It has been a while since I posted a Breakout Trading Plan on FX, so this one is for all you "Serial Money-Changers" out there.
1 Looking at the Hourly Chart of AUDJPY , we note a Major pattern forming, between 2015-05-10 to 2015-06-26, with a Breakout line at 94.65.
Subsequently a Reversal Breakout of this Major occurred, followed up by 2 Continuation Breakouts as illustrated.
Traders may also recognize that the 3 breakouts is in the form of an 5-Wave pattern.
Do note that this series of Breakouts has brought price to as low as 89.50
These 3 Breakouts has effectively established that the dominant hourly Trend is .
2 After the 3 breakouts mentioned in 1, price has retraced strongly from 89.50, forming a Minor Triple Top Pattern.
Interestingly, the breakout of the Minor Triple Top has also brought price to 89.50, before we observe sharp support buying.
3 Currently, AUDJPY is working out a retracement and from the RSI (14), there is an indication the retracement might be ending soon, for a continuation move lower.
Lets take a closer look at the RSI(14)>
First we look at point 3a, where we note sharp AUDJPY peak, at 91.70s, corresponding to an RSI top against 60.00.
Next we look at point 3b, we observe another sharp peak, at 90.80s, also corresponding to another RSI against 60.00.
So we have 2 tops at the same levels (60.00) but the Price is Lower at 3b (90.80), versus 3a (91.70).
This indicates that price is healthily and is likely to try another swing downwards, once the Market has recognized the retracement move has ended.
Therefore based on points 1, 2, and especially 3, we project that price is likely to try another down move, towards 89.50.
This move is a minor continuation move of the Triple Top Patten in 2.
Enter Short When both X and Y are TRUE
X) AUDJPY can convincingly do an Hourly close below 90.25
Y) Entry price is not higher than 90.25
(For X, please use Tradingview Hourly Chart, for consistency's sake)
Initially we can place the Stop Loss above 90.50.
If price manages to trade towards 90.00 after entry, we can consider shifting the stop loss to either 90.25 or breakeven.
Shifting of Stop Loss is essentially a move to protect your Risk Capital.
After all there is no shortage of trading opportunites but capital is always in limited supply.
A clean breakout move should run and hit the intended profit within a short period of time.
Hence, if the price does a slow move and cannot reach the target in time, it is a sign of a weakness and we should exit without hesistation.
The main profit target is at 89.50, where price found sharp buying twice.
However, we can consider taking a small partial profit (say about 20%) when price reaches 90.00
This is because 90.00 is a round figure support and there maybe some support buying taking some momentum out of the move.
There is always the risk of a false breakout, therefore please do adequate position sizing.
Also there is also the risk of fundamental data releases, which can drive prices to behave "abnormally".
The Factory Calendar is a pretty good reference.
Factory Calendar> http://www.forexfactory.com/calendar.php
Video on Double Top> https://www.youtube.com/watch?gl=SG&hl=en-GB&v=t6ldRw_k4ss
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Trading View: BreakOutArtist
Thanks for the compliment.
Yes, at lower time frame, say 5 Min, I think you can identify a support level at 90.30 so by all means please try and you can perhaps learn something from it.
I also note yet another support level nearby at 90.25.
There is slight chance, that price breaks 90.30 and bounce up from 90.25.
Therefore I will prefer to wait and let price breaks both 90.30 and 90.25, before entering ("kia see" in a sense).
This way, we have a higher probability of a profitable trade, at the expense of a bit of profit.
In this case I am willing to give up a bit of profit, in order to be more certain of a profitable trade.
Just to clarify, I am not saying it is a bad idea to enter 90.25. I think you should try it and see what happens, so you can learn how price trades when there are 2 support lines nearby each other.
I see you are still up at this hour, perhaps following the FOMC?
Keep up the Hard work!