Last week I wrote about a good trade in the EURUSD forex pair. The trade continued to play out this week and reached its original T2 target, which I call the “true cycle target” because it is the target generated by the price cross of the FLD (future line of demarcation).
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Here is last night’s Hurst Signals chart, with the original levels marked on the chart:
An interesting question was asked in the comments to last week’s post: “why isn’t the high of 8 May considered to be the pivot point?”
In fact the high on the 8th of May should be considered the pivot point, but last week I thought I would keep things simple. I presented the trading opportunity identified by the Hurst Signals system which was emailed out at the close of trading on the 7th of May, at which time the high on the 6th of May was considered to be the pivot point, or the initial stoploss level. Position sizing, stoploss and target levels would have been calculated on the basis of that level. The spike up on the 8th which happened before entry could have allowed us to adjust that stoploss level, and as a result the two targets prior to entering the trade if we had been watching the market action on the day of entry.
And even if we had not been watching the market during the day the T2 target should always be recalculated after entry so that it remains a true cycle target. The recalculated T2 target does of course use the high on 8 May as a pivot point, and resulted in a T2 target of 1.3666, a more accurate cyclic target as can be seen here:
The fact that the T2 target has been reached implies that the cycle move we were trading is complete, and therefore we should expect the 40-day cycle trough to form here.
And in case the downward move surprises us and extends further, we still have the third trade open, with a 3-bar trailing stop in place and a breakeven stop reducing our remaining risk on the trade to zero.
Have a good week and profitable trading!
