There are actually countless ways to get to the same conclusion.
Here I would show a few to help you out.
Since you know the configuration, which is bearish (Green River above Mr. Maroon – see Lema 30), you are looking for a short trade.
The secon piece of information is where your target would be.
This can be derived from the daily ATR.
80% of the ATR would put price at an ATR oversold level from a swing high.
The shaded rectangle shows such measurement. The swing high is the fractal cap right before the fall. The oversold neckline is where the blue line starts – and is accented with a B/C yellow value (B/C = buy to cover). An undercut of this would be your Target 1.
The third piece you need is finding an entry signal.
The above image has show hollow rectangles to show possible entry levels based on 1h inside bars. The break of the inside low (say by 1 pip) could be utilized as an entry. Or, when price back tests these break-down points.
If you were trying to get by my provided signals, you could have entered 1/2 position based off the tie off signal and/or could had opened a short based on the Maroon Sell signal (MS).
We are on my favorite 30 minute chart now.
On the action movie chart below, the following things apply:
The Sync fractal high (where RSI2 and Stoch10 were both in the overbought), everything was legit. The following fractal high was Async: the RSI2 went deeply overbought while the stoch stayed out of the overbought field. The “A-” plot comes with the weight of the prompting candle.
The Sync / Async sequence took place above E16 (in orange). When the crack happened, you had a verified break down.
E16 could had been utilized for a secondary entry after price was below it for 10 samples and re-approcahed it in a rapid manner.
Keep in mind, the Exit1 of the short position barely changed. If you look at the tie-off prompt on the left, Exit1 was as low as 1.1509 and it only moved to 1.1503 with the last fractal high.
Other signals that could had been utilized:
- the white, wave 1 movement down clarified the direction after crossing the root point.
- price was stalling out at MR. Maroon
- price crossed below the 1H cloud
- there were a number of cyan shaded professional volume activity 1H candles around the 1.16 level
What signals were in line that you follow?
…and the extra lesson after the press release…
- Always evaluate a Sync-Async sequence
As soon as you have the Async weight purchased, target the Green River or… Look up the breakdown that may be the resistance on the way up.
Also, please pay attention on the pullback staying in the overbought field: