Fibonacci levels are laid out from the most recent swing low of the previous move to the upside to the swing high. From where the swing high is located we can see this market moved to the downside and reached the 61.8% Fibonacci level to then reverse and continue a trend to the upside. Price then retraced back towards the 61.8% level and again bounced off this level. I also identified a head and shoulders
pattern on the chart which indicates to me that there will be a trend reversal, currently price is below both moving averages therefore price is moving on the downside, I expect price to reverse in and move in an uptrend. Within the head and shoulders
pattern, I have also identified a trend channel where price is bouncing off both trend lines
. We see a break out of the channel before reversing back down into the channel and price kept bouncing off the channel. The market has now currently broke out of the channel and Is now in the 61.8% level, RSI
is around the 37 level which also indicates to us that sellers are currently in control, but there is a strong possibility that the market is going to see a reversal. I expect the market to now move in an uptrend. I will be placing this trade with a 2:1 RISK / REWARD RATIO, and aim to hit a target of the swing high.
Please let me know what you guys think of this set-up :)