An unfolding 'W Reversal'

CMC Markets

As you can see from an earlier post that was looking at the AUDUSD 'W Reversal' setup this is a formation that looks for a reversal of trend being set up based on a formation around the Bollinger Bands.  Naturally, like any trade setup this is not fool proof or universally successful but it can be worth taking a look at how they unfold so as to think about how the trade once in place should be managed.

Traders can look at these setups in a number of ways now when it comes to managing them. Some will look to trail stops based on the formation of a new trough or alternatively they may look toward using a trailing stop placed just under the low x days ago. I think one of the interesting things to take away from this is that FX trades needn't be the bastion of the ultra short term trader because as you can see the patience of the end of day trader can be rewarded too.

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