I'll be scouring the charts for "actionable masterpieces". These will be signficant chart patterns or set-ups that I feel are not only tradeable, but also have a high probability of making big profits with little risk. Whenever I spot an "actionable masterpiece", I will post an annotated chart (my chart art) along with an explanation. My goal is to help you learn how to spot these low ocurring but highly profitable "actionable masterpieces" yourself.
Sell EUR/USD
Talk about some serious strengthening! It looks like once this pair got over the hump at 1.3000, it never looked back. But now it looks to be sputtering as it fails to break 1.3850. I spot bearish divergence on this weekly chart. With all the dollar negative news floating around, hardly anybody expects a dollar recovery anytime soon. Funny thing is that's usually when it happens.
On the daily chart, there's an ugly example of bearish divergence with price making higher highs while the oscillator plateaus. Keep in mind that when an oscillator stays "overbought" for long periods of time, this usually means the currency pair is in a strong uptrend. So there is risk here where you go short but the pair continues to head higher.
So why would I to fight the trend here? Well aside from the bearish divergences flashing at me, price has consolidated around the 1.38 handle topping out around the 1.3840s. Add on the fact that everybody and their mamas believes EUR/USD will soon reach 1.4000, I feel like being a maverick.
I'm going short this pair now at 1.3815. My stop loss (SL) will be 1.3885, plenty of room above the most recent highs. My initial profit target (PT) will be 1.3600. As usual, I will move my stop to breakeven if the trades goes my way to cover my stop loss (in this case, 70 pips, if price drops to 1.3745, my SL to 1.3815).
