I’m posting this partly for a comment left in the previous post ("Trade Management on the EUR/JPY 240").

While I am going to walk through them step by step, keep in mind that these are two separate trades.

Playing a trend reversal trade is especially challenging when the previous trade was a trend following swing entry that was stopped out, however, entering RCI reversal trades are quite often done after a swing trade stops out.

I posted a 240 minute EUR/USD swing short which — with the weakness in the U.S. Dollar today — broke through the point of validity.

If you want to see the details of the U.S. Dollar and crude oil moves, click here to read the post.

I’m going to walk you through what is essentially a stopped out swing trade that triggers a RCI/CCI reversal entry.

1)  This is the entry for the short.  Yes, the clock angle of the cycle was not the best for a swing as the downtrend was weakening, but none-the-less it was basically an aggro swing short at 1.4771.

2)  Prices did follow through the "00" and this did allow for an exit in front of the "00" at 1.4705.  The low was 1.4669.  This price action did set in motion the process for two keys orders: the exit and ratcheting the stop from a risk based to a break even

3)  Prices hit the break even stop (five pips above the entry = 1.4476)  You’re out of the short trade.

4)  Price continue to rally up through the top line of the RCI with CCI (20) confirmation, this is the buy trigger for the RCI/CCI (aka Wave /CCI) entry

5)  The initial profit target.  Just like the profit target in the short was based on stepping in front of size at the "00" same on the upside.  Step out in front of the 1.4900 at 1.4895. 

- Raghee

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