I wanted to talk to you about two (2) strike entries that could work out for us nicely.
As you may know, the Market has been pretty tricky for ‘Medium Term Trend Traders’ lately because of very deep corrections and lots of false moves.
My hope is that the Market will break into some more fluid trends very soon so WE can take advantage of them!
The first pair that caught my eye is the EUR/GBP. This pair has been in a significant downtrend for a good while now and most recently has picked up more momentum to the downside.
After a small rally, our Double Trend Trap Tools gave us a short signal on this pair that I like a lot:
(You’ll notice that many times multiple signals will appear in the same zone with the tools. That just means this is an area that makes sense for continuation–don’t take an entry on every candle)
**This trade is not too late to get in because of its longer term landscape (you may want to wait for the next pullback or you may not).
At first glance, the hourly entry does not seem like anything too special; however, what I like is the timing of the move. The rally was not a deep correction meaning that there is definitely not a ton of pips to the recent bottom. But when you look at the flow of the daily chart, you can see that the bias is significantly to the downside right now and there IS room for a significant profit:
You’l notice that the downward move here has been pretty consistent for close to a year now, and while a trend can turn at any time, the odds are always in our favor during a consistent trend like this one.
**Be careful though: You’ll notice that there is definitely room for a deeper correction here because we are pretty far from the top trend line. This is a situation where you can use a looser stop loss or use a tight stop and wait for a re-entry if it does correct back to the top of the trend wall.
To me, the EUR/GBP is a perfect trailing stop candidate because we are in a nice downtrend with no clear ‘bottom’ to target.
I’d use a 1 hour or 4 hour chart and look for new highs/lows that are being built to hide your stop behind as the trade progresses. You never know how far the daily trend could carry this.
Here’s the look on a weekly:
The other pair that interests me right now is the AUD/USD
Here, we have a much deeper retracement which means that we can have more immediate profit potential.
We don’t have an entry signal on the AUD/USD at this time, but a 4HR trend line will give you the signal (find this trend line strategy HERE)
With the AUD, the overall landscape is easy. There is a significant uptrend and there is immediate room to the upside based on our most recent move to new highs.
This is a completely different landscape than the slower-moving EUR/GBP we just looked at.
The easiest target would be to go a few people below the recent high (targeting around 100 pips with a tighter stop loss depending on the break).
Winner’s Edge Trading, as seen on: