So I have been giving you guys a bunch of patterns and every now and then its good to show you some structure trades we take inside of Forex TV. This one is simple yet it can look a little bit indimidating to the new trader so if that's how you feel, don't worry, I will go over it right now and hopefully you will get a better understanding.
The first thing that is needed to understand why we are taking this trade is to take a look at this pair on the daily timeframe. We are in the middle of a longer term pullback, but in that pullback, we have a lot of bearish momentum, and this last bullish move on the H1 is a relief rally of the downward move we have been having with EURGBP.
Once we understand that, we can start looking for bearish opportunities on the lower timeframes, like we have here. So now that we have our bias, the next step is to identify where is the best place for me to enter this trade. The way that I do that is by identifying the levels of major support and resistance because in the past, these had been the major decision points.
In this chart, we can see the channel price stayed in before going to the upside and finally breaking down low. My goal is to see IF price can give me a reason for entry at the level of major resistance. That's the most probable place price might go, and it has higher probabilities to go down than up since we are coming up against resistance rather than support. All I have to do is wait for price to confirm and the RSI to confirm. That is how simple it is. If you like this type of trading, I would highly recommend joining Forex TV, we do this every single day.
Like always if you have any questions , feel free to comment below