Dear Traders,
On this eurusd 4 hour chart you see higher highs and lows from number 1 to 6.
The retracement to number 7 took out the swing low at number 5.
Therefore I am inclined to start to only take bearish trades.
If I am a bear then I want to trade only in direction of my bias.
I wait for a retracement against the trend and go short from this point.
A better risk reward will be provided where I may also have a tighter stop loss.
On the chart this point would be number 10.
If price goes there then I wait for a reversal pattern like an evening star, hanging man or bearish engulfing candle before taking a short trade.
The stop loss goes over the area of resistance and the target would be at number 11 at 1.10000.
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Thanks Nuno. I like the way you have set out your analysis here. I actually already have a short trade trigger at 1.1200 with SL @ 1.240, so close to what you are suggesting (I think). I have had that trade set up sitting there for a few days now, waiting patiently. Maybe a spike up on London open today, with a move down through todays session? My SL is quite tight but will see what happens. If nothing happens on todays session may delete the order for the weekend.
Thanks Nuno