The Simple Thing That Tells You Not To Trend TradeI am a firm believer that when I’m stopped out of a trade it’s for 2 reasons.
Reason 1: a deeper pullback has occurred. This does not mean the trend has changed. Price just pulled back a bit more than expected.
Reason 2: a reversal has occurred. At this point I’m stopped out of the trade and the direction I was once trading in reverses.
In this GBPJPY 1 hour timeframe a reversal. I’ve been the buyer up tip this point. Now that a 1 hour
Lower low has been formed I’ll stop being the buyer. A lower low represents the sellers pushing price past the last higher price buyers(Japan) were willing to buy the base currency which in this case was the Pound.
As a trend trader my goal is to trade with the trend per the timeframe I’m analyzing. So, the buy is invalidate Ted until price begins to trend again. So, I wait for a pullback and evidence price can stay below the higher high and fall again. If it can I begin selling.
If price passes the higher high the lower low will have been a false breakout and I am the buyer again.
Just a simple understanding of when it’s time to not trend trade. Any questions?
