USDCNH Sets Up Second Big Trade Within 2 Days
Cory Mitchell, CMT
The USDCNH is moving in a pattern that looks like the start of a descending triangle. On March 24 the USDCNH reached a prior low and consolidated, setting up a trade that favored a move to the upside. While it took a couple of attempts, the price shot higher to achieve the 7.14 target.
Now that the price has reached the 7.14 area—where a descending trendline intersects—the price is consolidating again. This signals another trade.
A downside consolidation breakout has already occurred on the 15-minute chart at 1.1339.
A stop loss can be placed above 7.1430.
The downside target is the 7.08 region.
This provides for a nearly 6:1 reward-to-risk ratio.
While the price could reverse back to the upside, that trade is less compelling to me since there are two other resistance levels in close proximity above. An upside breakout is more likely to be a false breakout, and therefore a tight trailing stop loss should be used if trading it.
By Cory Mitchell, CMT. Join me in my free Facebook swing trading group.
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.