Price action is confined within a narrow descending channel on the small time frames
Looking for price to reach local support @ 4120
Depending on volume this could be a great set up to enter a long position due to Inverse head and shoulders pattern in play on the 1HR chart ( Pattern can be seen on all time frames from 15m to 4hr.
Stop loss can be placed just under the next local support @ 4040
The shoulder on the right hand side had a wick down to about 4070 so this will be a tight stop with a very high R/R
However i will look at exiting the trade once the R/R reaches around the 2 area as i am risk averse and would prefer taking profit instead of giving back potential earnings to the market.
The next target would be around 4500 Resistance level. I will look at taking profits there and if a successful retest occurs re entering another long position up to target of around 5500.
Weve expereinced a double bottom and volatility has been on the rise as well as this inverse head and shoulders pattern i believe in the short term the bulls have control if we can reach 5500 i wouldnt be surprised if that begins another wave of downward price action to trap people in their longs and let the bears come back into control.
Either way it doesnt bother me i am not biased on either side i am just trading as the market tells me i should be.
Looking for price to reach local support @ 4120
Depending on volume this could be a great set up to enter a long position due to Inverse head and shoulders pattern in play on the 1HR chart ( Pattern can be seen on all time frames from 15m to 4hr.
Stop loss can be placed just under the next local support @ 4040
The shoulder on the right hand side had a wick down to about 4070 so this will be a tight stop with a very high R/R
However i will look at exiting the trade once the R/R reaches around the 2 area as i am risk averse and would prefer taking profit instead of giving back potential earnings to the market.
The next target would be around 4500 Resistance level. I will look at taking profits there and if a successful retest occurs re entering another long position up to target of around 5500.
Weve expereinced a double bottom and volatility has been on the rise as well as this inverse head and shoulders pattern i believe in the short term the bulls have control if we can reach 5500 i wouldnt be surprised if that begins another wave of downward price action to trap people in their longs and let the bears come back into control.
Either way it doesnt bother me i am not biased on either side i am just trading as the market tells me i should be.
Comment:
I would also be inclined ot buy based on the bollinger band lower deviation line being next to local support. This is never a guarantee but more often then not price action tends to rebound on touched of the outer bollinger band lines, given this lines up near perfectly with support just gives a greater edge in terms of the probability of the trade working out in favour