WFAD #41
$EURUSD & $BBY
$EURUSD
Euro/Dollar currency pair
The first idea was to buy Euro/Dollar currency pair ($EURUSD). It was one of our trading recommendations on RBC-TV (see pictures 1.1. — 1.3.).
The results are shown on the pic. 2.
In few words, it was an H&S-bot. bullish continuation pattern (on 1 hour timeframe), or Three methods candle pattern (on daily chart). Entry was excellent, calculation of target zone was also valid. Target was reached successfully.
We want to point out, it is actually an amazing example of how technical analysis techniques can be used to make profits. The most interesting point here, that technical analysis gave rather concrete trading recommendations, while fundamental context was a little bit arguable. This case shows, that price really considers and reflects absolutely everything.
Profit from this recommendation = +2.32% in 12 days (+69.6% annually)
The lesson is =>
- Price considers and reflects absolutely everything.
- Technical analysis works well.
$BBY
Best Buy Co., Inc.
Services | Electronics Stores | USA
Second trading idea was to sell stocks of Best Buy Co., Inc. ($BBY) (see pictures 3.1. — 3.2.).
The result is shown on the pictures 4.1. — 4.2.
According to our strategy, we were seeking for sell opportunities in $BBY but as a result this trading idea led to a loss. Let’s analyze, if something was wrong with this forecast.
That’s how it was (from step to s step):
- Price of $BBY made a new historical high and began to slide down after it.
- RSI indicated a divergence and moved from overbought territory to neutral one.
- Than we had a combination of impulse + correction and we were intended to sell another impulsive wave down.
- $BBY price retraced 62% of descending impulse and started declining again.
- When Best Buy Co., Inc. management published earnings reports, price of $BBY gapped down and made a new low, what confirmed a new local downtrend. So we decided to sell a retracement, because or projected price target for short selling has not been reached yet.
- Next day after the gap $BBY raised rather significantly and we had a good opportunity to sell it according to the plan (pic. 3.2.).
- Then $BBY was moving appr. 24 days in a trade range in form of broadening triangle and finally hit into protective stop-loss.
Possible mistakes:
- $BBY price didn’t close below the low of the descending impulsive wave. That fact weakened a double top reversal pattern. A day later we can see, that there was a significant support from buyers near that 41.8 level. Long-range day closed the breakaway gap = bears showed their weakness and inability to continue selling. But formally local downtrend was still valid.
- We tried to sell the position in primary uptrend. It’s possible, that waiting for the end of correction and look for buy opportunities is more reasonable tactics in such cases (it’s an arguable point, but nonetheless).
We can’t say, that there was an important mistake in our forecast. It is a normal behavior of a market and the thing is that the sentiment and market forces just changed instantly in a moment. You should always be flexible.
Loss from this recommendation = -6.3% in 26 days (-87.23% annually)
The lesson is =>
1. Sometimes such «bad trades» happen. It is impossible to avoid all of them. Remember, that the best way to cope with them is effective money management and trade diversification.
