The “Pause, That Refreshes”

By Pro scalper Michael Storm—–Follow Michael on Twitter

Ok traders, good day to you all. Today I want to discuss with you the pause that refreshes. Take a look at the following chart and tell me, as a SCALPER, what do these 2 charts say to you?

1 Min Chart

5 Min Chart

This is what it tells me. On the one minute, we had a “double test” of recent highs near 134.23 followed by a one minute sell setup (and the 5 min chart is confirming). So, I entered a position short and banked around 10 or 12 pips on the first half. Then as it approached the “figure” (the whole number) I took some more. (I trade SO much that I cannot remember exact details…. I am just telling you how I think). IF I held any, I am sure that I would have stopped out on the remaining portion positive or break even on the last third. The REASON why I would get out near 134 is because of the “minor support” area there formed by the resent tails. IF it broke hard, and I was flat, I would have re-shorted into the weakness to catch MOMENTUM and tight stops. But alas, things do not always go as we plan, do they? So here is what happened. Take a look at this next chart

1 Min Chart

I waited for this and shorted probably around the 134.11 or 12 area. My stop is now set at the top of the wick on the second candle before my entry 134.16 I SURE don’t want to see that. Because that is over 2/3rds of the drop and if it goes there, it is most likely going higher and I know will most likely test 134.23 again. Here is what I am seeing on my other chart. The 5 min. I use ALL the charts in conjunction with each other. What happens next? Check this out:

1 Min Chart

This is the “Pause, that refreshes”. It is a continuation move I am stopped out for a small loss. Oh, I made some money and I lost a small portion of it, but that is not really what I am after. One win, one loss? NO. I have no real and lasting bias. I flow like the charts. THEY tell me what to do. I reverse my course of action and am now long just after being stopped out. Why? Because anyone else who might have shorted and held is now a Looser and is feeling PAIN. They have to cover. Their buybacks are helping to push prices higher. The momentum pushes it right past the prior high and we rocket forth another 15 pips ( I believe the total for this was around 22 or 23 pips higher when all was said and done). I am of course SCALING out, locking in profits and selling into strength as it goes up.

5 Min Chart

In case your wondering this is what the 15 min chart looked like at first:

15 Min Chart

Now do you see why I was shorting. Of course, its obvious. The 134.23 area was a prior area where prices were rejected and we moved lower. Price has MEMORY, and this was VERY recent memory. SO, anyone that was dumb enough to hold through that move was So very happy to get out in this area, I mean come on, we just “bounced” a hundred pips off the lows.

Now, here is the second 15 min chart Before the current 15 min bar has completed:

15 Min Chart

It is still in progress. I think it stalled near 40ish. Which is approximately a 2/3rds fib retracement area of the downdraft that had occurred. I got Most of the pips short on trade one. I had a bit of a loss (not bad) on trade 2. I got most of the pips on trade 3. Am I happy? You bet! Just do the math and add those pips up. Scalping is great fun. THAT is what I do, all day long. I seek to do this over and over as much as I possibly can. This is just ONE strategy out of several dozen that I have developed over 10 years. We will go over another one next week, Till then… Happy trading.

Michael Storm.

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