The Ninja has been trading inside a for 12 days on the hourly timeframe and formed a after the Fridays NFP-rally. In doing so, it broke above and closed above the psychologically significant 125-handle. Pennants are a common and reliable continuation pattern and as such this one could serve as a conservative entry for the continuation of the established trend. The period of consolidation inside the gave the oversold some relief after the rally, though it remains oversold on the daily. Its possible the pair has gathered enough steam to continue in the established trend direction and may eventually break out of the channel. It’s in territory both fundamentally and technically. As is usually the case, the was preceded by a sharp rally that is almost straight-line-like, called the pole. Measuring this pole and expanding it upwards from the potential breakout point is a way to estimate the projected price movement in case of a break to the upside.
This upside potential coincides with a daily structure S / R level from 2002. If the pair would break to the upside of the , I would go long. The stop goes below the apex of the . TP1 = 126.27 and TP2 = 126.78, which are both daily levels. In terms of trade management, when TP1 is hit I would take profit on half of my position and roll my stop loss to breakeven, enjoying a risk free trade towards TP2.
There are 120 pips to be made (if this pair follows the script) and the trade has a reward – risk ratio of 5.0!