Premarket Prep GBPNZD 20210603

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This is my pre­mar­ket prep for today’s Euro­pean ses­sion for the Forex pair GBPNZD. This prep builds off of my week­ly trade plan I made here:

GBPNZD Week 22 Trad­ing Plan

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The pur­pose of a pre­mar­ket prep is to find setups with­in my week­ly trade plan bias

Week­ly Focus Points

• Min. 3 times work­ing out at home + manda­to­ry cardio
• Trad­ing rules
  • Focus on tak­ing ONE trade a day. If I missed the first DTTZ then a trade needs to be tak­en on the 2nd DTTZ unless there is a high/medium ini­tia­tive activ­i­ty day.
  • Only price-action based exit rules (or if hit time stop comes earlier)
  • M15/M30 entries and exits at 1st DTTZ, M5 entries and exits at 2nd DTTZ
  • Buffer trades (prof­it tar­get >1R) are allowed and encouraged
  • 13 trades by the end of the month
• No social media / mes­sen­ger apps / phone calls allowed dur­ing the trad­ing window

Com­pared against Week­ly Trad­ing Plan

• Price trad­ing in last week’s body after hav­ing moved below with­in range

Non-con­jec­ture obser­va­tions of the market

• Price action
  • D1 Bull Engulf formed yes­ter­day giv­ing D‑C-D1.95239 with con­tin­u­a­tion dur­ing Asia tak­ing out D1 Supply. 
  • H4 Bear Engulf react­ing off D1 QHi with no fol­low-through and con­se­quent move high­er giv­ing H4-C‑D 1.95744 clos­ing with­in D1 QHi. Cur­rent­ly react­ing off H4-C‑S 1.96210 OLD
• Trend: H4 Up, D1 Up, W1 Up
  • Pre­vail­ing trend: Trend is Up
• Mar­ket Profile
  • Yesterday’s val­ue cre­at­ed above the 2 over­lap­ping ones but still with­in over­all range
• Dai­ly Range
  • ADR: 1176
  • ASR: 815 (very tight)
    • 21
  • Day
    • Yes­ter­day’s High 1.95990
    • Yes­ter­day’s Low 1.94705

Sen­ti­ment

• Loca­tions
  • H4-C‑D 1.95744 at VAH
• Sen­ti­ment
  • LN open
    • Above Val­ue, Out­side Range
  • Open dis­tance to value
    • 0.57xASR
  • Pre­mar­ket
    • H4 closed high­er with­in the old H4 Sup­ply deep­er with­in D1 QHi.
  • Nar­ra­tive
    • Mod­er­ate to large imbal­ance at the open. Trend is up. And with open above val­ue longs are favored. ASR is a bit tight though so got­ta be a bit care­ful. Pos­si­ble Return to Val­ue play off LTF demand (coin­cid­ing with M30 VWAP in UT) oth­er­wise at val­ue edge. If IB trades high­er ful­fill­ing mean rever­sion cri­te­ria with­out tak­ing out sup­ply there could be a mean rever­sion oppor­tu­ni­ty. If price does take out old H4 sup­ply there could be a sus­tained auc­tion. That said with tomor­row being Non­farm Fri­day and sum­mer time, things could be slow through­out the day. 
• Clar­i­ty (1–5, 5 being best)
  • 4
• Hypo 1 — Return to Value
  • Nar­ra­tive: H4 trad­ing high­er with­in old H4 sup­ply (less reli­able sup­ply) open sen­ti­ment con­ducive to a pull­back to val­ue edge or LTF demand. D1 Bull Engulf pos­si­ble con­tin­u­a­tion narrative.
  • Pre­ferred A: Pull­back to val­ue edge / LTF demand, PA rever­sal with­in IB to exten­sion up, 
  • Pre­ferred B: oth­er­wise a test below IB to failed auc­tion to Neu­tral Day.
  • Con: ASR tight, Trad­ing with­in D1 QHi, 
• Hypo 2 — Mean Reversion
  • Nar­ra­tive: Open sen­ti­ment, IB trades high­er ful­fill­ing mean rever­sion cri­te­ria, price trad­ing at D1 UKC in R
  • Pre­ferred A: IB trad­ing high­er to Mean Rever­sion lev­el (near­ing M30 QHi), although this could take out H4 sup­ply, IB exten­sion down with sus­tained auc­tion to val­ue edge, 
  • Pre­ferred B: or a failed auc­tion to Neu­tral Day in case of ini­tial exten­sion up.
  • Con: Pos­si­bil­i­ty tak­ing out old sup­ply could war­rant a sus­tained auction.
• Hypo 3 — Trend Continuation
  • Nar­ra­tive: Direct con­tin­u­a­tion to H4 narrative, 
  • Pre­ferred: IB exten­sion Up, pos­si­ble Late-sus­tained auc­tion entry
  • Con: Sus­pect to say the least due to open sen­ti­ment although 0.57xASR could fall with­in the pos­si­bil­i­ty of strength behind the move if IB backs up the narrative.

Addi­tion­al notes

• Cap­i­tal Preser­va­tion Rule in effect
• Tomor­row is Non­farm Friday
• ASR tighter than usu­al — extra caution

ZOIs for Pos­si­ble Shorts

• W1-C‑S 1.96876
• H4-C‑S 1.96210 OLD

ZOIs for Pos­si­ble Long

• H4-C‑D 1.95744
• D1-C‑D 1.95239

Mind­ful Trad­ing (lack of sleep?)

• Feel­ing okay

Focus Points for trad­ing development

• Month­ly Goals
  • No momen­tum trades on Non-Farm Fridays
  • Total of 13 trades by the end of the month
• Week­ly Goal
  • Min. 3 times work­ing out at home + manda­to­ry cardio
• Risk Man­age­ment
  • With­out forc­ing a trade: aim to take 1 trade a day, if pos­si­ble 2. 
  • Cap­i­tal Preser­va­tion dur­ing draw­down allows for 1R profit-taking
  • 2 con­sec­u­tive days of lack of sleep = NO TRADING

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