- Stable channel pattern identified.
- Bottom of channel, therefore good risk to reward.
- As always, risk of breakout. Tight stop loss prevents big losses.
- A strong, perfect double bottom, with two pull backs, the first of which returns to the support line. On the point of the second pull back breaching the resistance box, there is a strong bearish candle, suggesting increasing bearish power in the market, and a downturn back towards the historically strong support line.
- RSI dips at this point indicating...
- Evidence of converging channel, now on upwards trend (bottom of channel, therefore minimal risk!)
- RSI below 50 (historically, RSI for sugar at this point has been followed by a very bearish outlook)
- Bearish candle pattern identified
- Converging channel pattern indicates upward trend in short-run.
- Low risk (SL is optional at any point below the lower channel trend line) because price hit channel bottom. Only movement upwards likely.
- RSI at approx. 40 suggests underbought.
- Watch for breakout as channel increasingly converging. After TP is successful, can set a trade order partly above...
- existence of a very strong diverging channel
BUT...
- high risk due to low RSI, and current price level at a support line.
- therefore would recommend waiting for downward movement beyond this point before trading.
The graph shows a channel with a clear support and resistance line. The pair will go downwards to the resistance level. This trade is low risk with a well positioned stop loss. If pair breaks above trend line, idea will be invalidated and there will be an upward breakout. On the fundamental side, USD is quite strong at the moment.
P.S. I am quite new to Forex...
