Counter-Trend Signals, EURUSD & Trade Confirmation
The older I get, the more I appreciate trend trades. Though it seems a long ways back, it wasn’t all that long ago when, after reviewing my trades, my mentor declared, “Your a counter-trend trader”. His statement/ accusation hit me like a slap, because I knew better. It must be something in our youth that makes us think that going against the grain is “cool”; or more likely just not knowing better. I was reminded of the difference between counter-trending and trending price behavior this week; and of how to take advantage of them.
First let me say, I have nothing against counter-trend trading when done right. In fact your best defense as a trend trader is going to be knowing how to counter-trend trade. And many of your exits from trend trade signals will be counter-trend signals, and vice versa. The key is in defining that distinction ahead of time. And knowing that what’s counter-trend on one time-frame may be trend on the next lower time frame. Take Monday’s candle in EURUSD. Definitely a counter-trend signal on the Daily — see chart below – a trend signal however on the 240 minute chart — see second chart.
By knowing you were in a counter-trend trade on the Daily chart, and knowing because of this, you had to monitor the trade more closely, you would have been able to exit the trade cleanly just ahead of today’s U.S. GDP release, using a fact based trigger on the next lower time frame from your entry — the 240 — which just happened ot be in line w/ the Weekly trend.
Jay Norris
www.trading-u.com
To find out more about our coming trading room, hosted by Jay, and free BrewerFX clients, e-mail jnorris@brewerinvestmentgroup.com or call 800-971-2154 or 312-896-3986
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