Weekly Bounce Example
The attached EUR/USD 30-min chart zooms in on the Jan 18th bounce off of the previous week's high.
Draw a horizontal line on a previous week's high/low on the weekly chart. This example also had divergence with the 2 peaks. Fib retracement plotted to diagram exit levels.
The pair probed slightly higher than previous week’s high of 1.3454, so allow room for this possibility. Somewhere around 10-20 pips, and/or layer S/L levels.
We have a blended entry price of 1.3450, from the layered entry strategy..
Use R/R calculator to estimate scenarios with different exit points, as well as understand where the “break-even and trend the balance” point is.
In this example:
Low = Jan 17th 09:30 1.3243
High = Jan 18th 14:30 1.3465
S/L 1.3469 (15 pips above weekly high)
Previous week’s high 1.3454
Entry 1.3450 (19 pips risk)
Reward to Risk ratio (R/R) at exit levels:
23.6% 1.3413 = 1.3
38.2% 1.3380 = 2.6
50% 1.3354 = 3.7
61.8% 1.3328 = 4.7
At the 23.6, how many lots can we exit to ensure the entire trade will end up 2:1 reward/risk, based on balance take-profit at 38.2% fib?
If we exit 50% of position at the 23.6, and 50% at 38.2, what is the overall R/R?