Bias is bullish on the cable which is, in general, trading stronger than the fiber. We had traded down last week to significant resistance and had a huge pop of 200+ pips on Thursday and Friday. This move lined up nicely with seasonal tendencies and COT data.
I expected accumulation on Monday and the low of the week to be made by Tuesday's London Open. Upside objectives could reach to the 1.5900-1.6000 based on the OTE from the big swing down in May and swing projections.
On Monday we trade down during London and New York and then bounce. I set a price alarm for the 62% retracement and 5700 figure. Alarm sounds right at 2:00AM. Have SMT and USDx divergence. I enter long at 5693. I should have waited for a bigger OTE to form. I think I used something like a 14 pip swing which really isn't big enough. Price trades up about 5710 but then comes back down. Something just wasn't right so I got out for a small loss.
Turns out the Judas down is going to be quite a bit lower for the day. 5624 to be exact. The whole time I'm watching price action on the cable fall the fiber is not really budging. And USDx divergence remains.
This is what SMT divergence looks like.
Line chart. Light blue is cable and green is fiber.
Regular chart. Note how price is falling on the left (cable) but not on the right (fiber). Since I have a bullish bias I'm thinking the move down on the cable is bank engineered.
To help confirm that the move on the cable is being engineered I look to USDx divergence. Note how the purple line representing cable price is making a huge dip while the USDx red line refuses to go higher. A big clue that the cable's price drop is a Judas swing.
So this is the question: At what point do I enter long? Obviously the 5700 level was blown out in London open. OTE from previous day swing was blown out. So I switched gears to higher time frame support and entered long at 5670 as a turtle soup entry but that was blown out (I managed to get out at break even before it fell further).
So finally I go back to what I have written previously. I will wait for it to bounce 20-30 pips at least and hope for a OTE retrace. Of course that doesn't happen today. It did retrace 15 pips and retrace to the 62% level.
So back to my question. How do you enter long in a situation like this? I did note the 5650, 5637, and 5625 as levels price reacted to in the last month.
ADR was at 5642. S2 at 5632. Maybe there is just enough confluences with S2 etc. to go long but that is where I have been burned in the past. Next time I will be willing to use confluences of price events like daily pivots to enter. Also time of day is something to be considered. Seems like the day's "battery" is winding down at this time and the likelihood of further decline is minimal.
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