This is a very simple price action based long trade setup on FX:AUDNZD . After reading the price chart, we see the market is in trending mode and currently we are seeing a retracement back into previous (HL). With market coming closer to the previous higher low (HL), this reduces our risk on this trade quiet significantly. Right now we are about finish the correction, which completes right within the Fibs cluster zone (green box). I was able to come up with this cluster zone by drawing out Fibonacci retracements, extensions, and inversions from previous market swings.
The stop loss has to go below the previous high low but it also has to be far enough in order to give the trade some breathing room and at the same time not taking huge amount of risk. Taking into account the (ATR= 14 period) based on the 4 hour time frame, this pair moves roughly about 45 pips on average. Thus adding few extra pips to the ATR, we get our stop loss level for this setup at 1.0665 level. Both targets for this setup are structure based, meaning looking back at previous price level that may have acted as strong resistance levels. Thus I saw two clear resistance levels at which it seems reasonable to take some profit off the table, one is at 1.08219 level and the other is at 1.08688 level. See the chart above for more details.
That’s all I would like to cover for this trade setup. If you guys have any questions or comments about this trade, feel free to write in the comment section located under this description section. Hit that thumbs up button (top left corner of this chart) if you like the idea. Thank you everyone for all the SUPPORT that you have given me so far, I truly appreciate it. All The Best :)
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