I’ve finished my weekend market analysis, and found one pair i could set up a pending sell stop order for Sunday evening (Monday)
NZD/USD - D
A major swing to the downside has finished, and on friday price hopefully finished the retracement segment. The pink line that you are seeing on the chart is a monthly level of S/R.
But i am not trading a reaction of the monthly chart, i am hopefully looking to trade a bounce from A Fibonacci area (between the 50% and 61.8%). Friday’s candle is one of the formations i trade in this strategy. We have a hesitation bar, or a sandwich bar. Even though it’s not the prettiest looking one, it is respecting the Fibbo levels.
So my plan of action is to place a sell stop order 5 pips bellow the lowest point of that bar, and the stop loss 5 pips above the highest point of the bar. So if price ticks bellow, i will be filled in, which also signifies that price is bouncing. But if price takes out the highest point of that bar, than i will cancel the order.
Pros: The sandwich bar is to the pip precise touching the Fibbo level of 61.8%, and the more precise the level, the better the signal.
Cons:
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The hesitation bar is not considered a high quality signal, since it does not indicate market rejection, but market confusion. And as an added problem is the crazy volume we’ve been seeing lately, which could easily trigger my position, and then hit my stop loss.
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Also i am not liking the heavy rejection we got on the Monthly time frame. Take a look at the chart
Course of action:I still haven’t made my final decision, but if a do enter it will be with a smaller lot size because of the added risk. Opening smaller positions is something i am doing because of the worldwide outbreak and the massive volume we are seeing in the forex markets.
What do you guys think?