A lot of action following the non-farm payrolls news release today. We saw multiple whipsaws back in forth in a number pairs, while others acted very strong or weakly off the number.
I took a number of trades today based on different criteria. All trades are made at the actual breakout price (where line points); I don’t wait for bars to complete.
GBPUSD Long Trades -1 minute chart
These are definitely “scalping” type trades. Following a major news release you can basically throw indicators out the window. All I was trying to do was get in when momentum was likely to ramp up, and then get out as soon as it dwindled (and before a pullback).
The main thing here was to see that momentum was up at the time of the trades. We had the initial run higher, followed by big drop. But it bounced before reaching the lows of the day. That is why I took the first long. As the price continued to run to the upside it was quite likely it would test the high of the day, and possibly exceed it.
EURUSD Trades – 1 minute chart
The EURUSD had some whip-saw action early, but then settled into some decent trends. The first trade came when the EURUSD broke its high of the day. It had tested that level on several bars, so when it broke I assumed it would pop for at least a few pips. I carried the trade until momentum slowed.
Momentum then shifted down, and by the time I took my second trade in this pair I knew I wanted to go short–we had had a major lower-low and lower-high. The second trade was like a mini-channel breakout, but like the former trades I just wanted to get out when momentum slowed down.
USDJPY Trade – 1 minute chart
The USDJPY had some vicious back and forth. It then settled near the middle of the daily range and formed a triangle. I bought when the triangle was broken to the upside.
Ultimately no momentum was generated, and the pair continued to channel. I should have bailed on the trade right then. Ultimately the price drifted lower toward the low of the day, and stopped out my trade on the way.
Thoughts for the Day
While there were some good moves in the morning, it was a potentially confusing day to trade. There were a lot of very sharp reversals, and I wasn’t about to guess when they would occur. Therefore, I opted to pick entry points which I thought would generate enough interest to put me in-the-money almost immediately. My expectation was hold trades for a couple minutes until the momentum slowed, and then get out. There was no reason to get greedy on a day like today, when the price could so easily reverse on you. While in hindsight we may look back and see all sorts of trades we could have taken, the goal is to make good decisions. And whether a decision is good or not depends on the trading conditions (see: Pay Attention to Tendency and Price Action), and whether you respected them.