what could've been a good trade failed. Image below describes how it happened.
# stage 1
EU had 40 pip run-up followed by 40 pip fall, which led to this
- EU will fall off
- 40 pip green followed by 40 pip red -> a reversal pattern
- we could see reverse on 1D
- EU 5mio short, SL 40 -> 20% risk
=> expected EU fall out, went all in max size translating to 20% risk (braking rule of sane risk management, aka SRM)
# stage 2
- after 20 pip MFE
- and 10 pip retracement on 1H candle
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