This printing of lower highs and higher lows is commonly associated with a directionless market where neither the bulls nor the bears are in control. The Greece situation and the diverging economies as well as diverging monetary policies by the FED and ECB keep me overall on this pair, but I have to accept that there has been no clear direction on the 4H timeframe for several weeks.
Breakouts could generally happen 3/4 of the way towards the apex, which means it could be due. The regular divergence indicates underlying weakness and possible trend change towards downtrend. I am therefore watching for a breakout to the downside. For me to enter short, the following steps need to occur: (1) price breaks below and closes below the lower , (2) price retraces back up, to test this and (3) price stalls, stops and reverses.
In terms of trade management, I would make TP1 equal to my double my traderisk (with SL above the lower and the horizontal resistance at 1.1360), and TP2 would be the support at 1.1150. As soon as TP1 would be hit, I would move the SL manually to break even enjoying a risk free trade hunting for TP2. If TP2 would be hit, we would have a pattern, but that would be for another trade setup.
There are 188 pips to be made (if this pair follows all the steps in the script) and the trade has a reward – risk ratio of 5.7!
UPDATE: Today´s breakout proved to be a fakeout. I will continue to observe this triangle for potential new breakouts.
UPDATE 2: I entered the trade after a new breakout of the price pattern occurred, followed by a retest of the lower and a reversal. Yesterday TP1 was missed by 9 pips. But the weakening of the USD continued this morning and after a sudden spike the price came back in the triangle and the trade was invalidated. That’s why we have a SL in place, to minimize the loss.
POSTSCRIPT: Those who follow the chat room know that I revenge traded this one, now with the SL above the triangle. I took it off last night after a 151-pip move. All's well that ends well!