The Pound was on a tear last week and the price gained rapidly over 700 pips in a 3 day period. All I can say about that is wow. I wish I would have had that trade going. Well say no more. The pair has stalled and it has shown some reversal candle signals and now we are waiting to go short and what is our price target? It is greater than 700 pips away, actually the target is 1000 pips. So you can be apart of this weeks most profitable traders if the trade works in our favor.
The Eur/Usd is in a formation that is comparable to this one and the Eur/Usd is challenging the 1.5000 level. I think we could see a fall in that pair as well but I am not going to trade it short due to the long term bullishness of the pair. Where as the Gbp/Jpy has a bearish trend. To learn much more about the Eur/Usd this week look at he Outlook at Forex Crunch.
4 hr chart *Click on the Chart to learn a trading system.
Look at chart you can see the strong up move and now there are 5 candles that have been stalled and at the same level. That indicates that the bulls have lost strength and the bears are trying to gain back control. It is short candle stick formation. So the way I will enter this trade is to watch the price drop lower and then enter short.
I will put my stop 7 pips above the high which is 148.38 now in order to gain some early profits before the price target of 139.91 I will open an additional order and put the target at +100 pips. Than move my stop to break even and wait for the other position to hit the target of 139.91
Now of course it might not go short. This could be a bull flag and we could have an upward breakout. However at that time I will cancel the sell orders and then enter a long strategy but until that point I am going with the short trade.
Please send your comments to share your views on this trade setup.
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