Kevin_Zhang
Short

USDSGD 4H Short Opportunity, 4.1 Risk to Reward

OANDA:USDSGD   U.S. Dollar / Singapore Dollar
Hi everyone,

USDSGD has just confirmed a bearish shark harmonic pattern on the 4-hour timeframe with a 0B retracement of 0.886.

The potential reversal zone (PRZ) is comprised of 2 ratios:
1.618 AB projection at 1.36041
0.886 0B retracement at 1.35979

Stop loss is set at the 1.13 0B projection, or 1.36327.
Take profit is set at two levels, management and final.
The management level is the 0.50 BC retracement, or 1.35347.
The final level is the 0.886 BC retracement, or 1.34859.

Overall risk to reward ratio for this trade is 4.1.

The terminal price bar has also formed, confirming all three ratios, and an evening star formation has formed in the PRZ on the 4-hour, acting as a confluence for a potential reversal.

Looking at major timeframe analysis, the 1-day timeframe shows a strong resistance key level formed since the 22nd of January at approximately 1.36130. The PRZ forms at this level, serving as a further confluence of a possible reversal.

RSI has also reached heavily overbought territory on the 4-hour timeframe at the terminal price bar.

In terms of fundamentals, the retail sales report will be coming out later today, and this is something that we need to keep our eyes on as it is a high impact news release. We are looking for a failure to meet the expected 0.4% (Investing.com) in order to go along with our short position. I am overall bearish on this report, as I believe that the trade war with China is something that should take effect on retail sales, with potentially higher costs of production of goods as a result of the tariffs placed on both sides. This lowered supply due to higher costs of production will then lead to an overall lower quantity demanded on these goods sold by retail stores.

As always, observe further price action to ensure whether or not a reversal may happen before entering a trade, and for this trade, make sure you are following retail sales too!

Thanks for reading,
Kevin
Trade active: Currently watching price's reaction to the data just released on retail sales. Better than expected data actually, so I'm watching whether the price will push upwards against our short. If it does, I'll take the opportunity to close in a profit. Otherwise, I'm staying in my position.
Trade active: Looking at the price action, it doesn't seem to be going against our short position despite the positive data. I will be maintaining my short position unless this changes, but in the meantime, the 1-hour has just developed a very large bearish long day candle.
Trade active: Upcoming inflation data in around 2 hours. Watching this carefully as it is a high impact news release. We are looking for some sort of inflation rate above consensus, as this may lead to a fall in the exchange rate, going with our short position.
Trade active: CPI data has been released, ended up being 0.1% lower than expected. Price is still falling regardless, and the 30-minute candlestick shows a bearish reaction to the report. I will, therefore, be continuing to hold my short position, as of course, price action hs already encompassed market reactions to the announcement.
Trade active: The first take profit level has been reached. I have moved stop loss to break-even level, and depending on price action from now, I may take a 50% profit.
Trade closed: target reached: Hi everyone,

Take profit was reached a few hours ago!

Thanks for reading everyone and good job for everyone that took the trade with me!
Kevin
Excellent analysis Kevin!
+1 Reply
Kevin_Zhang LewisGlasgow
@LewisGlasgow, Thanks!
Reply
makes sense , well done . We shall see .
+1 Reply
@Peterson, Thanks for reading! Do give me a follow if you want more analysis like this. :)
+1 Reply
Peterson Kevin_Zhang
@Kevin_Zhang, Will do .
Reply
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