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Figure 1.1 EUR/USD 4hours time frame- Courtesy from OANDA
As mentioned in the article “ Get Ready for the Pullback on EURUSD: 26 July Update” Traders may look 1.2250 levels at 5 days high price level to enter a short (sell) position. This seems to be happening as shown in Figure 1.1, the highlighted area showing 2 bearish (seller dominant) candlesticks. The 2nd candlestick from the right shown in the blue shaded rectangle experienced a high of 1.2314 and a low of 1.2273. As of 27 July 2012, 1hour after the London Open, Price was seen flirting in the level of 1.2250.
Enter at 5 days high
A strategy that enters when price moved in opposite direction of a main trend (or counter trend) to reach 5 days high or low can be rather lucrative to trade. Shown below is a simulation result on equity growth did from 2005.04.27 till 2011.02.10 that triggered over 90 trades. Equity growth is dependent on entry/exit and not solely on the strategy, thus the below results only serve as a reference. Short Positions won% was 47.06% and Long Positions won% was 56.90%.
Yesterday presented the pullback to hit the criteria for my entry, and certainly look forward to see probability works in my favour. The 5 days high reached by the EUR/USD yesterday may just be the best opportunity to ride the trend!