This article looks at :

+ what's happening from technical perspective only and my expectations for EUR/USD for the near term;

&

+ how range-box breakout (i.e. RBBO method) analysis / trading is applied.


Note: For further details on use of range-box, please refer to my previous article
(at https://www.dukascopy.com/fxcomm/fx-article-contest/?My-Technical-Perspective-On-A&action=read&id=3198).


An example of RBBO method could be seen at the later part of this article.


My view for EUR/USD :

The 3-months chart shows price breaking below the blue-dashed ray line and proceed to consolidate above it for the next 5 bars (since early March 2015) and counting.




Going forward, how price reacts after reaching either of the 2 blue-solid lines drawn on the 1-week chart would be critical.


At this point in time, price has been below the mid-Bollinger for more than 2 bars.

We are also seeing price trending downwards; making lower highs and lower lows.

Price should move towards the blue-solid-horizontal price level. But how price reacts after reaching the blue-dashed line would be critical as it has been a consistent road-block the past few times.


Example of range-box break-out (RBBO) method applied:

We have below (1-day) chart, which shows 2 best, possible short entry positioning.

In a down trend, we would like to see the movement of price making lower highs and lower lows - much clearer when we use the grey range-box (accessed from blue-circled button shown at this chart- under "rectangle").

The first red down arrow showed price rebounding away from the red-dashed trend line, the mid-Bollinger line; as well as the range-box breakout line (which is also the magenta-colored 100% Fibonacci retracement level).


The "Fibonacci retracement" tool could be accessed from the pink-circled button.
Note: For further details on such use of Fibonacci projection, please refer to my previous article
(at https://www.dukascopy.com/fxcomm/fx-article-contest/?My-Technical-Perspective-On-A&action=read&id=3198).

The second down arrow showed price again rebounding away from both the mid-Bollinger line and the
range-box breakout level.

We should seek to have a confluence of such price rejections before any trade positioning as
that would meant more stakeholders are becoming aware of such support/resistance level.


Possible take-profit (TP) levels:

TP 1 at magenta 161.8% Fibonacci level (~120 pips);

TP 2 at the touch of blue-dashed line (~200 pips); and

TP 3 at magenta 200% Fibonacci level (~ 275 pips).


Why not go for the furthest target too at the bottom-most, blue-horizontal-solid line?

If we look at historical reference from the 1-week chart, from mid of 4th quarter of 2015 to
early 2nd quarter of 2016, we could see how price kept returning back to likely break-out levels.

We don't want too many strike-outs (while aiming for a home-run), especially when we're in a ranging
environment on the higher time-frame.


Recommended risk management tips:

+ Risk less than 2% of capital;

+ Keep reward (TP) : risk (stop-loss) at equal to 1 or higher; and

+ Back-test on demo. account until your trading method becomes sustainable.


Hope it helps.


Thanks for dropping by!

Best Regards,
Edwin

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Towards sustainability, and beyond
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