Swing Trading GBP/USD And Making 500+ Pips In 17 Days!

In this post, we are going to analyze our latest swing trade. If you haven’t read our previous posts on our swing trading system, you must do so now as it will help you understand this post in a better manner. We basically use divergences in our swing trading system. Divergences are considered to be powerful leading signals. There is no other indicator that can give so much lead as compared to divergences. Once you have read the post where we explain our swing trading system in detail, you can return to this post. Take a look at the following screenshot.

Swing Trading GBP/USD

As you can see in the above screenshot, only two indicators the RSI and the Stochastic are showing bullish divergence while MACD is not showing any divergence. Now if you have been reading our previous posts in which we have explained out swing trading system in detail, you must know by now we look for the divergence to appear on the three indicators simultaneously before we make an entry or exit decision. But this time it seems that the market is about to move big without MACD showing any divergence at all. How do we know the market is going to move big time? If you take a look at the MACD just below the down red arrow, you can see the red signal line about to cross the histogram in the down direction. When the signal line goes below the histogram it is an indication of an uptrend. We can also take a look at the daily timeframe as well. Take a look at the daily chart below!

Swing Trading GBP/USD

As you can see, the price bounced from the 50% fibonacci level on the daily chart. The first candle was bearish while the second candle is bullish. So we make an entry decision without waiting for the MACD to show bullish divergence as well. Out entry is at 1.51300 and the stop loss is at 1.51020. The risk is around 28 pips which is acceptable in case the market does not confirm your analysis and takes the stop loss out. But our analysis was confirmed and the market did not try to return to this level. It has moved up by more than 500 pips while we are waiting for bearish divergence signal to develop on the three oscillators this time. The lesson learned is. There is no harm in taking risk if the stop loss is small and you think that the market is going to move big time.

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