I see a possible Order block setup on EUR/USD in the 4-Hour Chart.
Whilst trading (EUR/USD) I have a short bias in mind.
Last week, I suggested that the major 4-hour support has been tapped multiple times. We were speaking about how lines of support eventually break if the price keeps tapping the same price point.
Well, we have seen a breakthrough. Now, we need to be careful of false breakouts.
We have a descending trend line acting as resistance and we have seen multiple order blocks succeed in the past few weeks for EUR/USD.
Taking all this into consideration as well as the fact that our bias is still bearish, we have reasons to look for further short entries.
I have highlighted the order block zone in yellow. I always look for the most recent bullish candle before the price impulsively breaks to the downside. We can see that this particular order block entry lines up nicely with the descending trend line.
We must beware of false breakouts. As we are so close to broken support, I would not risk my usual one percent or so on this setup. I would risk half of that. I would grade this particular setup as a grade B setup. We have all our requirements, rules and criteria met. However, because we are so close to broken major support and we do have strong bullish volume, this concerns me. So whilst I would trade this just like any other order block, my lot size would be smaller and my risk would be less.
I am waiting for the price to push back up into the yellow order block zone. I always aim for a minimum risk to reward of one to two, or one to three. My stop loss would be placed a few pips above the high of the order block zone. My entry would be somewhere in the middle of the order block zone. My target would be the previous price structure which is the broken support level at the 0.991 price point.
This is just one possible setup out of many. If this setup hits my stop loss, I’m perfectly ok with that. I simply move on to the next one. Remember, trading is a game of probabilities. We don’t know which way the dice are going to roll. However, if we know that if our edge wins a certain amount of times out of a hundred, then we know that eventually, sooner or later, we will come out on top and in the green.
I hope you all have a great Wednesday.
The Vortex Trader
Prediction Analysis Overview Table
|Analysis Overview Information||Prediction Analysis information|
|On what market is this position based (Forex, Stocks, Crypto, Indices, or Commodities)?||Forex|
|What is the trading position identifier (Name and/or Symbol)?||EUR/USD|
|Is this a Short or Long Position?||Short|
|Would this be considered a Short Term, Medium Term, or Long Term trade?||Medium Term|
|As a Short, Medium, or Long Term trade, which best describes the position (Scalping, Day Trading, Swing Trading, or Position Trading)?||Swing Trading|
|What Time Frame chart is the position based on (1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Daily, or Weekly chart)?||4-Hour|
|Depending on the asset, how much do you expect it to move in price or percentage?||From Entry to Target – 0.52%|
|What ratio of risk to reward is this trade/position? Choose your appropriate target(s)||Approximately 3 to 1 Target 2 N/A Target 3 N/A|
|What were the technical analysis tools used? Tick the appropriate boxes;||☒ Chart Patterns ☐ Indicators ☒ Price Action ☒ Support & Resistance ☒ Trendlines|
|From the technical analysis tools and indicators provided, tick the appropriate boxes for the tools and indicators used to analyze the position;||☐ Ascending Triangle, ☐ Bollinger Bands, ☐ Candlesticks, ☐ Channel, ☐ Cup & Handle, ☐ Descending Triangle, ☐ Double Bottom, ☐ Double Top, ☐ EMA, ☐ Fibonacci Retracement, ☐ Flag, ☐ Head & Shoulders, ☐ MA, ☐ MACD, ☒ Order Blocks, ☐ Pennant, ☐ Rounding Top Or Bottom, ☐ RSI, ☐ Symmetrical Triangle, ☒ Volume, ☐ Wedge|
Trading Prediction Success Probability Score
FSP ranks the probability of this trade a 5/10
- Wait for Price to retrace back into the order block zone
- Low volume with retrac
WATCH OUT FOR
- Fake-outs – the price has broken a major support level
- Strong bullish volume
Disclaimer: The FSP probability score is derived from adding and subtracting the positive and negative aspects of the position and is not a definitive sign of how the trade will play out. FSP is not in any way a financial advisor