Price moved past my entry line, so I’m in this trade.
I got a question today about a candle that formed on a trendline on EURGBP.
The question was whether it matters if the long wick is on the top of the bottom of the candle.
Here’s the chart in question…
Yes, it matters.
A long wick on a candle shows indecision by traders. It’s formed (on an up candle) when price goes all the way up to the trendline, then bounces down because enough traders think the price is too high to continue trending up any further.
But that didn’t happen here. There is no upper wick, so that second guessing didn’t happen. Most of the big players in the market are in agreement that price will continue to go up, so this is not the place for a short trade.
It’s now 8 hours after that candle closed, and price is still hovering around the same place. My prediction is that price will probably still go back down eventually, and only a little bit before shooting back up.
It’s certainly not the place for a reversal trade.
Price has dropped below the IB to my entry point, so I’m in this trade.
Because of Brexit it’s been 2 months since our last EUR/USD setup, but one finally formed.
It’s not the best setup, so I’ll be watching it closely and not taking any chances, but it’s a valid trade.
You’ll notice my stoploss is inside the S&R zone. I don’t really like that, but this zone is so wide I’ve decided to put the stop above the previous swing high instead of the S&R zone.
I’m only doing that because this trade is with the new trend. If it was against the trend I would NOT do that. Also, the trade is based on an IB, which gives us a lower entry point. That makes the trade harder to enter, so it will help confirm price has actually changed direction.