Wedge Short Trade | USD\CAD

Submitted by ChartSecret.com on Wed, 07/01/2009 - 10:03
in

Like predicted in previous analysis, price stopped on 1.1600 resistance, creating a beautiful Evening Star which is a very strong candlestick reversal pattern. This triggered a Short entry with stop loss right above the Dojis that formed the Evening Star. Risk:Reward ratio is also very profitable, and much above 1:2.

Also note how Bollinger Bands are flat in angle (Middle band), meaning that price is in a ranging period and trades on support and resistance levels are encouraged. Trade is right on Resistance level as price stops on this level for the 2nd time.

This is a long-termed short, which is expected to break down the Wedge and continue in a long-journey down to the beginning of the up-trend. It also confirms the retracement of 38.2% of the big downtrend. Short should take several months to complete. It can fail, as each trade is a probabilistic event, but if it succeeds it will gain 10 times the stop loss amount.