How to Trade Forex Using Structure and Retests

TL;DR

Wait for price to reach a predefined area of interest, then require a structural shift, body close, and retest before entering. The account began the week at $201,940, fell to $131,550 after a USD/JPY loss, and later closed the week with a $332,588 profit from GBP/CHF, while the trader emphasized percentage returns and cross-pair analysis over headline dollar amounts.

Transcript

it's week 12 of me turning this into a million day trading and I have a feeling I'm going to have to use this this week good morning ladies and gentlemen before I get started today and I do a trade update I want to take this second to appreciate the Iguana being here like I don't I don't think you guys understand what this means for this week last ... Read More

Key Insights

• A valid setup is more than price reaching an area of interest. The trader waits for supporting evidence such as rejection, a shift in market structure, a body close through structure, and a retest before executing the position.
• GBP/NZD remained bearish on the four-hour chart because its pullback did not break the established lower high. Although the one-hour structure had turned bullish, the trader waited for a bearish shift on the 15-minute or 30-minute chart before considering entry.
• USD/JPY was the preferred trade because its setup appeared cleaner near a daily area of interest and the 144,000 psychological level. The planned confirmation was a break and retest of 30-minute structure, potentially forming a head-and-shoulders pattern.
• Cross-pair analysis helped the trader avoid an EUR/JPY loss. Because USD/JPY still had room to rise toward its own area of interest, he reasoned that EUR/JPY could also make a deeper upward pullback before producing a selling opportunity.
• Patience prevented the trader from chasing GBP/NZD after it moved toward the take-profit zone without first providing the planned retest. He remained interested only if price returned to the marked area and created another potential lower-low leg.
• Trading performance is evaluated by percentage return rather than the visible dollar profit. The trader compared an earlier move from $100 to $3,000, described as 3,000%, with the current larger-dollar objective, arguing that the earlier percentage gain was more difficult.
• The week included a major reversal in account performance. According to the description, the balance began at $201,940, dropped to $131,550 following a USD/JPY loss, and later benefited from a GBP/CHF trade that produced a $332,588 profit.
• Forex trading carries the possibility of losing some or all invested funds. The description characterizes currency trading as highly speculative, warns that prices may be extremely volatile, and states that past performance does not indicate future results.

Questions & Answers

Q: How does the trader confirm a forex entry?

The trader first waits for price to reach a predefined area of interest, such as prior support, structure, an EMA, or a round psychological level. He then looks on lower time frames for rejection and a shift in market structure. For the USD/JPY setup, the required confirmation was a 30-minute break, body close, and retest before selling.

Q: Why did the trader prefer USD/JPY over GBP/NZD?

USD/JPY appeared cleaner because price had returned toward a daily area of interest near the 144,000 psychological level, which had previously acted as support. The trader could also identify a potential head-and-shoulders pattern. GBP/NZD retained bearish four-hour structure, but its one-hour structure had become bullish, so that setup required more selective lower-time-frame confirmation.

Q: How did cross-pair analysis help avoid an EUR/JPY loss?

The trader compared EUR/JPY with USD/JPY because both were JPY pairs. Although EUR/JPY had already reached a possible selling area, USD/JPY still had room to pull higher toward its own marked level. He concluded that EUR/JPY could also push higher before selling, so entering immediately would have exposed the account to a setup he considered premature.

Q: What market structure did the trader identify on GBP/NZD?

On the four-hour chart, GBP/NZD had formed a lower high and a lower low, followed by a pullback that did not break the existing structural high. The trader therefore still considered the four-hour structure bearish. However, the one-hour chart had produced a higher high, so he waited for the 15-minute or 30-minute structure to shift bearish before entering.

Q: Why did the trader wait for a retest instead of chasing price?

The trading plan depended on entering from a marked area after price returned and confirmed rejection. When GBP/NZD moved directly toward the take-profit zone without giving the anticipated retest, the trader did not chase it. He remained interested only if price pulled back to the area of interest, because that could preserve the bearish structure and support another lower-low move.

Q: Why does the trader focus on percentages instead of dollars?

The trader argues that trading should be measured by percentage return because the percentage directly determines the resulting dollar amount. He compares the earlier move from $100 to $3,000, which he calls 3,000%, with a much larger-dollar objective from roughly $200,000 toward $500,000. In his view, the smaller account produced the more difficult percentage performance.

Q: What happened to the trading account during week 12?

According to the description, the account started the week with a balance of $201,940. A loss on USD/JPY then reduced the balance to $131,550. The trader continued and took a GBP/CHF position, which generated a stated profit of $332,588 and allowed him to close the week successfully while continuing the challenge toward $1,000,000.

Q: What risks are disclosed for forex trading?

The description states that foreign exchange trading is highly speculative and that currency prices may become extremely volatile. It warns that traders can lose some or all of their initial investment and that forex may not be appropriate for every investor. It also advises consulting a financial professional and says that past performance does not indicate future results.

Summary & Key Takeaways

• The trader began week 12 near $200,000 and monitored GBP/NZD, USD/JPY, and EUR/JPY. Rather than chasing moves that occurred without the desired retest, he waited for price to return to marked structures, psychological levels, and the EMA, then looked for lower-time-frame confirmation before considering an entry.

• USD/JPY became the preferred setup after approaching a daily area of interest around 144,000. The plan required a break and retest of 30-minute structure, creating a potential head-and-shoulders formation. EUR/JPY was avoided because USD/JPY still had upside room, showing how correlated JPY pairs informed the decision.

• The account started at $201,940, suffered a USD/JPY loss that reduced it to $131,550, and recovered through a profitable GBP/CHF trade worth $332,588. Throughout the challenge, the trader framed performance as a percentage game, arguing that percentage returns determine the resulting dollar amounts and provide a clearer comparison between trades.