Two trade idea write ups in one night. That’s definitely a record for me.
Just take a look at the weekly candle on the EUR/CHF chart below:
Now if that isn’t a big honkin’ screaming bear, then I guess I’ve never seen one. Engulfs two prior candles and three-quarters of the one before that. And on top of that, it closed dead at the very bottom. So, I’m thinking to myself, I want to be short on this pair. Then the words of my mentor (Michael Storm) echoed in my mind “If you short the bottoms, I’m gonna slap you with a fish!”.
OK, this thing has to retrace some. So, looking at the daily chart below, I came up with a plan. This has just broken a daily up trend line. I’m going to wait for the pair to retrace back up to retest that trend line and I’ll get short on a daily sell signal there. That will keep the risk low and the reward high.
Here’s the plan: Watch for price action to reverse to the upside (it may go down a few more days first.) When price action retests the underside of the daily up trend line, watch for candlestick confirmation (a daily sell signal) and enter the trade short. The stop can be above the reversal figure or higher if there is good resistance in the form of a Fibonacci node or something. I’ll tweet the levels I’m using when we actually get up there. The targets can then be 1.3350 and 1.3090.
This should be a very high reward to risk ratio trade. We won’t know exactly where to put the stop until the entry appears, so be sure to do your risk calculations when you take the trade. No trade is a 100% sure thing, so be sure a stop loss will not exceed your risk parameters.
As I’ve said before, patience is the order of the day. Do NOT enter this until it’s ready. I will tweet details of this trade as it happens, so be sure to follow me on Twitter: @IsItCoffeeYet
May the pips be with you!
Secret Asian Man 😉
Winner’s Edge Trading, as seen on: