Here I issued a SELL call and place my stops above the previous high which lay outside and above the descending diagonal. Why did I do that? Why did I place my stops there?
The reason for my SHORT trade was that I was trading on the fact that this descending diagonal was still in play and was looking for a wave c down to complete the corrective wave 4. Wave c's are very good to trade as they are impulsive. My analysis at that time indicated that the next move would be a wave c down. Then after I saw that prices broke above the upper TL of this descending diagonal and then broke back down through it, I thought "false break". This is usually a good PA indication. NOT ALWAYS. But usually. After planning out the trade and figuring out the SL and TP and seeing that risk:reward was good, I triggered the trade.
But shortly after I issued the trade, prices turned and shot up stopping us out for a modest -56 pips loss! At that point, I knew that my analysis was wrong and the stop was telling me that something else was going on here besides that descending diagonal and I had to re-analyze the situation and then SIT, WATCH and WAIT! Not jump back in on a revenge trade!
So now I am PATIENTLY waiting for another good trading opportunity on this pair as per my latest post. NEVER, EVER feel anxious about missing out on any trade! Because the beauty of forex trading is that there is ALWAYS another trade just around the corner!
Loves your analysis and technique and willing to follow you to learn.
Again, sanjay. That was not all directed at you so don't take it personal!