Exploit ‘Daily’ Stop Runs for Short Term Day Trading: Live Trade GBP/JPY
ANALYSIS
I like to refer to this price action as the V formation, also known as the daily stop run. As displayed above, the price made a full average daily range (ADR) push to the downside and rejected that move with another complete ADR move to the upside. All within a single day.
This formation shows a significant rejection of lower prices, and often produces continued price action in the direction of the rejection.
Given the bias, I intended to look for a continuation move to the upside off the 156.00 manipulation point.
Setup
The initial stop run forms just before the EU session opens. The next 15 min candle creates another stop run candle in the EU session and resets the count to a new number one candle. The confirmation candle was the #3 candle in the formation, and entry was taken immediately as the price was just 13 pips from the low of the candle formation.
Trade management
After an initial 7-8 pip pullback against the entry, the price shot straight to a full take profit. I didn’t even manage to move to breakeven or even take my regular trade screenshots. I didn’t see a specific news catalyst which means it was more than likely just a really aggressive London open.
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-Kevin