Let us consider the GBP/USD currency pair on the H4 chart. The H4 and daily trends have a bearish momentum: we observe synchronizing scales that make us more confident about short position opening. ParabolicSAR values are moving along the current trend, confirming its negative bias. The last fractal support, strengthened by the lower boundary of Donchain Channel, is tracing an important level. Its breakout is likely to result in a strong volatile movement towards the red zone. The 1.49802 mark may be used for placing a pending sell order. We recommend conservative traders to wait for confirmation from RSI-Bars oscillator, which has to breach the 34.4285% level simultaneously. In such a manner, we will get verification from every analytical instrument available.
Stop loss may be placed in advance at 1.51003 support level. We would like to point out that this mark is confirmed by two Bill Williams’s fractals (double bottom), the upper boundary of Donchain Channel and by Parabolic historical values. This level can be broken up only in case of fundamental changes in market structure. If this occurs, the price will cross both the daily and H4 trend lines, with bulls taking the initiative. Taking the current situation into account, this is unlikely to happen. After pending order placing, stop loss is to be moved every four hours near the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets stop loss level without reaching the order, we recommend canceling the position: market sustains internal changes that were not considered.
|Sell stop||below 1.49802|
|Stop loss||above 1.51003|