I got a question about why I set an entry instead of waiting for further candle confirmation and it is a good question so I thought I was re-address it here for those of you who don't read all the comments (we've been getting a lot of them!).
In short this person was dead-right 95% of the time - always get confirmation. Waiting for confirmation will make your trades higher-probability and that is what long-term trading is all about: increasing your odds and finding an edge. The difference in this case, and in other cases in the past where I've done this, was how strong the trend was. Take a look at the weekly chart. The pair has been dropping like a rock - over 800 pips in less than two weeks. I've found in these very strong trends an entry when you can still get a good risk/reward and hide your stop behind good S/R is still a high probability trade.
Daily Outlook: As I mentioned above the pair has been extremely bearish of late, to the tune of 1000+ pips down since mid April. It doesn't take much technical analysis to see the trend is down. On top of that, we recently had a downward break of a bearish channel and an ascending triangle. We need the downward pressure to continue, however, to avoid a bullish retracement (which is healthy and normal). Complicating the picture is a bullish gravestone doji on the daily charts from yesterday.
As long as we stay below 1.2750 in the short term I am bearish and will continue to look for shorts. Also a sustained break below 1.2600 would open up 1.2500 and 1.2450.
Trading Idea: Trades are nearly identical to yesterday - short around 1.2720 WITH confirmation as the short-term trend is a bit murkier with the daily bullish candlestick. From 1.2720 short targets are 1.2695, 1.2665, 1.2635 and 1.2600 for +120 pips profit. A short on a sustained break of 1.2600 opens up 1.2575, 1.2550, 1.2525 and 1.2500.
Be cautious of a bounce off of 1.2600 and it is probably idea to employ entries to avoid standing in front of a freight train given that bullish inverted hammer on dailies.
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