Euro/Yen Day Trade

From my perspective, price (Smart Money) is either accumulating positions, marking them up or down, and then distributing them. Rather than over complicate this post by discussing how price is fractal, and that multiple things can occur on the different time frames, I'm going to keep this straight forward. The first couple of days of this week, I was watching the Euro/Dollar. I was not patient enough, and wound up losing a couple of trades. This morning I started around 7:45AM New York time, and was looking at the Euro/Yen. I really like the way the EJ had taken out a couple of the previous days lows (Smart Money bought sell-stops.) Also it was pushing into a type of structure that I was taught is called a breaker. Basically, a breaker is a forced move that runs liquidity. If you look at the up candle that the arrow is pointing to on the daily chart, from May 21st, 2018, my theory for today, was that candle was key.

The difficult part of taking this trade was that as I drilled down to a fifteen minute chart, and then a five minute chart, I really didn't have the confirmation of seeing higher highs, exceeding the last high prior to the low that was made. What I did see, was that there was a double top, where the more recent high was lower than the preceding high that formed the first top (see the red rectangle and the two blue arrows on the five minute chart below). That tells me that there are buy orders above (retail traders either willing to buy high on a breakout, or who are holding sell positions, and have their protective buy stops), up and around that red rectangle. Getting this trade, would mean that the trader accepts the 8:20AM candle as the likely daily low, waits for a return to the structure around 130.94, as I don't believe in chasing price, because it increases risk. I noted a couple of additional entry possibilities with purple lines, that were based on return to structure.

This is why trading is simple, but it's not easy. When you add in the human factors of wanting to protect capital, taking a buy position, which was the opposite direction of the days price movement so far, the fact that I'm much more alert at 11:30AM, than at 8:30AM, and that the algorithms that are used to move price up and down, were most likely created by someone who's very sadistic (which is why not watching trades is often a good idea.) It truly boggles my mind, that anyone can learn to analyze price this way, most people can write down a set of rules and follow them, but I know several people, who have the capital to exploit markets this way, yet a couple are hold negative hundreds of thousands of dollars in Cryptocurrency, because they like an idea they heard people talking about on a forum, and jumped into positions, without regard for the context of price.

*What knowledge I have, was learned from many different sources, ranging from a variety of price action analysis styles. I cannot speak to the authenticity of the person who helped me to better understand price movement. He claims to be a wealthy day trader in Baltimore MD, and while there is controversy about who he is, I am pleased with what I've learned from him. His name is Michael Huddleston and goes by The Inner Circle Trader. I don't want to use tools I've learned, without giving credit, but I will also not be mentioning him frequently. His teaching (some say he'd taken it from other places) make sense to me. The purpose of this blog will be to discuss financial markets, for which I truly enjoy studying.