Matt Simpson, CFTe, MSTA
CityIndex
If you like your trades to have pretty trends and precise entry points then look away now, this is not for you.
At this stage I am assuming the 1.03 top in April to be a significant swing high and for the 0.968 swing low (blue arrow) to be an interim bottom / correction. We can see that last week's Bearish Engulfing candle was below the 0.995-98 resistance zone to suggest we may have seen the end of this correction, so I am now seeking bearish setups on D1 in line with tis anticipated downwards move.
Price has retraced 50% of the move from the Bearish Engulfing on W1, with price action suggesting this is indeed a correction. 0.988 is a pivotal level of resistance which may provide an area to tuck a stop behind but I have allowed plenty of room for this resistance zone so also included the 62.8% retrace as a potential level for stop placement.
At current level, even if we placed a stop above the 61.8% level to target the 0.975 lows we can still achieve a minimum 2:1 reward/risk ratio.
As stated, this is not a particularly pretty trade but one we can happily set and forget, with a relatively loose stop and allow the market to do its thing. With any luck it will be on our side.
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