Last night, we set up a little bit differently for the second of our twice daily analyses. Rather than outline standard support and resistance, we looked at an upward sloping triangle that offered us the opportunity to get into the markets on a scalp trade position, and use that to draw a sharp, decent downside profit. Action is now matured overnight, and our scope trade worked out just as we had hoped. Price broke shortly after we published our strategy, and quickly ran down to hit our downside target base of the triangle. Since then, price is pretty much ranged in a consolidatory fashion – something that could indicate a coiling with attention to initiate another sharp movement going forward. Whatever happens, we’re going to go back to our standard breakout strategy, and setup a range with which we can take advantage of any volatility during today’s morning European session.
So, with this said, with last night’s action in mind, here are the levels that we’re focusing on, our exit points from a risk management and a target perspective. Take a quick look at the chart to get an idea of what’s on.
As the chart shows, today’s focus levels are defined by support to the downside 450 and resistance to the upside at 454.5. The latter is the most recent swing high, and should serve to give us something to go at if price reaches it (we are currently trading just below this level, so chances are high).
So, getting to the strategy, a close below support signal short towards 445. A stop loss on this one somewhere in the region of 451.5 keeps things attractive from a risk management perspective.
Looking the other way, if price breaks and closes above resistance, we will look to enter towards a relatively aggressive upside target of 460. Stop loss at 452 keeps things tight.
Charts courtesy of SimpleFX
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