[B]Student’s Question:[/B]
The current activity was a little lackluster in appearance, so I went back a bit on this EUR/USD. I picked a candle pattern for my starting then drew in what I thought the support and resistance would have been at that point. I supposed an entry at the open of the next candle with a 50 to 100 pip risk to reward ratio.
[B]Power Course Instructor’s Response:[/B]
You definitely have the right idea here. Especially if the Daily trend was up at this time as that is the direction we would want to trade…in the direction of the Daily trend. The 1:2 Risk Reward Ratio that you are employing is a solid strategy as well.
Once the Morning Star pattern completes, taking a long position at the opening of the next candle is a higher probability entry.
The only adjustment that I would recommend is placing the stop a bit below the lowest wick along the support line that you have identified. The reason is that once price has traded to a certain level, it quite possibly could trade there again. By giving your self a bit of breathing room, you lessen the risk of being stopped out prior to the pair moving in your intended direction.
Nice work…
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