Hi! Today we will share with you a trade idea (real setup we will execute on CRM)
First, let's understand what we can see here from a technical perspective.
a) The price was inside an expanding structure defined by the dynamic support-resistance trendline (white line) and the support level.
b) After a huge GAP that broke the expanding structure, we observed a 270 days consolidation (Flag Pattern).
c) In June, we saw the breakout of the Flag Pattern that tends to anticipate the beginning of a new movement once the price reaches a specific confirmation level (ABOVE "B")
d) Based on the previous items, we have defined pending orders above "B" and stop loss below "C" the key idea of these levels is that they are on price levels that provide good confirmations in term of broken levels. This type of approach increases the possibility of success.
e) What about the target? We have used a principle developed by Elliott, "New Impulses have correlations with the previous ones." In this case, using the previous impulse (Before the Flag Pattern), we can draw Fibonacci Extensions (nothing more than fixed proportions) to define 2 targets.
f) How long can it take this movement if everything goes as expected? Between 200 and 350 days.
g) How much do you risk in a setup like this? ALWAYS 1% OF our capital, never more. What does it mean? If you have a 10.000USD balance, you want to have a maximum loss of 100USD if the price reaches the stop loss.
Is this a forecast? Not at all; this is a scenario that our system tells us, "Here you have a 50% chance of having a winning setup, with a risk-reward ratio of 2.36" With that clear, this is a bet we will take 100 times. The most probable thing is that we will be wrong 50 times and right other 50. Our main goal is developing a positive expectancy over the long term. In other words, "an edge."
Thanks for reading!
First, let's understand what we can see here from a technical perspective.
a) The price was inside an expanding structure defined by the dynamic support-resistance trendline (white line) and the support level.
b) After a huge GAP that broke the expanding structure, we observed a 270 days consolidation (Flag Pattern).
c) In June, we saw the breakout of the Flag Pattern that tends to anticipate the beginning of a new movement once the price reaches a specific confirmation level (ABOVE "B")
d) Based on the previous items, we have defined pending orders above "B" and stop loss below "C" the key idea of these levels is that they are on price levels that provide good confirmations in term of broken levels. This type of approach increases the possibility of success.
e) What about the target? We have used a principle developed by Elliott, "New Impulses have correlations with the previous ones." In this case, using the previous impulse (Before the Flag Pattern), we can draw Fibonacci Extensions (nothing more than fixed proportions) to define 2 targets.
f) How long can it take this movement if everything goes as expected? Between 200 and 350 days.
g) How much do you risk in a setup like this? ALWAYS 1% OF our capital, never more. What does it mean? If you have a 10.000USD balance, you want to have a maximum loss of 100USD if the price reaches the stop loss.
Is this a forecast? Not at all; this is a scenario that our system tells us, "Here you have a 50% chance of having a winning setup, with a risk-reward ratio of 2.36" With that clear, this is a bet we will take 100 times. The most probable thing is that we will be wrong 50 times and right other 50. Our main goal is developing a positive expectancy over the long term. In other words, "an edge."
Thanks for reading!