Price has broken below the neckline of the head and shoulders set up, I posted on Monday.
This post outlines one approach to trading strategy for readers interested in following progress.
- Entry applied a price filter and sets a stop entry 4o pips below the neckline. On that basis the sell entry would have been this morning at about .7835
- The initial stop is behind the dashed resistance line. This gives some scope for a retest back into the body of the head and shoulder formation
- The target applies the “measuring rule”. This projects the height of the pattern from the point at which price broke the neckline.
- If there is a retest that doesn’t trigger the initial stop, the stop loss is moved down behind the peak of the corrective retest rally
- Once price gets 61.8% of the way to the target, the stop is moved using a trailing stop