Working With The Breakout
From the image above, we can establish a valid bearish flag formation. Price has broken out from the flag's channel and is making its way down.
Most traders would either sell at market or choose not to enter as they feel that since price has already broken out from the flag, they have loss the opportunity to enter the market.
However, not many traders realise that whenever price breaks out from a channel or a level of resistance, price is very likely to retest it again before making its way down.
Entering The Market
To set a level in which I would like to enter the market. I used the Fibonacci Retracement tool and took the swing of the lowest point to the highest point of the flag channel. I then realise that price has stalled at the 61.8% retracement of this swing (as seen in the image above).
The 61.8% Fibonacci level as we all know is a very strong point of resistance where price usually respects. As such I set my sell limit order at the 38.2% level of the swing as price is very likely to retrace upwards where the 38.2% Fibonacci level would serve as a price ceiling.
My predicted movement of where price would go can be seen by the black arrows which I've plotted in my analysis.
As predicted, price did retrace upwards where I got filled, respected the 38.2% Fibonacci level and continues making its way down further where I took modest profits of 54.3 pips.
Before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. Moreover, the leveraged nature of Forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. All information and videos contained on drinkforex.com are solely our products and any unauthorized redistribution without proper authorization will result in legal proceedings. Additionally, no information on this site should be considered as trading advice. All information is purely for educational purposes and we are not liable for trading decisions you make as a result of reading our content. You are solely liable for making your own trading decisions. DrinkForex is not affiliated with nor does it endorse any trading system, methodologies, newsletter or other similar service. We urge you to conduct your own due diligence.
No information on this page is directed at United States citizens.
For all inquiries please email us at firstname.lastname@example.org
2013 - 2017 Copyright - DrinkForex - All Rights Reserved