A protocol for overconfidence after a winning streak - Week 20 | Technical Analysis by Jasper Lawler

A Protocol for Overconfidence After a Winning Streak

Technical Analysis: Week 20, 2025

(EUR/USD | NZD/JPY | ETH/USD)

Your weekly market edge, from WeTrade x Trading Writers.

Weekly Thoughts

After a great March and April, the last couple of weeks have been tough.

Thats trading — which is why I have a protocol for these situations.

Directional, volatile markets suit momentum traders. Range-bound, volatile markets suit mean-reversion traders. Investors prefer lower volatility.

March and early April saw strong forex trends, but May has been more choppy — and thats difficult for trend-following momentum strategies like mine.

When the market aligns with your strategy, your trades work better. You go on a streak, feel confident, and it feels like everything clicks.

But…

“All good things must come to an end.”

Two key things usually end a streak:

• Overconfidence

• Changing market conditions

1. Overconfidence

After wins, you might loosen up — take trades that arent clean, size up, or skip confirmation.

Youre not reckless, just too comfortable. But in trading, comfort can be risky.

Subtle signs of overconfidence:

• Trading more often

• Increasing size

• Ignoring red flags

• Dismissing losses as flukes

The danger is this happens right as the market starts shifting…

2. Market Conditions Change

Markets evolve. What worked before might not work now. Trends stall, volatility fades, breakouts fail.

Often we only realise it after several losing trades.

So how do you deal with it？

Post-Winning Streak Protocol

Winning streaks cloud judgement. The solution？ A system to pause and reset.

Rule 1: “3-Win Pause”

After 3 consecutive wins, pause (e.g. 1 day for swing trades, 2 hours for day trades).

It helps reset emotionally and avoid euphoria-driven trades.

Rule 2: Post-Win Checklist

After X wins, complete a checklist before the next trade:

• Is this setup better than the last？

• Am I forcing a trade？

• Would I take it during a losing streak？

• Have conditions changed？

• Is my size aligned with my plan？

Print and tick it off before you click “Buy” or “Sell”.

Rule 3: Quality-Only Filter

Only take Grade A setups for the next 5 trades. No Bs or Cs.

This forces discipline and filters out streak-chasing.

Rule 4: Trade Size Cooldown

After a streak, reduce position size by 25% for your next two trades — regardless of the setup.

These rules may feel like they slow momentum, but that‘s the point. The biggest post-streak risk isn’t the market — its you.

The market doesn‘t care if you’re on a streak. But your behaviour changes. Guardrails help avoid costly reversals.

Setups & Signals

EUR/USD

Setup: Weekly bias is bullish. Watching for support on a retest of broken trendline resistance. A weekly close below the trendline would turn us neutral/bearish.

Signal: Daily chart is in a downtrend. A close back above 1.1265 could signal reversal.



NZD/JPY

Setup: Bearish under the 30-week moving average. The fakeout above 87 suggests a potential reversal. Strong bounce from 80 hints at a base — but this trade leans on a retest.

Signal: Daily chart is still trending up — not shorting yet. But a close under 85 or a failed retest at 87 could be our short trigger.



Ethereum (ETH/USD)

Setup: Bearish after rejection at the 30-week MA. But could flip bullish on a weekly close above it, given recent momentum.

Signal: Watch the triangle pattern on the daily chart. Trade the breakout — or be ready for a failed breakout reversal.



Thats how the team and I are reading things — what do you think？