The Kumo Cloud: what was a lower support has now become an upper resistance. After initial break attempt below the cloud, price retested it again, but could not make a high above the horizontal reseitance and dipped below the Kumo again, and is about to cross below Kijun Sen. Yesterday's candle on the close was pretty bearish too. MACD and Slow Stoch both supports shorts. Daily DMI bearish too, and ADX shows bearish momentum slowly picking up. What is also very interesting that if things go well, it will develop a perfect symmetrical Head and Shoulders pattern.
4 Hrs Ichimoku setup is bearish as well. We can start building short positions again on any corrective peaks, between 1,5140 - 1,5240. Initial stop at 1,5265. First target: 1,4900-1,4930. Second target is 1,4425 if bearish trend develops and the main trendline breaks as well later.
Alternative trade idea: Given the H&S pattern, it should produce a serious trend break within 1 month from now. For this reason I recommend to buy appr. 2 months maturity Put options with 1,5100 Strike. Mid vol is quite low, which makes it attractive. At the moment OTC option is offered somewhere around 127 - 133 pips.
Comments
Kumowizard
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Second half of outright shorts cut at 1,5010 (trailing stop) after bad CAD data. Now watching how high it can retrace.
Kumowizard
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This trade worked well, though I had to sweat a bit yesterday when it traded up above 1,5230 for a second. Anyway, that was a good opp. to sell on a bit more (it was not very prudent, but I made some on that too :-) )
Here I am cautious a bit, as we reach next support zone and the trend line on daily, while on lower 4 Hrs time frame it has become short term oversold. I decided to cut half of my outright shorts. Put options are still fine to hold, while we watch if the H&S pattern will finally get confirmation.