EURAUD has been obeying a down trending channel. The H4 chart clearly suggests that the price had a bounce on the support yesterday. That was too an H4 bullish engulfing candle. This justifies the channel’s support. The price has been heading towards the resistance since. In fact, the price is adjacent to the resistance. If we get an H bearish engulfing candle from the resistance of the channel, then selling the pair would get us some green pips. Let us have a look at the H4 EURAUD chart.
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EURAUD Price Action Analysis – 27th Nov 2018
The chart suggests that the price has been trapped within the down trending channel. Support and resistance both have been confirmed twice. The price is approaching to the resistance again. If the price ends up producing an H4 bearish engulfing candle at the resistance level, then the price would head towards the support of the channel by offering us a short entry. Let us have a look at the summary of the trade…
- Entry: upon an H4 bearish engulfing candle at the channel’s resistance (probable area 1.57400)
- Stop loss: Above signal candle’s higher high (probable area 1.57400)
- Take profit: 1.56200
- Validity: 72 hours
- Whenever possible, move the stop loss to the entry price and whenever you want, you can take profit anytime as long as you feel comfortable
Channel trading is one of the most frequently used trading ways by price action traders. The main thing to be able to draw a channel is at least 3 points to be connected. Those are two supports, one resistance or two resistances, one support points to be found out to draw a channel. We must make sure that we sell on a down trending and buy on an up trending channel.
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