GBPUSD I may have entered too early.. But im not backing out yet!
Observations from the Data
Trend Confirmation via Moving Averages: Several key moving averages and trend indicators (EMA at 1.30829, DEMA, HT Trendline at 1.31043, KAMA, Linear Regression) are positioned well above the current market level of 1.28234. This indicates that, on an hourly basis, the longer-term trend remains bearish.
Directional Indicators: The directional movement figures are very telling. With PLUS_DI at about 4.97 and MINUS_DI at around 31.38, sellers clearly dominate the market. A low DI(+) against a high DI(–) reinforces that the overall bias is to the downside.
Momentum & Oscillators:
The RSI is extremely low at ~15, indicating an oversold condition. In isolation, this might hint at a potential short-term bounce.
However, other momentum indicators, such as the Chande Momentum Oscillator (-70.09) and a slightly negative MACD (-0.00185), suggest that the underlying bearish momentum has been strong.
Oscillators like Williams %R (at -89.21) further underscore that the market is deep into oversold territory.
Volatility Metrics: An ATR of 0.0043 and relatively low standard deviation indicate modest volatility, meaning your stop-loss and target levels can be measured with reasonable precision.
Context and Rationale
Overall Trend: The majority of your trend-following indicators (e.g., EMA, DEMA, HT Trendline, KAMA) are positioned higher, confirming a prevailing bearish bias. Even though the RSI shows an extreme oversold reading (around 15), in a strong downtrend like this, oversold conditions can simply trigger a temporary bounce rather than a reversal. My sell entry at 1.27752 aligns with staying in the trend.
Directional Pressure: With the MINUS_DI (31.38) greatly outweighing the PLUS_DI (4.97), the directional movement clearly favors sellers. My entry at 1.27752 positions me within this selling pressure, assuming the bounce to fail and the downtrend to resume.
Entry Timing: Instead of waiting for a higher bounce ideal for a pullback short, my entry at 1.27752 suggests that I chose to capture a move early in the downswing or perhaps because price action broke a key support level. This could be advantageous if momentum continues as anticipated.
Why This Trade Setup Works
Alignment with Trend: Maintaining a sell position aligns with the overall bearish structure indicated by your moving averages and directional indicators.
Captchaing a Bounce Rejection: Even if a short-term bounce occurs from oversold conditions, your entry near 1.27752 could capture the early phase of a bearish continuation provided that the rally fails to sustain.
Confluence of Technical Signals: The combination of oversold conditions (which in a downtrend often predict a short-lived bounce) and the strong directional indication from MINUS_DI and related momentum oscillators creates a setup where a rejection of a minor recovery can lead to further downside moves.
