Matt Simpson, CFTe, MSTA
CityIndex
A follow-up to the recent trade idea where we can now create a more detailed plan to seek a bullish setup.
Price has drifted lower in a corrective fashion and now the pair is firmly in my hotlist in order to take a bullish trade. H4 is on par to produce a Dark Cloud cover which may help create a deeper pullback towards the trendline where we will (hopefully) build a base.
Whilst the trendline has not yet been fully established with a 3rd touch we can begin to look for bullish setups above this anticipated trendline, with a view to place a stop below it.
My preferred approach here is to place a buy-limit somewhere within the green buy zone. If triggered (and successful) it can transform an ordinary 2:1 reward/risk trade into a 3 or 4:1 reward to risk trade. Of course the downside with trying to be so elegant with an entry is you risk the chances of not getting filled, or getting filled and being stopped out anyway. This is where you'd need to experiment so you are happy that the trade aligns with your own risk profile.
Another set-and-forget approach is to set a buy-stop above the current swing high to assume the resumption of the bullish move. This would require a much looser stop if you tuck it behind the trendline, but an alternative approach is for a tighter stop below the 107.5 swing low. Again this is for you to experiment with.
A 3rd approach (and one I use occasionally) is to buy live at market and place a stop, so you can then walk away knowing you have been filled and at what price you will be stopped out if the trade reverses.
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.