Lets use StockCharts.com's explanation of what a triple top is to quickly review what we know about this technical signal(you can just skip to bottom to get to the point):----
Prior Trend: With any reversal pattern, there should be an existing trend to reverse. In the case of the triple top, an uptrend or long trading range should be in place. Sometimes there will be a definitive uptrend to reverse. Other times the uptrend will fade and become many months of sideways trading.
Three Highs: All three highs should be reasonable equal, well spaced and mark significant turning points. The highs do not have to be exactly equal, but should be reasonably equivalent to each other.
Volume: As the triple top develops, overall volume levels usually decline. Volume sometimes increases near the highs. After the third high, an expansion of volume on the subsequent decline and at the support break greatly reinforces the soundness of the pattern.
Support Break: As with many other reversal patterns, the triple top is not complete until a support break. The lowest point of the formation, which would be the lowest of the intermittent lows, marks this key support level.
Support Turns Resistance: Broken support becomes potential resistance, and there is sometimes a test of this newfound resistance level with a subsequent reaction rally.
Price Target: The distance from the support break to highs can be measured and subtracted from the support break for a price target. The longer the pattern develops, the more significant is the ultimate break. Triple tops that are 6 or more months old represent major tops and a price target is less likely to be effective.
----
The pair can go two ways right - it has a major resistance at the 107.12 area and if that were to be broken, we could see it continue to trend upwards for at least 1/3 of the signal range which would be anywhere from 20-30 pips. The alternate scenario would be the pair shooting downwards and continuing to break more support lines. In this type of situation, I would go with one of the following two options:
Long EUR/USD -- 20 pip stop loss
Long USD/JPY -- 20 pip stop loss
Limit: Having one of those positions liquidated, it should leave you with a 60-75% idea on the trend of the pair along with a few pips profit. I would then throw in a trailing stop with trigger set at 50% profit and let it ride.
----
If then OCO - If 107.12, Long USD/JPY with limit @ 107.40 Stop @ 107
If then OCO - If 106.82, Short USD/JPY with limit @ 106.31 Stop @ 107
Of course, if one of these two orders execute, you should close out the other order accordingly.
No comments:
Post a Comment