$EURUSD appears to be the gift hat keeps on giving. While we appear to be in consolidation, we can use a micro trend to get a nice 2:1 risk reward opportunity.
Identify & Predict
We have a micro bullish trend starting at 1.2153, and then price pushes up to 1.2364 before retracing to 1.2270. Price then extends to 1.2445 before beginning a retracement. I am looking for a 61.8% retracement before getting involved in this micro trend to give me that 2 times risk profile on the trade. I am forecasting targets at the top of the daily range at 1.2555. You could also take off half the position at 1.2447 if you are following a two-target strategy, but for the one in, one out style of trade I would stick with the top of the daily range.
Execution Plan
I am going to wait until price retraces below 1.2342. By that, I mean I need to see a bar that closes below that level. Once that happens, I will be looking for a bullish engulfing bar to signal that the market is likely to start moving up. I don't necessarily need RSI to be oversold, but it's nice to have that extra confirmation. Once my engulfing bar closes, I will be entering long at market.
Stops and Targets
My stop loss will be going at 1.2249. I derived this from a 113% Fibonacci inversion (a Fibonacci extension drawn from a swing high to a swing low in a bullish trade setup) which placed me at 1.2250. However, I do not place stops on psychological numbers like that so I moved it down 1 pip to 1.2249.
My target is at 1.2555 which is the high of the range on the daily chart. Once price reaches this level, we could see either a bounce or a breakout. If it is a bounce, exiting here maximizes profit. If it is a breakout, I leave money on the table. I am a bit more conservative so I would before to get flat and see what happens, but you could make an argument for staying in the trade. I won't be, but you can :)
Identify & Predict
We have a micro bullish trend starting at 1.2153, and then price pushes up to 1.2364 before retracing to 1.2270. Price then extends to 1.2445 before beginning a retracement. I am looking for a 61.8% retracement before getting involved in this micro trend to give me that 2 times risk profile on the trade. I am forecasting targets at the top of the daily range at 1.2555. You could also take off half the position at 1.2447 if you are following a two-target strategy, but for the one in, one out style of trade I would stick with the top of the daily range.
Execution Plan
I am going to wait until price retraces below 1.2342. By that, I mean I need to see a bar that closes below that level. Once that happens, I will be looking for a bullish engulfing bar to signal that the market is likely to start moving up. I don't necessarily need RSI to be oversold, but it's nice to have that extra confirmation. Once my engulfing bar closes, I will be entering long at market.
Stops and Targets
My stop loss will be going at 1.2249. I derived this from a 113% Fibonacci inversion (a Fibonacci extension drawn from a swing high to a swing low in a bullish trade setup) which placed me at 1.2250. However, I do not place stops on psychological numbers like that so I moved it down 1 pip to 1.2249.
My target is at 1.2555 which is the high of the range on the daily chart. Once price reaches this level, we could see either a bounce or a breakout. If it is a bounce, exiting here maximizes profit. If it is a breakout, I leave money on the table. I am a bit more conservative so I would before to get flat and see what happens, but you could make an argument for staying in the trade. I won't be, but you can :)
Comment:
The setup is still valid - I am just waiting for a break and close about the high of the previous candle stick to enter my position.