The channel set up I posted on was triggered when price broke through resistance yesterday.
At this stage things are off to a nervous start with price retreating into the body of the channel following Ben Bernanke's comments last night. These indicated a reduced probability of a third round of quantitive easing in the minds of many traders.
I've outlined thoughts on an approach to trading strategy on the chart below
- Entry was on a confirmed break through the channel resistance. In this case 1.0825 is assumed after allowing a filter of about 40 pips above the resistance
- The initial stop is placed behind the red support line. This allows some scope for price to retest back into the body of the channel. On this basis the stop would be at around 1.0665
- If price hits 61.8% of the distance between the break point and the profit objective a trailing stop could be instituted. This level is at around 1.10. If price clears this the stop can be left at 1.10 . This technique had a good result with the gold flag set up I posted recently. The stop was triggered for a profit at the 61.8% level and avoided last night's big sell off
- The initial objective projects the swing up to 1 from the low of the channel. This level is around 1.1128. Half the position could be sold at that level or the stop moved to that point with further objectives then identified above that level