USDNOK Shorts Win 5,300 Pips

This entry is a follow up to our original Short USDNOK Pays Off Well piece published 9 April 2016. Since then, we have closed out all our trades on USDNOK and have booked a total of 5,370 pips of realized profits. This translates into roughly +6.28% of unlevered returns. This piece is therefore to update readers and followers as well as to provide the last concluding bits of our thoughts.

 The supporting trade ticket for our second short position on USDNOK. This trade was closed out earlier on via a take profit buy limit order at 8.0850. This netted us a profit of 2,360 pips, or +2.83%.

The supporting trade ticket for our second short position on USDNOK. This trade was closed out earlier on via a take profit buy limit order at 8.0850. This netted us a profit of 2,360 pips, or +2.83%.

 The supporting trade ticket for our base short position on USDNOK. This trade was closed out earlier on via a take profit buy limit order at 8.1650. This netted us a profit of 3,010 pips, or +3.55%.

The supporting trade ticket for our base short position on USDNOK. This trade was closed out earlier on via a take profit buy limit order at 8.1650. This netted us a profit of 3,010 pips, or +3.55%.

It must be noted that this trade complex (consisting of a base short and a second short position) was initiated on 23 March 2016, and was closed out (second short) on Friday, 29 April 2016. This means this trade complex was active for more than a month. It gives traders a different perspective to what they normally read on forums and websites, where most traders hardly last for longer than a week.

We've been immensely busy for the past few weeks and had no time to post new trading related content on these pages. Safe to say that the markets have been even busier with a bombardment of macro & central bank events jostling prices around. In today's short entry we'll give you a final breakdown and some concluding thoughts on our short USDNOK trade complex.

Before we continue, it is important that you understand all of the trading content we put out on these pages are real trades on a real account that we trade ourselves. We're using real capital and trading live prices. You can find out more about our trading system here. You can also view our entire trading journal here. In publishing such articles, we want to help traders from all walks of life better understand how successful traders approach the markets, and translate ideas into actions.

Technical & trade details

We have highlight the key technicals motivations for both short trades in the highly detailed charts below. Trade details are also highlighted with entry and exit prices and locations indicated accordingly. Again, please read our original piece to understand more as we won't be repeating everything we've said there.

Recall that we previously said: "We plan to hold both shorts until our primary target is realized, contingent that the trades remain qualified. We may decide to add more exposure to this position but will be playing it rather conservatively going forward." That was pretty accurate in hindsight. 

 These charts depict the technical basses on which we entered our 2 short positions on USDNOK. The top pane shows the daily chart of USDNOK and provides a macro view of our entry points, our primary target, and key technical factors at play.  Our first short position was at 8.4660 and was initiated on 23 March, more than a month back. This trade was a classic sell on a corrective retrace into our key pivot zone, an area which also acted as a clear neckline support for the huge "Head and Shoulders" (H&S) formation on the daily timeframe. We have marked out the H&S formation. Interestingly, our primary target, where we finally closed out our second position, coincides with the textbook-styled objective of the H&S formation (taking the price distance from the top of the "head" to the "neckline", or our key pivot zone). Here you can see that sellers were in control of price for much of the time, despite it getting choppy at certain points. Once our key pivot zone (also strong technical support) was taken out impulsively, the next strong support was where we entered our second short position. Beyond this area, the only significant technical support lied inside our primary target.  The lower pane shows the 4H chart of USDNOK and pinpoints where and when we entered our second short position. This trade was an add-on to our base position on the pair, and was initiated on 7 April (3 weeks ago) at a price of 8.3210. This entry was based on another classic retreat to our micro intraday short term pullback selling zone, and also a clear test (and false break) of a key support turned resistance level all the way back from mid-March.  We exited our base short position at 8.1650 as seen in the 4H chart (lower pane) after prices strongly rejected technical support a little north of our primary target. While we were initially intending to hold both shorts till our primary target, we felt it was prudent to take half our notional off the table in light of increased volatility, and as part of our trade management parameters. True enough, prices staged a larger than average corrective advance that nearly retraced back to our second entry price. We held our last remaining short because we were convinced sellers were still in control and that the overall structure had not changed.  After staging a false break of a short term support turned resistance area (opening gap), USDNOK was offered heavily all the way down to the very edge of our primary target where prices missed our take profit buy limit order of our second short (due to illiquidity during the Asian and early European trading session). Regadless, we held our second short for about a week longer, sitting though another relatively sharp correction higher. Notice that prices was still forming lower highs, indicating that sellers were still in control overall.  Finally, after consolidating for a good 3 days right above our primary target, USDNOK brokedown impulsively, quickly filling our final target and even managed to trade at a low of 8.0320 on Friday. Price closed at the lows of the week, signaling that there might still be more to this down move. 

