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Overview:
The chart displays a clear bearish setup on the 1-hour timeframe for the GBP/USD currency pair. The pair has formed a descending triangle pattern, indicating potential downward price action. The price has been respecting the trendline resistance, which adds confidence to the short trade. Here’s a detailed breakdown of the key elements for this trade:
1. Pattern Formation:
Descending Triangle: A continuation pattern that suggests consolidation and potential breakout to the downside. The price is nearing the apex of the triangle, and we anticipate the breakout to occur below the horizontal support at 1.34495.
2. Entry Point:
The entry is set at 1.34475, just below the critical horizontal support level. This level aligns with the trendline resistance from previous price action, ensuring that we are positioning ourselves at a point where price momentum is likely to shift downward.
3. Stop-Loss (SL):
The stop-loss is placed at 1.35060, just above the trendline resistance. This level is chosen to minimize the risk in case the price fails to break the support and reverses back upward. Keeping the SL tight ensures that the risk is controlled.
4. Take-Profit (TP):
The take-profit level is set at 1.33774, based on the price's potential to reach a key support zone. The target is set at a conservative level, providing a strong risk-to-reward ratio while aligning with previous price action lows.
5. Risk to Reward Ratio:
With a SL of 85 pips and a TP of 705 pips, the trade offers a favorable 1:8.3 Risk to Reward Ratio. This ensures that the reward far outweighs the risk, making it a worthy trade setup for those seeking high probability and high return trades.
6. Technical Indicators:
Trend Indicators: The 9 and 20 EMA lines confirm the bearish trend as the price is trading below these EMAs. The cross of the 9 EMA below the 20 EMA further supports the downside momentum.
Volume: A decrease in volume during the consolidation phase suggests a buildup for a breakout, likely to the downside as indicated by the pattern.
7. Conclusion:
This trade setup provides a logical bearish scenario, supported by strong technical analysis. The entry, SL, and TP are placed strategically based on price action and pattern confirmation. A breakout below the support level at 1.34475 would trigger the short position, aiming for the next significant support at 1.33774.
The risk is well-managed with a tight SL, and the reward is significant, offering an excellent risk-to-reward profile.
Make sure to monitor the breakout closely, as this setup depends on the price respecting the triangle formation.
Overview:
The chart displays a clear bearish setup on the 1-hour timeframe for the GBP/USD currency pair. The pair has formed a descending triangle pattern, indicating potential downward price action. The price has been respecting the trendline resistance, which adds confidence to the short trade. Here’s a detailed breakdown of the key elements for this trade:
1. Pattern Formation:
Descending Triangle: A continuation pattern that suggests consolidation and potential breakout to the downside. The price is nearing the apex of the triangle, and we anticipate the breakout to occur below the horizontal support at 1.34495.
2. Entry Point:
The entry is set at 1.34475, just below the critical horizontal support level. This level aligns with the trendline resistance from previous price action, ensuring that we are positioning ourselves at a point where price momentum is likely to shift downward.
3. Stop-Loss (SL):
The stop-loss is placed at 1.35060, just above the trendline resistance. This level is chosen to minimize the risk in case the price fails to break the support and reverses back upward. Keeping the SL tight ensures that the risk is controlled.
4. Take-Profit (TP):
The take-profit level is set at 1.33774, based on the price's potential to reach a key support zone. The target is set at a conservative level, providing a strong risk-to-reward ratio while aligning with previous price action lows.
5. Risk to Reward Ratio:
With a SL of 85 pips and a TP of 705 pips, the trade offers a favorable 1:8.3 Risk to Reward Ratio. This ensures that the reward far outweighs the risk, making it a worthy trade setup for those seeking high probability and high return trades.
6. Technical Indicators:
Trend Indicators: The 9 and 20 EMA lines confirm the bearish trend as the price is trading below these EMAs. The cross of the 9 EMA below the 20 EMA further supports the downside momentum.
Volume: A decrease in volume during the consolidation phase suggests a buildup for a breakout, likely to the downside as indicated by the pattern.
7. Conclusion:
This trade setup provides a logical bearish scenario, supported by strong technical analysis. The entry, SL, and TP are placed strategically based on price action and pattern confirmation. A breakout below the support level at 1.34475 would trigger the short position, aiming for the next significant support at 1.33774.
The risk is well-managed with a tight SL, and the reward is significant, offering an excellent risk-to-reward profile.
Make sure to monitor the breakout closely, as this setup depends on the price respecting the triangle formation.
Trade active
Change Target & Stop Loss Target = 1.33995
Stop Loss = 1.34875
Trade closed: target reached
Target Reached = 1.33995
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.