I wanted to talk about a very interesting price action setup that was being discussed in the War Room chat room. We are looking at the EURGBP daily chart and the first thing which grabs your attention is that massive bearish day from the previous trading week.
The market slammed down hard on a key support level where price churned away for the next two trading days as buyers attempting to trade bounces off this support level had their orders soaked up by the rest of the market.
The Inside Day setup produced on the chart is one of the breakout setups we trade in the War Room. We can see the market has broken down below the inside day cluster triggering short positions with the bearish momentum. If the market can maintain prices under this level then we could see much lower prices as there is plenty of room to fall before the next key support.
Trade Review
At the beginning of the week the EURGBP cross pair stalled and consolidated above a key support level after an aggressive slide down. The heated sell off produced a ‘Power Candle’ signal, which is one of the price action setups we trade inside the War Room.
After the power candle the market stalled and churned for two days, producing a cluster of Inside Days, another price action signal we actively trade.
By playing in the direction of the recent power candle signal, we were anticipating breakouts to the downside as the overwhelming bearish pressure broke the support level.
This trade has hit our minimum target of 1:3, which means it returned 3 times what was risked. Some traders are targeting the next key support level for a 1:5 – 1:6 return on risk, which is very possible as there is no sign of the market’s slide down stopping yet.
This was a pretty straight forward trade setup and required very little effort on our behalf. If you would like to learn more, you can check out our article on Inside Day breakout trading