A Tale of 2 Cities.... EURJPY

I spotted a potential long trade on the EURJPY when it was trading in a triangle pattern.  The price was moving towards the bottom trendline which was also supported by a past Resistance at 137.85.  The situation looks good that the price should move off this significant combination of trendline and support line.  I felt that the bounce could be strong enough to cause a breakout of the triangle.

So I entered the following trade:

EURJPY
Long: 137.93
Stop: 137.71 (22 pips)
Target: 138.38 (45 pips)

And true enough the price moved off the trendline/support and subsequently broke through the triangle and hit 138.38.  Great!  A nice 45 pips profit!

Now, after witnessing the breakout, I was keen to ride up with the break as I have seen previous breakouts move another 100+ pips.  So I entered another trade targeting the next resistance at 138.73.

EURJPY
Long: 138.33
Stop: 138.06 (27 pips)
Target: 138.68 (62 pips)

However, the breakout did not hold.... in fact it crashed back down through the support of 137.85 and went down to 136.82 over the next couple of hours.... a drop of over 160 pips from the top of the breakout *whew*  Thank God for the Stop at 138.06!

Now could I have seen that coming?

Ok, the read on the first trade looks pretty sound, with both up trendline and support providing strong indication of an upward bounce.

Well, on hindsight, the read on the second trade was full of wishful thinking.... After a successful trade, the euphoria and greed blinded me into making a trade that was not supported by any evidence.

Without any supporting trendlines or support/resistance lines, I will have to look to the indicators for evidence of a significant move up.

1. On the completion of the Green Candle at 1030pm, the Slow Stochastic was at 79.06 and the RSI was at 69.36.  Both showing strong upward momentum but also indicating possible Over-bought situations.
2. On the completion of the Red Candle, during which I entered the trade at 138.33, the Slow Sto was at 86.91 and RSI has turned DOWN to 61.30 indicating a significant LOSS of momentum.
3. With the Sto in Overbought territory and the RSI indicating loss of momentum, the price indeed fell through strongly.

*whew* Lesson learned, do NOT jump straight into another trade following a successful one in the hope of chasing it further.  There was absolutely nothing to suggest that it will continue.  Only enter a trade when all the signals are right.

Happy Trading!