From Craig Cobb at Trade with Precision:
It isn’t often that we are able to share with you a trade setup before the trade has actually triggered. I am writing this post on a Sunday so that this trade gets out there before it triggers and goes live. The trade is on EURUSD and it is on the daily time frame. The idea of getting this post out in time is to show you all how a trade comes together. This is not a “hot tip” and I am certainly not telling you to take the trade. I will be raising an order and I wish to share with you all why.
The breakdown of information on the above chart is as follows.
- Price back into the buy zone
- Small bullish candle in the buy zone
- Convergence of the MACD and RSI
These are some of the basic rules from the “trend flow” strategy which we teach to all CMC live account holders. Now I would like to go into a bit more detail and show you some tools I use to get a higher probability of success.
The above chart has a level of support drawn in by using the horizontal draw line. Notice how the small bullish candle in the buy zone is also rejecting the old support and resistance level from a little while ago. This now gives me added confidence that this chart may find support here and be the low in what I hope to see as the continuation of this up trend.
Now I introduce Fibonacci to the chart and it is clear that the support level is also “clustering” with the 50% fib level. Once again another increase in probability that this may become a higher low.
OK, so now I have shared with you the reasons I will be raising this order long. I will be looking to get long if the price breaks the high of this bullish candle by 1 pip and my stop will be 1 pip below the low of this same candle.
Now let me go into some detail as to where my final target will be and why I will be choosing this level. Often traders and educators can miss the importance of targets, after all getting into a trade isn’t the whole battle you still need to get out for your profit.
I will be using the horizontal drawing tool to find a likely place for price to move to.
Notice I have added the top horizontal black line. This has been support and resistance in the past and I have no reason to believe it won’t be once again should price reach this level. With this in mind I will be looking to be out of my final position just before this level is reached. This allows me plenty of room to get a good profit while also not being greedy and being happy to complete the trade should it let me at these top extremities.
Keep in mind that there may be more than one chance or more than one trade that could set up if this market is to move up to the resistance. What I have now done is given myself a range to trade in up to the upper resistance.
Trading is about taking educated guesses on market consensus. With a strategy and understanding for where the market is and could go, I am able to work within that range and build the probabilities in my favour. I really hope this explanation of this live trade helps you to understand the way I am thinking.
It all sounds and looks wonderful however this trade may just move down on Monday, break the lows and I will be forced to cancel my order. That’s trading, enjoy it!