I’ve closed all my positions at good profits, pretty close to the lows of the day, except EURJPY where I could’ve got about 50 pips more. But I don’t regret getting out when I did. EURJPY is a particularly volatile pair these days and moves of 100 pips in an hour is common for this pair. Also, one must always keep in mind the old traders’ adage: The last 10% of a move is the most expensive! What it means is that being greedy and t trying to get the last few pips will usually cost a trader far more than he may gain.
My decisions to exit were fairly straightforward technical calls. There is strong support on the daily / weekly charts at 1.3200 / 3180 in the EU; at 123 / 122.60 in EJ and 1.0220 in AU. So strong, that there might be some overshoot but I was confident that these levels will surely be respected. The same in GBPUSD – I was a bit early there, but cable is well on its way to close back above the strong weekly / daily support level around 1.5200.
One may ask – so, if I am sure that these supports will hold, why am I not going long here? After all, the risk/reward at these levels is fantastically good. For the answer, another old traders’ adage comes to mind: ALWAYS WAIT FOR CONFIRMATION! I should have kept that in mind before punting on the GBP earlier today. A related maxim is ‘Like a dog that always comes back to sniff the spot where it has dropped its load (i.e. poo) the market always comes back to test its breakout / support / resistance levels. We still have a Friday and early next week for the market to make another attempt at the levels that it is bouncing from today. If the levels hold a second time we get our confirmation of support and can confidently enter longs. The confirmation also gives us a clear level against which to measure risk.
Gold and silver are also bouncing, and could be good medium term trades from here. We need to wait until next week for confirmation before entering long. I wouldn’t try to catch the absolute bottom precisely. The earlier adage applies here too – the last (or first) 10% of the move usually are the most expensive!