GBP - Solve the Hedge
Updated
After some major dissection from a few different angles, I see a bit of chaos mostly. I imagine for the open of the week, we may see some spikes and just general up and down. Overall, we look to be finishing up by going into a down trend, or at least going a bit lower, maybe as low as the 1.18 range. It is rather balanced right now, with a lot of long and short looks, but the major picture of the 4hr says we made a major double top, with the most recent top just slightly lower,(Red dashed line) and very strong reaction from that area, so more downward action can be expected, still a ways to go for reaching a major bottom level.
Current positions open:
1 Buy @ 1.23015
1 Buy @ 1.22895
2 Buys @ 1.22254
4 Sells @ 1.22165
Overall spread/drawdown in positions: 184-206 pips (variable spread, working spread is average of 188)
Current trade equity: + 76 pips (not sure how I got 62 pips before, double checked is 76.0 pips net positive. Garbage in garbage out on calculators I guess)
Current available pips: 601 (Free margin) + 1250 in reserve (9% drawdown, 25% will make me uncomfortable, so plenty of room to work in)
Plan #1
Looking to see price move up, and into one of the red circles around the A point on the left chart. The leftmost, and lowest red point is the breakeven point for the buys. The uppermost right red circle is the 4hr level, and we have a lot of interest coming together at this point. This would be a good entry point for Sells, but to keep my position weight down, I will pass on selling this level, and just place a 4x buy hedge above the 1.231 mark, with a little flexibility on the exact price to allow volatility at the time price is near that level. Depending on how price reacts, I may even hold the Buys until the 1.228 level at the second red circle, but staying strong to hedge orders above. The safest play would be to liquidate them immediately as price crosses breakeven, and allow the sells to gain some ground. Once price leaves the A areas, I will be looking to target the B areas for places to liquidate the sells with small profit, and trail a buy hedge down just incase we get one more push up, but I don't see much possibility for it to reach back above the 4hr level(yellow top line) again. Once sells liquidate, I will be looking for re-entry at another B point on retest to sell down, but in a new idea, as this trade will be closed and solved. (Fairly High Probability, Most likely if we don't gap down on open)
Plan #2
Price tries to move up, but just doesn't make it for some reason. It struggles but the selling interest finally overwhelms all the buyers still holding out for the trend to push up longer, and we start to fall. Once Price reaches the B levels, I will look to liquidate the sell orders, and take account of it's value. I will then close an opposite buy trade of equal or lesser value (times [-1]) to remove the highest order(s). I will then add 2 buy positions from this level, and look for breakeven right around the C point to end the buys even, and overall trade even with small or no gain, but covering all losses from other positions. Objective net 0 in this situation. (Low probability, not much lines up with this idea, but could happen due to the extreme balance right now of buyers and sellers in the market)
Plan #3
Price just straight out takes a nose dive. If this should happen, for example we just gap way down on open, or the day opens and then just runs away without ever looking back, then I will continue to hold all positions, and wait for price to find something to show any sign of support. I still think the 1.204 level could be where that happens, even though we did not get the triple tap top. It is the next most major level that is very clear across most timeframes, even weekly. If the open and initial reaction goes below the B level, I will be looking to close the sell the same way as before in plan #2. Because of the equal positions in spread value, one or two buys will remain. I will enter a buy or possibly 2 from a lower level(1.204 most likely in this case), The amount will need to be determined by how many get closed, with an objective of trying to line up a buy breakeven on the B level point. This will also return a minimal gain, as the focus will be on closing out with net 0, or small gain on closing prices at key levels, not just because, should the opportunity be there. (Moderate probability, Extreme Sell Pressure is present, bulls are ready to push, but they don't have the numbers the way we closed out Friday, and not enough movement/momentum to get an exciting rally on their side, it will be rather difficult to get up from this point as well if this is how we open)
Current positions open:
1 Buy @ 1.23015
1 Buy @ 1.22895
2 Buys @ 1.22254
4 Sells @ 1.22165
Overall spread/drawdown in positions: 184-206 pips (variable spread, working spread is average of 188)
Current trade equity: + 76 pips (not sure how I got 62 pips before, double checked is 76.0 pips net positive. Garbage in garbage out on calculators I guess)
Current available pips: 601 (Free margin) + 1250 in reserve (9% drawdown, 25% will make me uncomfortable, so plenty of room to work in)
Plan #1
