AUDUSD 09/09/10

Entry Buy: 0.92499

T/Profit: 0.93280
Stop Loss: 0.92203
Trailing Stop: 30 Pips

Potential Loss: 30 Pips
Potential Profit: 79Pips

Reason for entry: At the time of my entry, the price had broken the resistance line and it got pulled back to the resistance line. And so I thought this would be a good entry trade to Buy. 

Normally, it would go further high up once it touched back the resistance line. Why? Once the resistance line broken, it formed a strong support line. Plus, the risk/reward ratio is at around 1:2.

Reason for T/Profit: I have a weak belief that would be the next resistance line. Since my belief is weak, I have coupled the trade with trailing stop of 30 pips. The reason why I think is weak at that point because of too many ZIG ZAG around 0.93280 - 0.92487. 

Reason for Stop Loss:

there was a strong resistance line at around 0.92185

Reason for Trailing stop: I wasn't able to conclude the next resistance line.
Result: 
Stopped at: 0.92203
Loss: 30 Pips

Thoughts:

12/09/10 - After reviewing the reasons I have entered, I will not entered this trade again (I am just afraid that the results I received has influenced my judgement here). I should have known better and think more thoroughly that the huge ZIGZAG between 0.93280 - 0.92487 does not show an obvious up and down pattern (i am looking into daily chart). WHY? this is because most trades I made, I could see obvious SINE WAVE. However, in this currency pairs, it looks like there is SINE WAVE within SINE WAVE.

As a result, AUD went down more than t

he stop loss I had setup. It went down 40 pips before it went back up again. Have I setup my stop loss wrong? I am not too sure. 

I didn't want to risk more thank 30 pips at that time and I could see there was a strong resistance line at around 0.92185. However, the market decided that the resistance line supposed to be at 0.932039 (there was another candle just right below 0.92185). 

Lessons:

1) Becareful with SINE WAVE within SINE WAVE. This would affect the setup of my stop loss. And, this is going to be harder to determine the stop loss. Maybe I should make a larger stop loss for this.

2) If the entry trade is very close to the ZIGZAG lines (SINE WAVE within SINE WAVE), do not enter the trade. WAIT AND OBSERVE TO SEE A MORE OBVIOUS PATTERN.