AUDCHF – 19th Dec 2017
The daily chart is showing a Head and Shoulders pattern that’s been forming over multiple months. The pattern triggered with a break of the neckline in early November and has recently retested the initial breakout point. This is a clear supply area and is a key zone on the chart when looking for trading opportunities. We can see price rallied up into this area and formed a doji candlestick, this shows indecision at and a potential rejection of the former supply. The rejection was confirmed on the following day and this meant the opportunity was on now on our watchlist.
On the hourly chart we can see MACD divergence across the prior highs and price had broken beneath the 50EMA following the daily confirmation. To trade within the rules of our strategy we look for a pull back to the daily pivot point and enter a short position with a sell limit order. Our stop loss was placed just slightly above R1 and our profit target just slightly above S1.
Our target was hit for a 1.64R gain