Cory Mitchell, CMT

The USDRUB has formed a declining wedge on the hourly chart in the midst of an aggressive uptrend. An upside breakout of the pattern—a rally above 79—provides an opportunity to get long with a stop loss below 77.5.

An upside target of 82, just below the March 18 and 19 peaks provides a reward:risk of roughly 2:1. I prefer to use trailing stop losses, especially in fast-moving markets like what we have seen recently. If the price has another surge higher, the trailing stop loss could produce a much higher reward:risk. And if the price doesn't have a big run, the trailing stop loss will reduce risk or lock in a small profit. Renko charts work well as a trailing stop loss.

The price could also move lower. I am not particularly interested in that trade currently. I would rather see how the next rally acts. If it is weak, then there is a chance for a short, but I am leaving the short alone currently.

There was a Russian interest rate announcement moments ago (630 AM EST). They maintained interest rates at 6%. With the US at 0% interest rates, going long the pair requires paying the interest rate differential. Therefore, I prefer to get in and out for shorter-term trades as opposed to holding a long position for an extended period of time.

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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.

Comments (1)

Had a nice breakout. Didn't quite get to the target, but still provided good profit potential.

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