Short term bullish, long term bearish - multi trade analysis

2018년 5월 12일

Daily chart shows sell off since triple top at 0.81 cents
After the initial sell off there was a retracement towards ~0.795 cents which was 61.8% from the 0.81 high, this was followed by another sell off to 0.771 followed by a 61.8% retracement to 0.788.
Another sell off has occured to 0.764 and another retracement to 0.778 which again was the 61.8% retracement.
Since the last retracement there has been another sell off which is down to a low of 0.741, since this it has retraced 38.2 of the way and has rejected this level and created a pin bar.

Will the longer term structure continue?
There is another ~100 pips to go to the 61.8% retracement of the current structure if the 61.8% retracement pattern where to repeat itself. At this price there is previously price consolidation (as shown by red rectangle). So this will be a good place to short if you’re of the opinion that the longer term structure were to continue.


Looking closer to the 4 hour chart, there was a shorter term trend line which was broken week just gone. I am inclined to think the next few days will be up days and price has rejected previous consolidation zone (around 38.2% retracement and 0.756 level) at the time being. It would be ideal to get short around this level for a quick 20-30 pips.

Range trades
Based on previous price consolidation I am of the opinion the more times price is going to test the 0.7566 are the more likely it will break and continue to the more longer term .7660 level look to short initially and then change biased to long side the longer support is held.
Same goes for the 0.76-0.7613 level

Breakout
Breakout traders look for the break at 0.7580 for a quick 20-30 pips where price previously consolidated and again at the 0.7613 level.

Risk:
The best risk reward trade on this structure is the longer term sell zone where you could risk 50-70 pips and look to make 200 -250, that is a risk to reward of just under 1:3.

Note:
A risk reward ratio of 1:2 means you only need to be right 35% of the time to be profitable. So consistent discipline to this principle along with analysing the market correctly and you are well on your way.