You will notice the Fibonacci line I have Drawn from 2014 March High's to 2015 June's lows. This shows further , further surmounted by Zones 1, 2 and 3.
A trend based extension has been drawn using the second downward leg as its foundation. Of course the first downward leg is observed at the retest of the 0.9600 area on 2015 March 23.
How to trade this set up
A short position could be taken if Zone #2 offers significant price rejection from our recent full bodied daily candle close. This area has rejected price 4 times prior to our Full Bodied Candle Close. This could be the start of our third downward leg.
A long position could be taken, if we accumulate in Zone #2, moving the price above the 0.8720 zone, offering strong resistance and clear candle rejections for the bears. This would present an opportunity for a further corrective wave, which may drive price up to the 0.38, 0.5, 0.61 retracement lines.
A short term trader may look to short on the 0.8690 line with a TP at 0.8660, and a TP2 at 0.8630. Also to buy if we break above, buying on the 0.8715 line with a TP1 of 0.8740 and TP2 0.8780. Keep stop losses tight.
A Swing Trader may take a short opportunity around the 0.8690 line with a TP1 at 0.8560, TP2 at 0.84000 ( Zone #3) Also if price action breaks Zone #2, driving up to test our Fib Lines. At this point taking short positions on the Fib Lines and profiting from short term resistance. With TP1/2 midway down to the previous line, and Stop Losses shortly above the fib line.
A Position Trader may look to open a Short Position now. With TP1 on the 1 Extension and TP2 on the . Also If price clearly breaks through Zone #2, Open a long position while still holding your initial short. As price moves above Zone #2, be prepared to place short positions on fib lines 0.38 0.5 0.61, while holding the initial long as a hedge to balance your initial short, until returning down to the 0.8700 line with profits from fib line resistance. Then following through with the Short Plan.
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