Sive Morten
Special Consultant to the FPA
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Hello Sive,
I attached a daily chart of USDJPY. What is the stop loss? I suppose for DRPO it is at 61.8 % between the low extreme and the high after the second penetration. In my chart it is the white lines and the 61.8 is the green line. If the daily closes below the green that means the failure right?
As far as the TP goes, I would go for OP. Would you do the same?
How would you trade a DRPO failure in this case?
Rasto
You're right, Rasto, theoretically stop should be below 5/8 at close. But, usually, I use deeper levels, such as 0.786 or even 0.88 for stop placing. Understand, DiNapoli has written his book in 90's. Market has changed significantly. Now 3/8 and 5/8 Fib nodes are well-known and usually cleared by m-makers well.
In case of DRPO failure - you may enter short or just step aside. Don't struggle with it and don't be long.