UPDATE #3: Hello traders, I am still in this trade with currently in a drawdown, which is not surprising because I accepted the risk on this trade BEFORE getting into it. Anyways, I have decided to close half of my position just before the 62.00 even handle. I am doing this because we can see a really good formed at the 62 level looking left, which haven't been tested yet. So, I do expect the market to react from that level. The other half of my position will be closed 395 pips away from the entry price!!
UPDATE #2: We have gotten a good retest of the triangle, I have entered into buying position at 61.06.
UPDATE #1: 4 hour candle closed above the triangle. Looking for a good retest of the triangle before opening buying position.
Here we have a really good symmetrical triangle, which is created when price action is making Lower Highs (LH) and Higher Lows (HL). This shows that neither buyers or seller are able to push the market into a clear trend, this is also known as consolidation (price moving in horizontal direction). We know that eventually there will be a breakout in either direction, we do not know in which direction the market will breakout BUT we do know that it is going to BREAKOUT.
So how can we take advantage of this critical piece of information?
I have labelled 2 options for both buying and selling positions, on the chart above. You can choose which ever option you like, based on your personal trading style. I will be most likely taking the conservative approach if trading with larger position size. I will only trade with smaller position size, when taking the aggressive approach.
Where to exist and take profit?
For symmetrical triangles the distance between the 2 starting points of the triangle is taken as the target level. In this setup, the total distance between HL and LH is about 395 pips. Therefore, which ever option you choose to trade, the target level for your position will be 395 pips away from your entry price. The target levels labelled on the chart above could change based on where we get the breakout and also on which option you choose to trade.
Where to place stop loss?
After the price breaks out of the triangle, the stop loss can be either placed couple of pips above the highs (for selling position) or lows (for buying position) of the breakout candle. The other option is to place the stop loss on the other side of the triangle. So if we get breakout to the downside, then stop loss will be placed above the AB . If breakout occurs to the upside, then stop loss will be placed below the CB . The first option includes risking fewer pips but more likely to get stopped out, while the second option includes risking more pips but it is much safer. Again, choose which ever option you like based on your trading style and on your account size.
I believe I have covered everything that was important and please let me know, in the comment section below, what else I could have included in my chart and in the description section to make things more clear. This will allow me to publish future ideas with more important details. Also, I would really appreciate it if you could point out any mistakes that I have made in my chart or the description section. Thank You.
Please feel free to AGREE or DISAGREE with this idea. Hit that thumbs up button (top left corner of this chart) if you like the idea. Good Luck :)