Trading Journal #1 | My market analysis for today 24th July

1 day ago (Edited)

Pairs: GBPUSD, EURUSD, DXY

Introduction

After a brief and careful examination of the market, I have some observations for today on the pairs GBPUSD and EURUSD. Additionally, I will utilize DXY, which measures the strength of the dollar, as an extra confluence for my analysis.

If you are new to trading, you're probably wondering what confluence in trading is. For me, confluence is those other things that I apply to my trading that aren't a fact but can be used to validate my trades.

As one of my tutors will say, one confluence low probability, two confluences high probability, and three confluences gives you an even higher probability trade.

But then trading is a game of probability; you can fall on either side of the coin, but with a good win rate let's say a 40% win rate and a good consistent risk to reward ratio you will be in good profit even though the curve might be moving down at first but if everything is consistent then there is a very high chance your curve moves up.

Pairs I'm Watching

GBPUSD
EURUSD

Market Bias

GBPUSD

GBPUSD 4hr timeframe chart

GBPUSD weekly timeframe

On the weekly timeframe, where I am starting my analysis, the market has tapped into a high-time-frame demand on a weekly timeframe. Now I am not just going to jump in; I still need other confirmations, and I got that yesterday before taking my first trade following that bias.

GBPUSD 2HR timeframe

GBPUSD 30 mins timeframe

After confirming my bias on both the weekly, daily, and the 4hr timeframe, I know that going into the market for the next few days already have a plan in mind to look for sells, but even at that will good understanding of the market, you can also catch small retracement inform of buy trades. The important thing is knowing when to get in and get out.

Now you might be wondering why do I feel that point will the be the best for the market to continue selling from well there's a thing with points of invalidation on the charts, a point of invalidation is usually a strong point to pick a trade from and the other confluence trendline though I don't trade with it I still need for validation like I said before 1 confluence low probability more come confluence higher probability trade.

My final confluence is the Dollar index (DXY). This shows the strength of the dollar at any given time. Now, since I am trading dollar-based pairs and all I am doing is saying GBPUSD will be bullish if the pound gains more strength against the dollar, then one of the best ways to do that is the Dollar index (DXY), and thankfully it has its own chart.

dxy 2hr chart

Since the DXY is still clearly bullish, that means the GBPUSD will most probably be bearish 😃, like I said, most probably.

Now this analysis works for EURUSD too, but I will just drop a picture of it. Please remember this is just my thoughts from the little I know. There are great traders out will even better understanding than I do, and any corrections will be most welcome cause am really eager to learn from you.

One last thing to note: price doesn't always get to the order block before it reverses. Sometimes it fills half the imbalance, and then it moves in the opposite direction. That is the reason why some trades are missed trades, but if you can react to the market, then you can catch this move. Remember: always react, don't predict.

EURUSD 2hr timeframe chart