Firstly, we paint the picture in an attempt to map potential market movement. Starting off with the Daily time frame, it is evident the market has been in a strong bullish trend since August 2022, now testing a strong resistance level with price hovering around December 2021 highs. During December 2022 we had a small pullback with the rejection of the resistance level highlighted, followed by the current bullish movement to retest the same resistance level. Analysing current market price we can anticipate a potential breakout above resistance to test September 2021 levels.
As seen in the consolidated area (Price within the rectangle highlighted) we have a slight higher high (HH), with a potential Higher Low (HL) to be formed around the 61.8% Retracement on the H1 time frame (Price 1.445-1.45). This will only be confirmed on bullish price action (PA) confirmation.
If however, price does not retest the 61.8% level and continues bullish momentum to break above Dec 21 resistance, we can drop to the H1 or M15 and seek a retest at support + bullish PA to enter the trade.
Contingency:
When planning trades it is important to map out a contingency plan if the market moves against your initial prediction - if price breaches and closes below 1.425 we can expect 1.40-1.38 to be met.
As seen in the consolidated area (Price within the rectangle highlighted) we have a slight higher high (HH), with a potential Higher Low (HL) to be formed around the 61.8% Retracement on the H1 time frame (Price 1.445-1.45). This will only be confirmed on bullish price action (PA) confirmation.
If however, price does not retest the 61.8% level and continues bullish momentum to break above Dec 21 resistance, we can drop to the H1 or M15 and seek a retest at support + bullish PA to enter the trade.
Contingency:
When planning trades it is important to map out a contingency plan if the market moves against your initial prediction - if price breaches and closes below 1.425 we can expect 1.40-1.38 to be met.