(Click on image above to enlarge it.)
Here at the daily level, we've intentionally removed all of the Ocean tools except the STX stop. The sub-graph shown below the daily bars is a weekly bar chart, with the magenta arrow located on the week ending 7/25. This was the week described previously that generated the long entry from the weekly Zero Hit, so the application of a stop for the long trade should begin here.
Note that as the entry occurred, prices immediately cut above the STX stop (labeled as #1 on the price bars) in conjunction with the entry signal predicated on the higher time frame weekly setup. This is exactly what should happen as a long entry occurs - prices move above the stop, so that it tracks below the price action as an exit for long trade. Over the next 15 days or so, as prices advance rapidly, the STX stop accelerates, particularly in early August, as the pace of the advance intensifies.
Note the location labeled 8/8 on the weekly sub-graph - this is the place on the weekly chart analysis where we identified that prices had exceeded their upper SD bands of the Ocean moving average, and where NMC had violated its upper SD as well. It was this critical information concerning the overbought condition of the market that drove us down to this lower time frame looking for the STX stop to have adapted to the market's advance.
Here we see that the STX has responded very nicely to the strong advance, accelerating so that it tracks just below the lows during the vertical ascent. Then as prices top out the beginning of the following week, STX goes "flat" in harmony with price action until the stop is hit on 8/14/or 8/15 (shown with magenta arrows on prices).
If a simple violation of the stop was used as the exit, it occurred on Thursday 8/14, while a "close only" stop requirement wasn't triggered until Friday 8/15. Note that the week ending 8/15 was the high week for the initial move (see weekly chart) that then resulted in a 6-week near sideways consolidation of the breakout before the next powerful advancing leg got underway. This could have been anticipated by the weekly overbought condition, and is why we came down to this daily chart to finesse the exit using the STX .
As you can see, the STX has performed very well, allowing us to capture almost all of the advance, and taking us out of the trade just as the market goes into a rather prolonged sideways consolidation phase where our capital could be better employed elsewhere. Let's now go back to the USDCAD Weekly STX chart and look at the next buy setup and entry to assess how the STX stop performed there:
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