232 Pips GBPUSD may 15th - Trading Multi Time Frame Short of GBPUSD from Supply Area

GBPUSD fell about 80 Pips during London Session on May 15th and still continue to 160 pips during Asian session on May 16th. I was exit the market around 80 pips range with more than 232 Pips in tree Waves scale in.

First Scale in with 4 unit trdes: 41 pips,  41 pips,  27 pips,  22 pips  = 131 Pips

Second scale in: 28 pips,  27 pips,  12 pips,  12 pips,  4 pips  = 83 Pips

Third scale ins with 3 orders scratched before US session for:  8, 8 and 2 pips 

If you only stick to M15 chart then LST System would not provide you with any signal. If you look closely bar histogram of LST on M15 then you would see exaggerating divergence (Forex Master Method) between the last swing high and the hammer. But it was just 4 bars and LST would consider it not a significant swing of price.

It was chart M1 and M5 of LST that provide a signal of divergence.

I trade with dual monitors and set each of them with 3 charts consist of M15, M5 and M1 chart. This is how it looks.

Remember:

-  Yellow lines are entry line, Red lines are Stop Loss and Take Profir and the Top Rirgt corner are Real Time Pips gain for eact unit order.

- Term used: Supply and Demand - Sam Seiden, YTC PAT - Lance Begs, FMM - Russ Horn, MMM - Steve Mauro, Trend Collapse - Hector De Ville

Pic-1:

Pic-1a:

Reading price movement on Circle-5, the bullish move At the end of Asian Box was a tree sweeps to the high (SM's MMM). It was a sudden move without a growing momentum. Some times this effect is a kind of spring effect created by narrow consolidation after the end of US session.

This tree swipes was headed directly in to a solid wall of SUPPLY area. It was also touch M3 of MMM's Vipot line (not seen on the chart). As XLT-Supply and Demand taught, only novice buyer that would buy in to this strong Supply Area. Professional would be looking to Sell to this Novice.

Seeing only M15 and the best of a professional could have done was to place order under the Shooting Star in Circle-5 since the RR wasn't seem to be a significant pullback. It was more than 12 pips of the high.

But look at the price action om M1 chart that exploring the situation of Circle-5 better. You won't see this smooth price action on M15. Yet you will say it is noisy if you were using oscillator or MA cross.

I could have enter under the shooting star in the Cirle-1  but I was considering the solid Supply area above that hasn't been penetrate. Even RR on Circle-3 M5 charts usually not an enough sign of reversal without confirmations. Many times I found this RR or double Pins but still the price made another push high in to the Supply area before reverse. So I'd rather wait for a Re-test of this high and Re-test in to the Supply area.

The price indeed failed to take out this high and never touch the Supply area. Remember that Supply area is an area and not a solid exact line. At the same time Chart M-5 has shown an "Exaggerated Divergence - Russ Horn's FMM).

So I place my 2 units short after failed test of the initial high in Circle-2. It was less than 4 Pips of the high, with additional 5 Pips (spread 3-4 Pips) then my Stop Loss was just about 9 Pips.

The price gradually fell and I scaled in 2 more units after a small retrace then Exit all units when the price paused by the Supply area Created on Supply Area on May 14:

http://trading-price-action.blogspot.com/2012/05/lsts-confirmation-trend-line-sr-supply.html

Details of Price Action behavior around the Supply Area are on Pic-2 Circle-8 below

1st wave riding gone to: 41 pips,  41 pips,  27 pips,  22 pips  = 131 Pips

2nd WAVE TRADE: 28 pips,  27 pips,  12 pips,  12 pips,  4 pips  = 83 Pips

Pic-2:

Pic-2a:

The price Later retrace but lack of follow trough and growing bearish momentum instead. I gave it times to show it momentum so I enter a little bit lower after a shooting star  on M15 and has a bearish follow through. Chart M1 at Circle -6 shows a better look of Price Action. Look at the slope of Yellow line I draw, learn the change momentum. Learn also the series of bar that were overlapping each other on the move up while down move were 4 consecutive "Lower Close Bearish Bar  - YTC PAT". The same principle applied on the next 3 units scaled in.

I pay a close attention on another Supply area created on day before. There were Buy signal of LST on M1 but lack of follow trough so I waited for another test low. A quick rejection after a burst low happened on Circle-7. LST System Guide call this a MORUBOZU effect. I exited all the 5 trade at this point for 83 Pips.

3rd Wave Trade: Scratch for 8, 8 and 2 Pips = 18 Pips

Pic-3:

Pic-3a:

As usual, I enter 2 units short on the Pin of Shooting Star and 1 later on follow through. The Trade Scratch before US session when LST Histogram showing Divergence. Yet I saw that price have gone far from Water on MMM indicator. This situation many times create a massive move but I don,t want to stay late in to US session.