Looking to see price move up, and into one of the red circles around the A point on the left chart. The leftmost, and lowest red point is the breakeven point for the buys. The uppermost right red circle is the 4hr level, and we have a lot of interest coming together at this point. This would be a good entry point for Sells, but to keep my position weight down, I will pass on selling this level, and just place a 4x buy hedge above the 1.231 mark, with a little flexibility on the exact price to allow volatility at the time price is near that level. Depending on how price reacts, I may even hold the Buys until the 1.228 level at the second red circle, but staying strong to hedge orders above. The safest play would be to liquidate them immediately as price crosses breakeven, and allow the sells to gain some ground. Once price leaves the A areas, I will be looking to target the B areas for places to liquidate the sells with small profit, and trail a buy hedge down just incase we get one more push up, but I don't see much possibility for it to reach back above the 4hr level(yellow top line) again. Once sells liquidate, I will be looking for re-entry at another B point on retest to sell down, but in a new idea, as this trade will be closed and solved. (Fairly High Probability, Most likely if we don't gap down on open)
Plan #2
Price tries to move up, but just doesn't make it for some reason. It struggles but the selling interest finally overwhelms all the buyers still holding out for the trend to push up longer, and we start to fall. Once Price reaches the B levels, I will look to liquidate the sell orders, and take account of it's value. I will then close an opposite buy trade of equal or lesser value (times [-1]) to remove the highest order(s). I will then add 2 buy positions from this level, and look for breakeven right around the C point to end the buys even, and overall trade even with small or no gain, but covering all losses from other positions. Objective net 0 in this situation. (Low probability, not much lines up with this idea, but could happen due to the extreme balance right now of buyers and sellers in the market)
Plan #3
Price just straight out takes a nose dive. If this should happen, for example we just gap way down on open, or the day opens and then just runs away without ever looking back, then I will continue to hold all positions, and wait for price to find something to show any sign of support. I still think the 1.204 level could be where that happens, even though we did not get the triple tap top. It is the next most major level that is very clear across most timeframes, even weekly. If the open and initial reaction goes below the B level, I will be looking to close the sell the same way as before in plan #2. Because of the equal positions in spread value, one or two buys will remain. I will enter a buy or possibly 2 from a lower level(1.204 most likely in this case), The amount will need to be determined by how many get closed, with an objective of trying to line up a buy breakeven on the B level point. This will also return a minimal gain, as the focus will be on closing out with net 0, or small gain on closing prices at key levels, not just because, should the opportunity be there. (Moderate probability, Extreme Sell Pressure is present, bulls are ready to push, but they don't have the numbers the way we closed out Friday, and not enough movement/momentum to get an exciting rally on their side, it will be rather difficult to get up from this point as well if this is how we open)
Note
The chart on the right is basically how my brain sees the price charts, it's not supposed to make much sense. The Left chart is the same, and has some of what is in the right chart, but only ones that are relevant to where price is now. This makes a bit of a clearer picture of where price may go.*One additional note on plan #3, if we go down hard enough, I would be patient for the 1.201 level possibly unless price begins to decelerate a bit, about 40-60 pips before we get there, then let it pause and final hoorah push to look for any position changes.
Note
Idea #4Covering another moderate probability:
Price opens and nudges down to around 1.2180, then finds some buying interest off that level from buyers taking a second charge. In this case, I will liquidate my sell hedge, and re hedge just below the C level, around 1.2125. There is still the concern of the level at 1.2119, but if we meet some visible buy interest here, a pullback to the A level is very likely. I will be ok if the lower sell hedge gets hit, as looking to the overall picture, it looks very strongly like we are in a slightly down angle channel, and right now we are near the top of it, getting ready to make a run back down to the 1.18 levels, which I think is an extremely likely outcome in any situation. For the most part, I will be looking to reduce the sizing down to 0, then look for a new short re-entry with a new plan. This way, I can minimize the risk exposure to be in the trade on the correct side of the market (short)
Note
To finish Idea #4, if the hedge does not get hit at the lower level, then I can easily let price ride up slightly and reach a breakeven there too. One other thing I could also do in this situation is liquidate some of the buys as well, if nothing else at least one of the upper ones, as long as it is the same value or less than the sell hedge profit, making breakeven closer to where price can reach it.Note
Looks to be playing as plan #1, channel pattern slowly up into the A level then down we go... I think it's going to turn at the lower red circle to the leftNote
Setting buys to take at 1.2262, just on the bottom of that areaNote
4x buy hedge at 1.2295, stay protectedNote
1.2274 Picking up a little momentum, so going for the slightly higher target levelNote
Updated with a clean idea that summarizes all of that into what I think will happen next. I will continue trade tracking in the newest idea, since it makes much more sense what I'm using and looking at versus this one.
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