Continuing the divergence theme, we are looking for a bounce out of this support area on the $AUDJPY. If price makes a lower low in the Box, but the multi time frame stochastic indicator makes a higher low (ie we see divergence) then on a valid exit from the Box, a long trade will be taken. Profit Lock is set to 10 pips once 40 have been made. No divergence – no trade!
A very short video showing the new (optional) Divergence Filter, allowing you to specify that Box trades are only taken if divergence is seen on multiple time frames as price leave the Box!
It’s an exciting week as the Box tests out some new functionality that allows the trader to deploy a multi timeframe divergence filter! This means that a trade will only be placed if the exit from the Box also shows a divergence between the price move into the Box and the momentum shown on multi timeframe Stochastics.
If price retests this area on the $AUDUSD and makes a new high, but the stochastics don’t, then a short trade will be entered on the exit from the Box.
I will post a video later to explain more about the Wallaby Divergence filter!
A frustrating ‘look what you could have won’ week. Our $USDJPY long trade idea peaked at over 220 pips above our entry point, but failed to hit the box by probably less than a pip (due to spread!). A similar story on the third $EURUSD trade idea which opened too far out of the Box to be valid, but again went on to peak at nearly 100 pips above! We ended the week with a modest 34 pip loss from the trade ideas.
BIG news is that there is now a Divergence Filter in the Box EA, which will only trigger a trade if divergence is seen on multiple time frames. This option is trader selectable, but this week we will be trying it out in our trade ideas!
The $EURUSD is playing cat and mouse with the Box at the moment so I have gone back to first priciples (and my first idea) and placed it around an area of supply and demand that may still have an excess of demand in it. The rest is the same; If price comes into the Box and then closes above it a trade will open to the long side, close below the box and an automatically calculated profit target based on average daily range.
Third time lucky!
Our original Box trade set up on Monday has not triggered but the movement in the $EURUSD has set up a new Box trade…so we’ve moved the Box! Price broke through a recent high and it is possible that price will come down to test the area and find that it now acting as resistance. If price comes into the Box and then closes above it a trade will open to the long side, close below the box and an automatically calculated profit target based on average daily range.
Quick trade idea on the $USDJPY as it heads towards an area of previous but now broker support, which may act as resistance. If prce comes into the Box and then closes above it a trade will open to the long side, close below the box and an automatically calculated profit target based on average daily range.
Full trade updates via @ThradingTheBox on Twitter