Hello Traders, I’m Mani and I’m the writer of Trade 77 section, please follow me on twitter for further updates.
I want to have a short analysis on my favourite pair, CADJPY here.
Daily chart above just shows that price bounced off the daily trendline that is been in play from August.
But in the H4 chart there is another trendline indicates price is bouncing in a triangle right now.
I like the H4 trendline to be broken and I will go short there. 81.15 and 80.60 are good profit targets.
One of the readers just asked me how I exactly act with broken trendlines, I want to show you an example:
Assume that the trendline is broken and now there are two assumptions here; 1) A bearish candle closed at point A 2) A bearish candle close at point B
In these cases I will find best stop and profit targets for my trade and calculate the risk reward ratio for it.
I like to use a point beyond the broken trendline for my stop and using S/R levels for my profit target, for the first assumption from point A to a level beyond the trendline there is a small distance(near 30pips) and I want to use previous low at 81.14 for my first profit target, so for this example risk reward ratio is 1:1 and I’m comfortable with that.
For the second assumption price is already at my first profit target and distance between point B and somewhere beyond the trendline is big so I won’t trade it and wait for another retest of the trendline(Point C near 81.60) or a fibonacci retracement level for the last bearish move to go short with better Risk reward ratio.
So after a sharp move down, looking for 81.60(Point C) for going short is great.
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