[B]Entry[/B]: Short at around 1.0280 at the upper trendline.
[B]Stop Loss[/B]: Above the upper trendline and past the last high at around 1.0320
[B]Profit Target[/B]: The resistance level at around 1.0130-1.0140
[B]Reward-to-risk Ratio[/B]: 1:3.75
[B]Risk percentage[/B]: 1% of my account balance
[B]Indicators used[/B]: RSI (12), indicating that price is nearly overbought
The big falling trendline has started at the end of November 2011 and on the opposite site there is a rising trendline from September 2011. Both are forming a symmetrical triangle at daily and 4h chart. There is also a large evening star with a long upper shadow at the 1h chart.
If a break past the upper trendline occurs, I will go long directly at my stop loss or after a pullback to the trendline. My stoploss will then be set below the upper trendline and my profittarget could be 1.0400 and then 1.0500, depending on fundamental setting and market dynamics.
This trade idea might get support by necessary consolidations of x/USD currencies, which took a big hit today.
Fundamentals are not that important on this trade since we use a stop-and-reverse play to profit from either a drop or a rally of the USD.
By the way, if USD/CAD really drops, there might be a head and shoulders pattern at the 4h chart. If the neckling AND the lower trendline break, we might see a big drop of the USD.
Damn you were close to making the trade of the week. You were off by 30 pips but regardless you had the right direction and I had the 1.0160-1.0170 area that is a more likely exit but if you were moving your stops you would of probably still be in the green
Well the trade is still running nicely so far (over 100 pips profit yet). Let’s see, if we can reach the 1.0140. I moved my stop loss to 1.0205 because 1.0200 might be a good support-turned-into-resistance level.
Today I went long on USD/CAD, expecting a bouncing from the bottom of the trendline I imagined that started on Jan 12. Obviously it was a mistake. It didn’t hit the SL yet though (missed by 1 pip). I was also relying on the Stoch’s oversold signal and one of my many stupid divergence hallucinations.
I guess the trendline was just too shortterm. When trading longer term charts like 4h+ you need to look at wider angles and more long term trendlinies. Otherwise traders won’t recognize and respect them. The trade has a good risk-reward-ratio though and is not that bad but you should have switched to a short trade after the breakthrough. I would also have set my stop loss closer to the trendline.
USD/CAD is currently finding support at around 1.0165-1.0170… let’s see if it can break that level or will reverse to the top of the triangle again.
Also, I noticed that my would-be divergence was hidden, not regular. So it’s normal to expect a continuation. Besides, a very poor divergence condition on Stoch.
