GBP/USD - Hanging Man
The purposes of these illustrations are that through constant repetition of active market charts with demonstrations of distinct candlestick body, the reader will imbibe a clearer understanding of the market psyche.
Here again, we repeat our study of the Hanging Man.
In the GBP/USD chart below another classic hanging man appears with a top body and dangling shadow to omniously signal a key reversal in market sentiment. The difference in this chart in comparison to the EUR/USD we discussed in the previous article being the volume traded. Where the EUR/USD in article 2b demonstrated a high volume pull back upon the preceding high volume demand, in this case below the market has a general lack of interest resulting in a brief sideways channel before a precipitous slide in market price.
On the 2nd July 2014 The GPB/USD makes the Hanging Man with 3 days preceding upwards push.
The critical days to signal the market stall are -
1st - H. 1.7176 L. 1.7142 the preceding 4 trading days being successive market higher close.
2nd H 1.7165 L. 7114 the classic Hanging man appears to indicate a stall
4th H. 1.7181 L 7133 a confirmation of stall
and finally...
5th H 1.7156 L 1.7112 re-confirmation of stall and sidewys channel and downward drift
A hypothetical Short future entered with call option would have been the strategy employed in this case of Hanging Man identification with the pre- defined target reach of the support at 1.5423 (14/08/2013 low). and should that support give way then the next support at the 1.5102 (02/08/2013 low).
Trading in a highly volatile market such as Forex with traling stops is always going to end in whipsaw. Day trading is extremely difficult. However position trading enables the trader to take advantage of longer term perspectives.
Forex trading is very risky. Suitable studies in hedging with currency options are advised to minimize losses in case of adverse pullback.
Further recommended readings -
http://forexeducationperspective.blogspot.com/2014/12/article-markets-and-battlefields-2.html
and
http://forexeducationperspective.blogspot.com/2015/01/article-markets-and-battlefields-2b.html
Pieter Bergli - DeLoren Trust Holdings
Education in the currency markets
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.
