formulate a trade idea – your analysis, a likely possibility // set-up play out
On the daily chart price has broke out of the downtrend after meeting a weekly support. Broke out and retested the 150SMA first time, and now second time. Bounced off this key level (0.618) with a bullish candle after rejecting lower prices. Additional confluences: Stochastic burst out of oversold zone and this steep pullback could be Wave 4 since the Wave 2 consolidation was flat. Anticipating Wave 5.
trigger for the mentioned idea, what you want to see: clean impulse + choppy correction
Former resistance turned support + price has completed the AB=CD on the pullback. The swing lows also align very nicely.
TREND on entry timeframe & 4H chart, determined by SMA if subjective (✓)
IMPULSE registering ADX>25 (✓) ADX40 on daily
COIL structure clear formation relative to prior impulse (✓)
Flag (Steep) // Rectangle // Pennant // Wedge // Triangle // Diamond
Fibonacci 50%–61.8% // S&R Level // Trend Line // Moving Average
Simple // ABC // ABCDE // Extended Combo
Entry @ Break of Structure // Area of Value + Candlesticks
Stop Loss @ +1ATR away from last wick // Before Impulse Start
Take Profit @ Length of Prior Impulse // Next Area of Value
1% capital risked for potentially 2.7R
Entry: 1.545 | Stop loss: 1.518 (-270 points) | Take Profit: 1.618 (+730 points)
If running >1R + swing established, risk halved
If 20% left to take profit, shift to break even Massive pinbar (price rejection) + upward channel line + weakening bullish momentum (could be the retracement due on the Euro or the third channel line with formation of head and shoulders) = downside needs to be covered and price should not be retracing back to trade entry point if it still has a strong possibility of reaching take profit target
Where do I think price is gonna go? I have absolutely no idea. Therefore, just manage risk and keep the trade alive as long as idea is still valid. Trail stop loss if a sell setup forms, give a chance for the structure to fail.
If strong momentum + space to run + aligned with long term view, extend take profit and use trailing stop
Manual. Reason: Bullish momentum faded away. Idea is still valid… But such a bearish impulse and price unable to recover? Almost a sell setup. Triangle has formed, signalling an even match up between bull and bears. Exiting trade to cover for T14 loss. Result: 0.85R
This is the analysis. A 3-wave structure within a HTF consolidation instead of the 5-wave anticipation as mentioned above. If it does drop, it would be a great place for a buy.