The Fibre had a bullish week, printing a green candle every day for a total gain of 190 pips. We have seen mixed data points for both the Eurozone and the US but the main fundamental driver is obviously next Thursday´s FOMC event (interest rate, policy statement and press conference) as market players are preparing their positions. Not only the Fibre was bullish, as the Greenback lost against most major currencies last week and the Dollar Index printed 4 red daily candles. Expectations for FOMC are mixed but -especially when taking the recent Chinese developments into account- hike expectations seem to fade.
On the technical side, this pair has been trading inside a bullish parallel channel on the daily timeframe since March and inside a bearish parallel channel on the hourly timeframe for 20 days. It touched the upper trend line of the bearish channel last Friday and is showing signs of reversal. There is a horizontal hourly S&R zone just above it as well as a key daily level and an ascending trend line that served as support before and should now act as resistance. On top of that we have regular bearish RSI divergence, pointing to underlying weakness and a possible change of direction and the oscillator was overbought when price touched the top of the bearish channel. That makes a total of 6 factors, all providing confluence for a short-term bias to the downside.
The stop would go above the daily level. TP1 lies just above an ascending support line. TP2 lies just above the lower trend line of the bearish channel, which intersects with the bottom of the bullish daily channel. See the chart for details. In terms of trade management, when TP1 is hit I would take profit on half of my position and roll my stop loss to breakeven, enjoying a risk free trade towards TP2. As always consult your own trading plan and apply the rules of entry, exit and risk management you normally use and are comfortable with.
There are 390+ pips to be made and the trade has a reward – risk ratio of 6!
P.S. I included a link to my last published trade idea for this pair, where both profit targets were hit for a total of 600 pips.
Thanks for sharing this set-up. I see the bearish channel you charted is narrower and lower though the target is similar :)
Lemnos
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Thanks Jasper ...
JazzForex
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You are welcome. But remember, always calm! and attention! when trading this pair :)
Lemnos
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Yes your right , calm and attention .. :) Fomc coming all world waiting
JazzForex
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Yes good point. If this trade would still be open at the time of FOMC (Thursday), I would close it beforehand, regardless of where price would be. Safety first!
hatimtai
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Hi jasper cool trading idea.
JazzForex
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Thanks, lets grab some pips :)
Trilo
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Hi nice analysis. This is my view on the pair.
JazzForex
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Hi, your chart looks clean in small form but when I enlarge it, it becomes cluttered and less clear. This may have something to do with how you publish it. I like that you have a plan for a breakout to either side. Thanks for sharing, the more views we have the better it is.
i agree