Hi Traders! The market is in an overall Uptrend. Here is our multiple timeframe analysis for this pair.
Let's start with the Weekly:
As you can see we are here moving in an ascending Parallel Channel. In addition, there are two important key Levels. Firstly the Supprot at 1.20. Secondly the Resistance at 1.34, where the market is at the moment. The pink dotted line is a former Trendline which is now unvalid. It just shows the current bullish power for GBP.
Now we continue with the Daily:
As said before, the market is at Resistance. Additionally it is moving in a Wedge. Because the wedge has a steep Trendline, we expect the market to break out of it before it makes its next upturn. The main target is the lower Trendline of the weekly Parallel Channel. After that, the expection is a Trend Continuation, because of its bullish power.
Going on to the H4:
Here you can see the Daily Wedge again. Furthermore, there are a Support and Resistance Levels here. It is possible, that the market starts to range.
Lastly, let's take a look to the Entry Timeframe:
Now we are going to analyse the Entry with this template:
A: The overall Trend is an Uptrend, but it needs a correction to move further. The Trend of the Entry Timeframe is sidewards. That's why it is legit to short the market.
B: We are doing our MTFA at this particular moment.
C: Never break your rules.
1.: The structure Levels are:
The upper Resistance
The two dotted Support Levels
The lower Trendline of the Daily Wedge
The Neckline
2.: Usual Behavior after Head and Shoulders Pattern: - Break of Neckline - (Temporary) Trend Change
3.: Entry Trigger is the Break of Neckline.
4. & 5.: SL is 26 pips above the Neckline and the TP at the lower Support.
6. & 7. & 8.: Let's put it into the Position Size Calculator and wait for the Break after the left Shoulder!
We recommend to trade the Break with bearish Momentum or a Retest!
Thanks and successful Trading :)!
Comment
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Here is the RED BOX with the Trade Details for you ;)
Hmmm... Ok you're saying Entry at 1.34162, but what if it goes 1st to that level before going up to create the potential right shoulder so then what, enter it right away?
swissmoneymakers
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@Helena_FX Thanks for the question! Here, the plan was to trade the H&S Pattern, that’s why we’re waiting for the right shoulder to come up. But it is also possible to trade directly the Breakout of the Support. Then it is a Breakout Trading Setup. So, which way you want to trade (H&S or BrOut) will result a correction move.
We only decided for the H&S, because we still see some bullish power. If this bit of power is used for the right shoulder, we sell the market underneath the Neckline. If there wouldn’t be bullish power, we would’ve probably chosen the BrOut Trigger.
It‘s a fine difference between H&S Pattern and Breakout Setup. We really appreciate that question and we think, that you are able to get even more successful, because you read the article carefully and asked the right question. Many don’t even ask.
We wish you and all of the Readers a successful never-ending Trading Journey!
Helena_FX
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@swissmoneymakers, Thanks for the reply and your detailed explanation. Yes, it does make sense, but in case of the trend going back up to create the potential right shoulder wouldn't be better and more profitable to enter the Sell by going to the smaller timeframes such as 5m or 15m and enter the Sell order in case of a signal such as a hammer/inverted hammer, bearish engulfing...etc, wouldn't that be a better option? Thank you.
P.S. I love the way you put it :) "never-ending Trading Journey" :)
swissmoneymakers
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@Helena_FX, If we understood your idea correctly, you mean this:
This is the 15-min TF and here we wait for a candlestick pattern to form.
By thinking precisely about your suggestion, we really think that this is an even better Entry point! Because we are waiting for the last bullish push to form the right Shoulder and then we could directly sell it at the Resistance. We can use candlestick patterns or a Fakeout Setup as well!
Thanks for this suggestion. We never end learning, especially not in Trading. That's just how the "never-ending Trading Journey" is like :)
Have a nice day!
Helena_FX
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@swissmoneymakers, Yes you understood me correctly :) This is now I intend to trade it. But let's wait and see :)
Good luck.
Helena_FX
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@Helena_FX, Them news of Boris Johnson might be pulling out of the deal played out a big role, but the news was only reported by the Sun newspaper. Hmm interesting, who knows positive news for a deal will push the pound back up. I think for today is probably over with the sales...