Easy Order Block Setup On EUR/USD – Major Bias Still Short
I see a possible Order block short setup on EUR/USD in the 4-Hour Chart.
Last week, I suggested that the major 4-hour support has been tapped multiple times. We were speaking about how lines of support eventually break if the price keeps tapping the same price point.
Well, we have seen a breakthrough. Now, we need to be careful of false breakouts.
We have a descending trend line acting as resistance and we have seen multiple order blocks succeed in the past few weeks for EUR/USD.
Taking all this into consideration as well as the fact that our bias is still bearish, we have reasons to look for further short entries.
I have highlighted the order block zone in yellow. I always look for the most recent bullish candle before the price impulsively breaks to the downside. We can see that this particular order block entry lines up nicely with the descending trend line.
We must beware of false breakouts. As we are so close to broken support, I would not risk my usual one percent or so on this setup. I would risk half of that. I would grade this particular setup as a grade B setup. We have all our requirements, rules and criteria met. However, because we are so close to broken major support and we do have strong bullish volume, this concerns me. So whilst I would trade this just like any other order block, my lot size would be smaller and my risk would be less.
I am waiting for the price to push back up into the yellow order block zone. I always aim for a minimum risk to reward of one to two, or one to three. My stop loss would be placed a few pips above the high of the order block zone. My entry would be somewhere in the middle of the order block zone. My target would be the previous price structure which is the broken support level at the 0.991 price point.
This is just one possible setup out of many. If this setup hits my stop loss, I'm perfectly ok with that. I simply move on to the next one. Remember, trading is a game of probabilities. We don’t know which way the dice are going to roll. However, if we know that if our edge wins a certain amount of times out of a hundred, then we know that eventually, sooner or later, we will come out on top and in the green.
I hope you all have a great Wednesday.
The Vortex Trader
Last week, I suggested that the major 4-hour support has been tapped multiple times. We were speaking about how lines of support eventually break if the price keeps tapping the same price point.
Well, we have seen a breakthrough. Now, we need to be careful of false breakouts.
We have a descending trend line acting as resistance and we have seen multiple order blocks succeed in the past few weeks for EUR/USD.
Taking all this into consideration as well as the fact that our bias is still bearish, we have reasons to look for further short entries.
I have highlighted the order block zone in yellow. I always look for the most recent bullish candle before the price impulsively breaks to the downside. We can see that this particular order block entry lines up nicely with the descending trend line.
We must beware of false breakouts. As we are so close to broken support, I would not risk my usual one percent or so on this setup. I would risk half of that. I would grade this particular setup as a grade B setup. We have all our requirements, rules and criteria met. However, because we are so close to broken major support and we do have strong bullish volume, this concerns me. So whilst I would trade this just like any other order block, my lot size would be smaller and my risk would be less.
I am waiting for the price to push back up into the yellow order block zone. I always aim for a minimum risk to reward of one to two, or one to three. My stop loss would be placed a few pips above the high of the order block zone. My entry would be somewhere in the middle of the order block zone. My target would be the previous price structure which is the broken support level at the 0.991 price point.
This is just one possible setup out of many. If this setup hits my stop loss, I'm perfectly ok with that. I simply move on to the next one. Remember, trading is a game of probabilities. We don’t know which way the dice are going to roll. However, if we know that if our edge wins a certain amount of times out of a hundred, then we know that eventually, sooner or later, we will come out on top and in the green.
I hope you all have a great Wednesday.
The Vortex Trader