By Rob Colville on November 14, 2013 in
It’s always baffled me why many people never get into trading the Scandies. As far as our technical analysis goes looking at the chart – they behave like any other currency pair.
The move, shake, rise and fall like any other instrument for that matter…not to mention giving set-ups with high profit potential!
In fact, USDSEK currently looks good for a sell good to trade and trade south. Fantastic, in fact…there are 5 reasons why!
I love trading the scandies – USDSEK is no exception to this.
Ok, even though we may have 5 reasons in support of a sell remember that nothing in the market is ever guaranteed and, as technical traders, we are left to work with the probabilities.
The daily looks all good and everything but the one thing holding me back right now is something that may seem a little innocuous. It’s that damn hourly cyclicity! It still looks bullish in how it’s still making key higher highs and higher lows.
However, all is not lost! You see, while the higher timeframes such as the daily and weekly will tend to dominate the overall market structure, people forget about the timeframes which actually make up those higher timeframes… Timeframes like the 60 minute and 4 hourly chart represent all combine to make up the daily chart and 5 daily bars make up the 1 weekly bar. So, the smaller timeframes act like the cogs turning the bigger wheels in the market.
So, with that in mind, the last thing we want to happen is to be triggered into the trade on the daily timeframe yet – to our horror – see that the shorter-term hourly chart is STILL making higher lows and higher highs and will eventually stop us out. That would be creeping death.
Remember, there are 24 hours in a day and the hourly chart, although not as dominant as the, say, daily or weekly, it will give us a clue as to the present sentiment. This is why we want a clue in the form of a bearish reversal pattern on the hourly if we do have a reason to sell on the daily. Clients on the Ultimate forex training course will be informed exactly what to look out for here and how to trade it.
You have the agony of choice! It really depends on what how conservative you are as a trader.
The more aggressive option: Price could simply collapse and move south without our confirmation of a reversal pattern on the hourly. That’s the trade-off: the price we pay for being careful…sometimes we miss out but can sleep at night in the knowledge that our entry has been safe and fully justified. However, if you you remain fearful of missing out like this and want to trade it short, then take it short…but be wary that it there will be less probabilities in your favour.
Or…be conservative: Wait for that remaining clue. Annoying – yes! But remember, because of the longer term nature of the daily, we can often get in later on down the line at our original entry price once price action has ticked a number of boxes (ie; making reversal pattern on the hourly or at least close below the trendline).
So here’s the question: what kind of trader are you? Looking at the hourly chart, you I don’t blame you for taking the conservative option! This is what I would do. Remember, a pilot on the ground wishing he is in the air is better than a pilot in the air wishing he was on the ground.