 50 pip channel has formed inside the 4H 150 pip channel.
  • Entry Options
    • We can trade the large 4H 150 pip channel and the Buy Stop would go above the channel
    • or
    • We could trade the 50 pip channel and the Buy Stop would go above the green smaller channel
    • or
    • We could wait for the breakout and trade a bullish breakout candle 
    •  .
  • There is also a confirmation Point & Figure (PnF) Buy Stop (Don’t worry about Point & Figure at this time)
    • 50 pip channel buy stop is confirmed on Point & Fingure (PnF) 10×3 box 
    • 150 Pip channel buy stop is confirmed on PnF 20×3 Box
  •  

Step 6 – Entry Options

  • 150 Pip Channel Buy  Stop (Option 1)
    • Buy Stop @ 2.0040
    • Stop Loss (SL) @ 1.9960 (80 pips) Using the SL from PnF and not the bottom of the channel. 
    • Take Profit 1 (TP1) @ 2.0060 (20 pips)
    • Take Profit 2 (TP2) @ 2.0160 (120 pips)
    • TP2 @ 1.5R (R = Risk:Reward Ratio)
    • On a 80 Pip Stop Loss the lot size would have to be 0.02 for a $16 risk.
  • 50 Pip Channel Buy Stop (Option 2)
    • 50 
  •  Wait to see the bullish candle that prints as the price breaks both channels. (Option 3)

Pending Order Placed – Option 1 – Initial Break Out Strategy of 150 pip channel

Trading View Alert Added on Inner Channel – Based on the price action of the break, out we may switch to the Retest Break Out Strategy.

Step 7 – Place Buy Stop For Option 1

  • Pending Buy Stop Placed in MT4
  • Add an Alert in Trading View so that I am notified when the price breaks the inner channel.

What you should do now?

  • Follow each step and mark your charts up the way I have in each step. You can exclude the point and figure chart.  Drop you charts in our Telegram group or any questions that you have.
  • The final step will be to add an alert to the 50 pip inner channel.  Add the Trading View app so that we are all notified when the price leaves the inner channel.