If we look at 4H chart, we can see a pennant
chart pattern. It's a continuation pattern and mainly after a breakout of its signal line, a market continues the previous trend. The pennant
is formed by support and resistance
lines converge towards each other. We have to trade this pattern based on breakout signals. As it's a continuation pattern we should expect that price moves upward and breaks the resistance line. After that we'll have a buy signal and a possible entry level above the signal candle. But we must be very careful with this trading signal. The breakout will be near the strong resistance zone
formed by 2900.00 and 3000.00 levels. This zone will be able to stop and reverse the market with further short term downward movement. But if you want to take part in risky trade, why not? Just you must use stop orders with your long trades. Place stop orders below 2645.00 level which is the local swing low. Based on this chart pattern, profit target should be near 3500.00 level. Don't forget that when price breaks the resistance line of the pennant
, it will be better to get confirmation from volume
will have to be strong during this breakout. If you are not sure that the market will be able to pass throught the resistance zone
, you should skip this buy signal.