Monthly - Close to breaking below the low of 2017 and the round number 1.2000.
Weekly - Below the 200SMA and the 50SMA.
Daily - Below the 200SMA and the 50SMA.
Only a few weeks later, our bias has now changed from to with price now trading above the following levels:
Weekly - Above the 200SMA and the 50SMA.
Daily - Above the 200SMA and the 50SMA.
On the monthly chart, ideally we want to see price trading above the high of 2017 to confirm a bias but the high of 2017 is almost 1000 pips away from current price action. In this scenario, standing aside may mean missing out on 1000 pips of profit as there is room for a trend to develop. Instead, reducing your risk is a smarter option as the full criteria of what defines "an edge" has not been met.
Monday's price action saw encouraging moves with an end of day break AND close above the key resistance of October 2017. Price also attempted to break through 1.3000 but closed just below proving once again the importance of patience and knowing levels that price will react to. Today saw price react to resistance with the bears pushing price back below October's high forming a potential tram tracks formation.
Tram tracks are a reversal chart pattern that at resistance can cause trends to change direction.
This is an environment where you could place short trades and make profit but often picking tops and going against the trend is an inconsistent and difficult approach. It is guess work and simply placing short trades based on price being at resistance is not a trading style "with an edge".
The simpler approach, and one that has been proven to be a timeless approach, is to go in the direction of the bull trend. What we need to do here is to apply the all important skill of patience and wait for price to confirm a break and close above 1.3000 ideally in the form of a . This will offer a high probability long entry point that has the potential to return far more profit as well as opportunities to compound and compounding is the key to exponentially growing trading accounts.
As a reminder, levels are likely to get broken when price is in a trend.
Any comments or questions, do not hesitate to leave them below.