An (oh-so-close) example of a great trade:
Maybe everyone forgot about it, maybe it's too far past the year 2000 to use the term 'millennium' anymore. In any case, it's an almost-mythical trade that that you can make when you're in the technical zone.
What is the Millennium Trade?
It's a three-part breakout trade.
- The breakout
- The 61.8% retracement
- The continuation
Trading GBP/CHF last week, I almost nailed it but lost focus on the final leg.
It doesn't get much better than GBP/CHF today, I wrote. "I think there is a case for a cautious short here for a return to 1.4500 or 1.4452, which was the March 31 high."
GBPCHF intraday chart
The next day I took profits on the trade and I wrote about looking to re-enter a long at 1.4450.
"There's no rush but look for another test of 1.4450 (hopefully with a slightly higher low than 1.4433," I wrote.
What happened was the pair didn't successfully retest and hold 1.4450. I was in no rush into the trade and not particularly focused on a pair I don't trade often. In the end, GBPCHF continued lower to 1.4417, and I moved on to other trades.
Had I been paying closer attention, I could have spotted the low and bought the successful retest. I almost never buy at any level on a directional move, always waiting for confirmation the low will hold.
The retest eventually came and it was a textbook example but was just below the 61.8% retracement.
How the GBPCHF trade played out, it rose as high as 1.4666 today.
The difficulty of the millennium trade is that you need to reverse the trade twice. In general, it's easier to watch the break and then buy the retracement, but when you're really in the zone, it's a great trade to work it on both sides.
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