is in the midst of a corrective bull
move following the big impulsive bear
move. Therefore, our plan should be to look for a short entry to rejoin the overall trend in time for another bearish
impulsive sequence. Looking at current price action
, we can see the 50% retrace of the latest impulsive move has held up, this coupled with an overall descending triangle
formation and a well defined support and resistance
zone are enough to make us interested sellers. A break of the RSI
ascending trend-line and price ascending trend-line will be strong confirmation and a good reason to move the stop to break-even. Our basic trading plan is outlined on the chart: entry short at 1.2575, with a 45 pip stop at 1.2610, and a 175 pip profit target at 1.2400. This simple trade has a risk:reward ratio of close to 4 to 1. The alternate option of trailing our stop is very viable with this type of trade as it is a clear with-the-trend trade.