20150414 XAGUSD Short Updated

20140414 xagusd d1 short

This is the kind of setup that is hard not to take.
– Long term bearish pressure (declining 200sma)
– A key level combining a) a well defined trendline (rising blue line) b) a just as well defined support turned resistance at 16.70 (fixed red line) c) several moving averages but especially the 100sma
– Declining MACD confirming downward momentum
– RSI is below 50 while ADX is ticking up (albeit still relatively low)
– Obvious price action : a) breakdown, b) retest from below, failed to close above (agressive traders might have entered there), c) confirmation the next day with a small inside bearish bar.
– Target is reasonable, based on price action back to late 2014.

Now, what is against this trade?
– First of all the SL is not ideal. I have a very small account and i couldn’t go further without getting out of my risk management. I wanted to enter at market after the close of the NY session and was thus limited. Still, it’s a decent SL placement i believe. If we go retest this resistance it means the downward pressure was not strong enough.
– The risk reward is not ideal. Entering a day earlier (after the failed retest) might have been better. Still, we are in a choppy market and i wanted confirmation.
– News event. US (Core) Retail Sales and PPI figures are expected later today. This will probably make or break the trade.

I manually closed the position at the news for a small profit because the figures were below expectations, indicating suspicion towards a rate hike in june and thus USD weakness. Should have i hold? I don’t know. The paire ended up rejecting the 16.20 support. Here is what the chart looks like after the NY close :
20140415 xagusd d1

20150414 XAGUSD Short Updated

The secret to trading 

I met a Government Bonds Trader who’s working at a major bank. He specialized on Portugal, Spain, Italy and Greece. Needless to say he’s quite busy at the moment, with the QECB and all that. He recommended i read The Disciplined Trader by Mark Douglas and actually lended his copy to me. Of course i started reading it right away and came across this gem. The bold emphasis is mine.

You create the game in your own mind based on your beliefs,
intents, perceptions, and rules.
It is your own unique perspective and no one
else’s and the secret is, you can and do choose how you perceive events


The secret to trading