Well, the GBP/CHF trade broke just like everyone said it would. It broke pretty nicely too, to the tune of about 400 pips. See for yourself (click for a larger picture):
As you can see, the candle closed outside the box, then proceeded to savagely retrace back into the box. Then it decided to exit the box again and march on it’s way to 400+ pips of potential profit. Is that frustrating or what?!
Actually, I did execute the order on my trading platform but it just so happened that my internet connection crapped out. It might have been a blessing in disguise because had I been stopped out on the retracement, I may have been discouraged and not taken the next break.
Well regardless of the outcome, I have to ask myself, what did I learn from this and more importantly how can I apply it in the future?
If you look at the retracement back into the box, it hits some key points. As you can see on the chart, price bounces off the 62% Fib retracement. That level also coincides with a central pivot point and the moving averages (not shown on chart).
I will backtest this and see if it is beneficial to look for a key convergence point to re-enter a box trade if it closes back inside the box or if I should just wait for a second break of the box?
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