Week of 5.20.2012 Review and Next Week's Plan

You look back at the week and trading on the left side of the chart is so easy.  Even though I wrote that predicting price action is futile I still focused too much on trying to find the reversal.  There are more signs that price will reverse shortly but instead of focusing on trying to predict when it will reverse I will wait for it to do so and then change my bias.  Until then I remain focused on shorts.

This week I will only trade the New York session.  Assuming the high/low of the day is made in London I will simply look for a retracement during New York to get in sync with the move of the day.  To try to pin point when to get in I will concentrate on the four signals I like to use:

1. SMT divergence
2. USDx divergence
3. Type 2 trend following (or in the case of a reflection pattern Type 1) stochastic divergence
4. A/D divergence

I was using A/D divergence incorrectly using a candlestick chart and hopefully by using a line chart I will see it more clearly and the tool will become more effective.

If I see any two of these I'm entering the trade with proper risk management.  Risk can be decided by the number of signals confirmed above, pivot zone agreement, market flow agreement, and market structure agreement.

I think I will start with very low risk for the start of the week and see if I can ramp it up by the end of the week.