EUR/USD 4-Hour Chart Analysis:
Strong Pinpoint Candle and Volume:
Identified a strong pinpoint candle on the 4-hour chart with significant volume on Friday.
Indicates potential strong market interest or participation.
Wick Gap and Failed Fill:
Noticed the next three candles failing to fill the wick gap of the strong pinpoint candle.
Suggests resistance or strong selling pressure.
Fibonacci 0.618 Retracement:
Applied Fibonacci retracement, highlighting the 0.618 level.
Identified this level as a critical point, potentially forming a right shoulder.
Potential Right Shoulder Formation:
Hypothesized that if the retracement fails to pass the 0.618 level, it could shape the right shoulder of a reversal pattern.
Opening Positions Strategy:
First Position: Considering opening a short position if the retracement fails to pass the 0.618 level and a reversal candle with volume confirms.
Pattern Neckline Break: If the neckline of the reversal pattern breaks, signaling further downside, considering opening another position with confidence.
Pullback to Broken Neckline:
Anticipating a pullback to the broken neckline.
Considering a third position with a strong conviction for a downside move.
Emphasizing a favorable risk-reward ratio of 5R for the planned positions.
Indicates a potential for significant profit relative to the risk taken.
It's important to note that trading decisions involve risks, and market conditions can change rapidly. Continuous monitoring of the market, confirmation of patterns, and risk management are essential aspects of successful trading. Always stay informed about economic events and be prepared to adapt your strategy based on real-time market dynamics.
Strong Pinpoint Candle and Volume:
Identified a strong pinpoint candle on the 4-hour chart with significant volume on Friday.
Indicates potential strong market interest or participation.
Wick Gap and Failed Fill:
Noticed the next three candles failing to fill the wick gap of the strong pinpoint candle.
Suggests resistance or strong selling pressure.
Fibonacci 0.618 Retracement:
Applied Fibonacci retracement, highlighting the 0.618 level.
Identified this level as a critical point, potentially forming a right shoulder.
Potential Right Shoulder Formation:
Hypothesized that if the retracement fails to pass the 0.618 level, it could shape the right shoulder of a reversal pattern.
Opening Positions Strategy:
First Position: Considering opening a short position if the retracement fails to pass the 0.618 level and a reversal candle with volume confirms.
Pattern Neckline Break: If the neckline of the reversal pattern breaks, signaling further downside, considering opening another position with confidence.
Pullback to Broken Neckline:
Anticipating a pullback to the broken neckline.
Considering a third position with a strong conviction for a downside move.
Emphasizing a favorable risk-reward ratio of 5R for the planned positions.
Indicates a potential for significant profit relative to the risk taken.
It's important to note that trading decisions involve risks, and market conditions can change rapidly. Continuous monitoring of the market, confirmation of patterns, and risk management are essential aspects of successful trading. Always stay informed about economic events and be prepared to adapt your strategy based on real-time market dynamics.