Long AUD200, bullish divergence
Updated
Hi friends…
I love this chart… It tells so many things in one quick glance.
This is 4 hour time frame chart.
In the first case, 24th to 30th July, we see strong bullish Price movement, completely unconfirmed by RSI (bearish divergence) and then we see a sharp fall in Price (would have a good time to exit any long position at this stage, maybe even consider a short, by analyzing lower time frames for an opportune entry level)
From 5th Aug to 14th Aug, price made a lower low, however, we saw RSI not making a lower low, instead making a higher low, indicating, possible change of trend again or a price action in the opposite direction.
That does happen and price moves upwards and from 23rd Aug to nearly 23rd Sept continues to make a series of higher highs and lower lows, there by creating a symmetrical triangle formation. Generally this formation is a continuation pattern of the trend that was present before the start of the formation, in this case a downtrend.
On 19th Sept, price breaks out of the channel and tries to run upwards but the bears quickly bring it back into the channel, indicating the breakout was fake. As we reach closer to the climax zone, on 23rd Sept, price breaks downwards of the channel and after a quick pullback to the earlier support zone, now the resistance zone, price continues to move downwards.
After this fall, price then gets into an upward moving rectangle zone, also confirmed by RSI. This again is a bearish formation as price made an entry into the rectangle from the top and is expected to mostly exit the pattern on the downside and that does happen on Oct 1st when we have a sharp fall.
Post this price continued to make a series of higher highs and lower lows and the RSI got into a un upwards moving rectangle (from oct 1 to oct 16th) and broke out of that channel.
On a closer look now, the chart shows that the we have triangle formation on the price chart and a wedge formation on the RSI. From 17th Oct to 24th Oct Price has failed to make higher high whereas the RSI as made a higher high. This is a case of bullish divergence and I expect that since we are very close the climax zone of the triangle pattern, we have a case that the probability is higher for a breakout on the upside
Keep looking for breakouts and retests of support and resistance zones. That’s a great way to place trade entries and better Stop loss placements
If you like what you see, please share a thumbs up and share your comments too.
Cheers
I love this chart… It tells so many things in one quick glance.
This is 4 hour time frame chart.
In the first case, 24th to 30th July, we see strong bullish Price movement, completely unconfirmed by RSI (bearish divergence) and then we see a sharp fall in Price (would have a good time to exit any long position at this stage, maybe even consider a short, by analyzing lower time frames for an opportune entry level)
From 5th Aug to 14th Aug, price made a lower low, however, we saw RSI not making a lower low, instead making a higher low, indicating, possible change of trend again or a price action in the opposite direction.
That does happen and price moves upwards and from 23rd Aug to nearly 23rd Sept continues to make a series of higher highs and lower lows, there by creating a symmetrical triangle formation. Generally this formation is a continuation pattern of the trend that was present before the start of the formation, in this case a downtrend.
On 19th Sept, price breaks out of the channel and tries to run upwards but the bears quickly bring it back into the channel, indicating the breakout was fake. As we reach closer to the climax zone, on 23rd Sept, price breaks downwards of the channel and after a quick pullback to the earlier support zone, now the resistance zone, price continues to move downwards.
After this fall, price then gets into an upward moving rectangle zone, also confirmed by RSI. This again is a bearish formation as price made an entry into the rectangle from the top and is expected to mostly exit the pattern on the downside and that does happen on Oct 1st when we have a sharp fall.
Post this price continued to make a series of higher highs and lower lows and the RSI got into a un upwards moving rectangle (from oct 1 to oct 16th) and broke out of that channel.
On a closer look now, the chart shows that the we have triangle formation on the price chart and a wedge formation on the RSI. From 17th Oct to 24th Oct Price has failed to make higher high whereas the RSI as made a higher high. This is a case of bullish divergence and I expect that since we are very close the climax zone of the triangle pattern, we have a case that the probability is higher for a breakout on the upside
Keep looking for breakouts and retests of support and resistance zones. That’s a great way to place trade entries and better Stop loss placements
If you like what you see, please share a thumbs up and share your comments too.
Cheers
Note
Take Profit 1 level achieved, 50% position can be closed. Stop loss may be moved depending on individuals risk profileTrade closed manually
After the impulse exit and achieving our TP 1 level, SL as discussed in the comment section may have been moved as per each risk profile. I like to reduce risk and take SL to entry so avoid loss completely.
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