Student’s Question:
I couldn't really find any good trades with either MACD or Slow Stochastics so went with a loser to see what you think. Maybe I could have done this better. I picked spot where both lines were over 80 on an hour chart. The daily chart showed a downtrend. Sold @1.4266 with stop @1.4359 which was near last resistance level. Limit was near support @1.4131. Not a good profit loss percentage being less then 2 to 1. I also waited to see a candle confirmation with an evening star a few candles from from crossover. Then I was stopped out @1.4359 for -93 pip loss.
Power Course Instructor’s Response:
You definitely are on the right track here...
Using the Daily chart to correctly determine the direction of the trend which is bearish on the GBPUSD pair is the way to go. Then, going to a one hour chart to fine tune the entry is a solid analytical technique called Multiple Time Frame Analysis. Your usage of Stochastics to determine when momentum favors the trade is spot on as well....good work.
Hindsight of course is 20/20...but, when placing a stop, try not to place it precisely at the point of the last significant level of resistance. Rather, give it some breathing room and place that stop perhaps 25-30 pips above/below that support or resistance level depending on which way the trade is being taken. Also, since the GBPUSD is one of the more volatile pairs, perhaps an even greater amount might be in order.
See the chart below for a visual...
