I was able to get short within just 6 pips of todays high in the Euro (and 3 of those pips were the spread). Here's how my thought process went. The above is a 5 minute chart of today's price action. You can see where I went short this morning (1.36981). It was during the exact 1-minute high candle of the day. My decision to get short there was due to having counted 5 waves up for a wave C to end what I'm thinking was wave "b" aqua, and therefore the end of purple wave 2. The key here is that wave 5 red of wave "c" aqua appeared to be an ending diagonal. So, trading on a 1 minute chart, I went short (at market) as soon as a throw-over above the upper diagonal line was quickly followed by a retracement back under the line. I was looking to get short because the 5 waves up appeared to be complete without have quite reaching the previous swing high of 1.37167 (ask). This would create an excellent risk-to-reward trade. As soon as the position was entered, I placed a stop 5 pips above the extreme of orange wave 2 (1.37226) (see http://sidscharts.blogspot.com/2011/02/eurusd-e-mini-february-18-2011-great.html) , so the risk on the trade was initially only 24.5 pips.
Since then, the trade has moved as much as 61 pips into profit, and more importantly, completed what I'm interpreting as 5 waves down. So, worst case, I think this must have been a wave "A" of a downward zigzag. Best case, I'm expecting to see many hundreds of pips to the downside. After seeing the 5 waves down complete, I initially moved my stop to 5 pips above the start of the 5 waves down (as shown in the chart), but just now, as I'm typing this, there is some aggressive upward movement, so I just moved the stop to breakeven. My potential loss at this stage zero.
Now, if my primary count is correct, which is a very bearish 1-2-1-2-1-2, the Euro should really gain some momentum to the downside during the Tokyo and London sessions with the chance of being stopped out at breakeven quite remote. Hopefully, I'll be able to hold this position for several weeks while the Euro moves almost 2000 pips southward to under 1.200. (See my long term count at http://sidscharts.blogspot.com/2011/02/introductory-post.html).
The worst case scenario at this juncture: breakeven. Best case: about 2000 pips. That's a risk-to-reward ratio of what I call "infinity-dot-ohh". LOL
One last note: normally I would take some profit here, and then look to get in again, but with this bearish of a count, I'm gonna wait it out. Also, if this count is invalidated, I'll need to redo the count, so stay tuned . .
