Identifying The Impulse
From the image above, we can clearly see an impulse move by the market represented by the bullish green candles. It is also highlighted by the light blue trend line. Price reaches a point where there are too many buyers in the market. It reacts to this by making a move downwards.
The bullish impulse is closely followed by a diagonal consolidation downwards. This move forms a channel which price constantly rejects which I've identified by the dark blue trend lines.
The Trade Plan
The next step would be to figure out when to enter the market. At this point in time there are a few options we can look at. Entering at market, setting a buy limit order or a buy stop order. Ultimately, this boils down to preference. Aggressive traders would either enter at market or set a buy stop order to get filled.
Being the conservative trader that I am, I always believe that when price makes a breakout from any channel whatsoever, there is a possibility that breakout is false and can make a reversal which can lead to huge losses.
As such I waited for the breakout and set a buy limit order at a level where price would retest the channel once again which now acts as a support.
Watch The Pips Fly
Now that we've set our order and did our analysis, we wait and see what price does.
As predicted, price retested the channel again which allowed me to get filled. Shortly after, price reversed and made a strong bullish move upwards where I took profits for 38 pips.
You can watch the analysis video below.
Thank you and safe trading!
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