The EURGBP has been one of the best currency pairs to trade since the referendum. And he seems ready to go …
False breaking reversal
The FBR is one of the great models of reversal. They appear again and again, but may surprise us because we have been conditioned to stay with the dominant trend.
It started last Friday with the Harami during the day. Monday broke lower, it seems, with the downtrend since July.
By the end of the day, it had reversed, leaving behind a long wick that turned the day's trading into a hammer, one of the best reversal candles in the world. price action.
Tuesday's price action confirmed the RBF. The rule is that when the price returns above the top of the downside breakout candle, the RBF is fixed. Previous sales transactions closed and then reversed.
This is exactly what we did.
Another technical reversal is the Hikkake. It is formed from at least three candles, starting with the Harami. Following the downside breakout, Monday rally, and the breakout above last Friday Harami high, a bullish Hikkake is triggered.
The wave count …
Counting waves can be confusing, they don't always follow the rules! This one was clearer with five waves up and the same down. A reversal was due but the trend could have continued, as it seemed on Monday morning.
The fifth wave ends with inversions and by the end of Monday the Hammer confirmed it's about time.
My new course goes into more detail, but you can check out my YouTube intro at Elliott Wave here. Take into account the bad sound recording.
The price action is THE most important indicator as shown on the daily chart. It's also extremely tight on the downside, just ready for a flashback, the catapult trade.
Back that up with the weekly wave count which adds to the evidence that this could turn into a significant reversal. At the very least, it's been a great job, so far.
As always, the markets will catch up with the majority of traders, most of the time.
"Never let a profit become a loss"
Will this trade work?
As stated above, price action is everything and THE most important indicator there is! & # 39; The price must keep up and continue to move to new highs daily. If it doesn't, and does the opposite, dropping below its latest low, what do you do. Cut the trade !!
That’s it. Don't wait for him to recover or fall back into his thoughts, he will come back. They rarely do. Take the first loss, it's always the smallest. Then move on and trade it in the mainstream trend.