Short Term Trading – When Volatility Returns

The current framework has been performing well. We’ve had several days “short” USD while the majority of market participants are “just now” starting to see the weakness in USD, as well the big jump in Gold down around 1180.00 ( we saw that too ).

We’ve banked several hundred pips just over the past few days in a number of currency pairs.

Volatility is certainly “back in town” so I’ve been more inclined to “take profits fast” and then look to re-enter trades on pullbacks or momentum – depending on the timing.

Today has again provided opportunity to “bank profits” and look to re-enter on any kind of bounce, perhaps “after” the U.S data comes out.

A quick look at AUD/USD with identification of the current “channel” on a 1H.



You can see that taking profits at the “top of the channel” ( just within the last hour or so ) makes total sense, but then of course you have the difficult job of “re-entry“.

Depending on the “angle of the trade channel” as well the “width” ( this one being around 120 pips! ) you’ve got a couple of choices.

1. Put in orders “above” the recent high and catch “momentum” ( only that you leave some 75-80 pips of potential movement).

2. Wait for price to find an MA that you generally see it turn / follow along from prior price action ( in this example the blue 200 SMA may serve this purpose ), or wait until price comes “all the way” to the lowest part of the channel, and try to pick it up “on the cheap”.

I’ll often look to do both. or follow price action very closely and look for a reasonable “swing low” on perhaps a 15 minute chart ( although this could occur “several times” within a 12 hour period and isn’t so reliable ) still attempting to put my orders “a few pips above price action” to catch things only when they start moving my way again.

I wanted to get this out early enough for it to be relevant to today’s action / taking profits etc….and will plan to re post again here mid day.

Remember…I’m here and available “most of the day” for any questions or more “real-time discussion“.

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