formulate a trade idea – your analysis, a likely possibility // set-up play out
A cup and handle pattern might be in play. Any way, price bounced off an area of support (former break out point) and then a coil succeeded the bounce. There is also a trend line starting from the flash crash candle connecting all the lows for an added confluence.
Fun fact: The 50 & 150 SMA has crossed upwards on the daily after the rally that made up the cup.
trigger for the mentioned idea, what you want to see: clean impulse + choppy correction
Not the best trigger with those 2 candles, but still valid according to the plan
TREND on entry timeframe & 4H chart, determined by SMA if subjective (✓) 50&150SMA
IMPULSE registering ADX>25 (✓) ADX27
COIL structure clear formation relative to prior impulse (✓)
Flag // Rectangle // Pennant // Wedge // Triangle // Diamond (adjustment of the coil lines and this could be an expanding triangle)
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 2R
Entry: 1.793 | Stop loss: 1.753 (-405 points) | Take Profit: 1.879 (+855 points)
If running >1R + swing established, risk halved
If 20% left to take profit, shift to break even
If strong momentum + space to run + aligned with long term view, extend take profit and use trailing stop
Possible sell structure? Perhaps the weak impulse could’ve been a reason to avoid the trade. But it registered ADX>25 and no rules were broken.
Oh well, gotta take the L on this one.