This analysis is a "clean slate" analysis. I have incorporated some previously identified channels and simple patterns and have added some possible S/R levels based on previous structure and Fibonacci.
Some sort of breakout is bound to happen soon (within a cuple of days): we have already 2 inside days, several oscillators are around their centerlines and PA is contained between dynamic S/R of the 100- and 200MA.
Wether or not the breakout will be big or small, real or false, the start of a new trend or more consolidation we have no way of knowing...
I have identified several possible target and/or possible reversal levels and have drawn some 'breakout channels' based on these levels. EW and harmonic pattern traders will surely identify more levels but I just wanted to get back to basics with this one...
I am neutral offcourse, how can you be anything else in the current situation... I do have a bullish preference because of the up-channel and ascending triangle but that could change quickly if I get signs that the bear flag might play out.
Because of the complexity of the movements that we have experienced in the last couple of weeks/months I will be watchful for false breakouts and will chose my targets cautiously, taking shorter-term trades only.
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MILAD-FX-26
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IS A GOOD ANALYSIS ,THANKS FOR IDEA ,
but have now In your opinion, how far price rises.
KVE
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Breakout trade idea:
KVE
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Breakout of the box! Looking at smaller timeframes now, waiting for a retracement to get an entry to go long.
KVE
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Correction: The third day (08 Sep) is not an inside day based on the day before (07 Sep). It is however still inside the box (daily range of 05 Sep).
timwest
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I like your analysis, and I wonder if you would consider putting down the stop loss if you go long or short on a breakout of that green box you have labeled? Do you use the oppose side of the box as your stop?
KVE
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Thanks for your comment, much appreciated!
I would not immediately trade the breakout of the green box on this timeframe. No clear direction the past weeks and first breakout might as well be false...
That said, the opposite side of the box and the MA's would indeed be obvious levels for a SL if the target levels were far enough away to get a good R/R ratio! This however is not the case: first targets are quite close so one would rather be aiming for the second targets. If the move will be bearish, the blue "up" channel boundary is also very close there, I don't particularly like the odds on that scenario (on this timeframe)... That's why I said I would be considering only shorter-term trades (preferably up), using the direction of the breakout as a guide to trade in that direction on smaller timeframe confirmation.
Now, that said, seeing as the situation has developed and we now have a 3rd inside day (!!) and the daily range is very limited (!) (smart money trigger fingers are getting itchy I would guess :-) ) you could however begin drawing other, smaller boxes (also looking at smaller timeframes) and I do think we could get much more favourable R/R out of this!
If I do end up taking a trade on the breakout of the box the current situation could therefor, imo, justify having a SL for instance in the middle of the box (or at least moving it there asap)!
You can also wait for confirmation, say a daily candle close beyond the box, then go to a smaller timeframe (1H or 4H), wait for a retracement to previous structure on that timeframe and then trade the breakout of the high of the daily breakout candle! You will get much better R/R out of that and you are much more likely to avoid possible false breakouts!
Now, if we get a breakout, reversal and then a breakout to the other side I WILL CERTAINLY trade that :-) !!
My conclusion: even if the situation is complex and unclear we can still get profitable opportunities out of it, looking at smaller timeframe setups and keeping in mind the situation on this timeframe!
Looking at scheduled fundamental reports this week I am not sure if we will get a clear breakout, or some unexpected FED or ECB statements (rate hike news always does it...) or other major unexpected events should show up...
I must say I do use this strategy frequently intraday, i.e. trading the breakout of fractal channels (basically using Bill Williams' tools and strategy) on the 15min. charts, but I have not done it before on this timeframe...
Intraday it can be quite profitable. I'm sure you know all about this technique but for those who don't: you start in the morning (for me that is) around the London open and look for pairs (preferably of which you have already done longer-term analysis so you know what levels to watch!) where PA is caught in a fractal channel (or S/R channel), the channel is narrow, the MA's (gator lines) are contained in the channel and your preferred oscillators (use Bill Williams' if you wish, but not required) are around their centreline.
I do NOT take all breakouts and use other indicators to confirm (I especially like to have divergence on one of my preferred oscillators!). I look at 5min charts to get first signs but only trade based on 15min charts (you could use 30min or 1H also but I prefer 15min). On a breakout (candle close beyond the channel boundary and no obvious immediate reversal signs on the next candle, doji-like candles are also fine!) I open a trade in the direction of the breakout with SL at the opposite channel boundary or closer to the breakout line sometimes if the move is larger (possible reward smaller, so risk should also be smaller, or I don't take the trade alltogether!), my target 1 + SL to BE is always at R/R 1/1 (50%), target 2 at R/R 2 (30-40%) and the rest (10%-20% max.) you can let run as far as it goes (just keep an eye on important levels or patterns you've identified on higher timeframes). You can add on further breakouts of consolidation phases in the same direction if all conditions are met. I do move SL asap (to channel middle/breakout boundary/BE, it all depends on the initial move...) to limit my risk, especially on the first breakout after the London open since that is often false...
I only close prematurely when I get AT LEAST 2 signs from other indicators pointing in the opposite direction, or I just let it run if targets are met and risk is eliminated.
but have now In your opinion, how far price rises.