Welcome in Wednesday’s Price Action Setups review. Few of setups which were described yesterday became quite successful – GBP/USD came to the indicated support, but there is no visible buy signal and although the currency is still strengthening, it was quite hard to open good position. Here we go:
Yesterday, the price reached the 50% correction of the long, Thursday’s candle which allowed to open long positions. Situation is clearly upward as evidenced by the long, lower shadows. But all the time the supply can be observed.
Another pair were yesterday we saw a correction. The price approached the 50% abolition of the candle from Friday.
An interesting situation in the Euro to Yen. Friday brought a failed resistance challenge, yesterday morning it was attacked with a long white candle, which contains next 6 candles (H4)! in its body. Break down may mean a return to downward trend – so you can trade is like on the chart – sell stop below the minimum mother-candle and SL above.
Here, the price has not reached the 50% abolition – literally just few pips more and the level would be approached. This unfortunately is the danger of playing concrete setup while waiting for correction. All the time however, the order is as current as possible because the price does not have to make correction immediately after the signal – few candles can do it (in this case it will be a few day) later. But it has to be remembered, that the Canadian dollar trend is declining and it will be a move against the trend.
Nice PA buy signal on H4 chart. Long pin bar candle allows you to open long positions. As usually it can be traded in 3 different ways:
– Buying after breaking the maximum, stop loss below the 50% abolition of the candle (better profit-to-risk ratio than in the first case – where the likelihood of loss was greater)
– Buy limit around 50% abolition of the candle, SL below the minimum. Better profit-to-risk ratio than in the first case and safer SL than in the second one. However, there is a risk that there will not be a correction and we will reaming with observation of developing trend out of position. If you did not see this signal yesterday, there is still a strong likelihood of correction. This is a huge advantage of trading at longer TFs. Signal occurred almost 24 hours ago and still, we have a chance to open profitable position.