Euro / U.S. DollarShort
Anticipating a EUR/USD Pullback from a Rising Wedge Formation
Setup Overview: The EUR/USD chart shows a rising wedge pattern, which is typically considered a bearish reversal pattern. This suggests that despite the recent uptrend, the pair could be poised for a downward reversal. The blue arrow indicates a potential future path for price action, suggesting that after rising slightly within the wedge, the price might break lower.
Trade Strategy:
Entry Point: Look for a confirmation of a price breakdown below the lower trendline of the wedge before entering a short position. This breakdown should ideally occur with increased volume or other bearish indicators like a bearish candlestick pattern.
Stop Loss: Set a stop loss just above the last swing high within the wedge or at the upper trendline of the wedge to protect against potential reversals to the upside.
Take Profit: The first target can be set near the 0.382 Fibonacci retracement level from the wedge's start to the breakdown point. Additional targets could be placed at the 0.618 and 0.786 Fibonacci levels if the downward movement gains momentum.
Risk Management: Monitor key economic releases or market events that could impact the EUR/USD pair, as these might trigger volatility that could either enhance the trade or cause unexpected reversals. Adjust stop losses and take profit levels accordingly as the trade progresses.
This setup is based on typical behaviors associated with rising wedge patterns and anticipates a return to lower support levels, providing a strategic entry for a short position with clearly defined risk and profit targets.
Trade Strategy:
Entry Point: Look for a confirmation of a price breakdown below the lower trendline of the wedge before entering a short position. This breakdown should ideally occur with increased volume or other bearish indicators like a bearish candlestick pattern.
Stop Loss: Set a stop loss just above the last swing high within the wedge or at the upper trendline of the wedge to protect against potential reversals to the upside.
Take Profit: The first target can be set near the 0.382 Fibonacci retracement level from the wedge's start to the breakdown point. Additional targets could be placed at the 0.618 and 0.786 Fibonacci levels if the downward movement gains momentum.
Risk Management: Monitor key economic releases or market events that could impact the EUR/USD pair, as these might trigger volatility that could either enhance the trade or cause unexpected reversals. Adjust stop losses and take profit levels accordingly as the trade progresses.
This setup is based on typical behaviors associated with rising wedge patterns and anticipates a return to lower support levels, providing a strategic entry for a short position with clearly defined risk and profit targets.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.