These charts depict the technical basses on which we entered our 2 short positions on USDNOK. The top pane shows the daily chart of USDNOK and provides a macro view of our entry points, our primary target, and key technical factors at play.

Our first short position was at 8.4660 and was initiated on 23 March, more than a month back. This trade was a classic sell on a corrective retrace into our key pivot zone, an area which also acted as a clear neckline support for the huge "Head and Shoulders" (H&S) formation on the daily timeframe. We have marked out the H&S formation. Interestingly, our primary target, where we finally closed out our second position, coincides with the textbook-styled objective of the H&S formation (taking the price distance from the top of the "head" to the "neckline", or our key pivot zone). Here you can see that sellers were in control of price for much of the time, despite it getting choppy at certain points. Once our key pivot zone (also strong technical support) was taken out impulsively, the next strong support was where we entered our second short position. Beyond this area, the only significant technical support lied inside our primary target.

The lower pane shows the 4H chart of USDNOK and pinpoints where and when we entered our second short position. This trade was an add-on to our base position on the pair, and was initiated on 7 April (3 weeks ago) at a price of 8.3210. This entry was based on another classic retreat to our micro intraday short term pullback selling zone, and also a clear test (and false break) of a key support turned resistance level all the way back from mid-March.

We exited our base short position at 8.1650 as seen in the 4H chart (lower pane) after prices strongly rejected technical support a little north of our primary target. While we were initially intending to hold both shorts till our primary target, we felt it was prudent to take half our notional off the table in light of increased volatility, and as part of our trade management parameters. True enough, prices staged a larger than average corrective advance that nearly retraced back to our second entry price. We held our last remaining short because we were convinced sellers were still in control and that the overall structure had not changed.

After staging a false break of a short term support turned resistance area (opening gap), USDNOK was offered heavily all the way down to the very edge of our primary target where prices missed our take profit buy limit order of our second short (due to illiquidity during the Asian and early European trading session). Regadless, we held our second short for about a week longer, sitting though another relatively sharp correction higher. Notice that prices was still forming lower highs, indicating that sellers were still in control overall.

Finally, after consolidating for a good 3 days right above our primary target, USDNOK brokedown impulsively, quickly filling our final target and even managed to trade at a low of 8.0320 on Friday. Price closed at the lows of the week, signaling that there might still be more to this down move. 

Once again, only our Premium Subscribers are updated in real time on our live trades, so be sure to hop in the bandwagon if you want a part in the fun!

Final thoughts

These were great trades. Not because of the profits but because of the process which enabled the trades. We are happy with our trade management and had set realistic objectives for the trades. It's all about the process of idea generation, to execution, and management. All 3 worked well together to produce acceptable results.

For those whom are interested in the underpinnings, the trades were 80% fundamentals and 20% technicals. We have talked a lot about the fundamentals in our original entry and won't be repeating them here.

For us to hold a position for more than a month, there has to be a very strong fundamental case for it. No amount of technical alignment will suffice. This is why we always advocate proper education and thought processes as traders formulate trade ideas. It is myopic to rely fully on the charts.

Once again, subscribers to our Premium Signals Service were kept updated in real time on all of our positions and had exclusive first hand insight to our trading activity as it unfolded. Many of them were short USDNOK with us and have profited heavily as a result. Congrats to those that did!