The EUR/USD pair for swing trade on January 22, 2014.
The last four strong levels:
- Swing bearish trade = (Sum of Resistances ) / (Total of Resistances)
- Swing bearish trade = (1.3471 + 1.3585 + 1.3653 + 1.3767) / 4
- Swing bearish trade = 1.3619
- The market will indicate a bearish opportunity at the level of 1.3620. Hence, it will very profitable to take profit at the 1.3585 price as the first target and it is going to continue towards the price of 1.3515.
Weekly pivot point = 1.3585
- The value of 100% Fibonacci retracement is: high = 1.3698 in H1 chart.
- The best location for placing a stop loss should be placed above 1.3686.
It should be noted that:
- Take profit = 110 pips.
- Stop loss = 66 pips.
- Take profit = 5/3 * Stop Loss.
Stop loss should never exceed your maximum exposure amounts.
Risks to reward ratios are important and should be calculated.
Example:
- A risk reward ratio of 1:1.7 is recommended:
- Risk: 66 pips must make a profit of 112 pips.
- 66 pips * 1:1.7 = 45 pips.
