EUR/USD update 5

While last post’s chart made me decide to move the stop to almost break-even, it wasn’t enough to close my trade. The reason is that if I close at a profit of 300 pips, while tempting, would not be a good risk/reward strategy, since my R:R ratio would be only 1:1 which would hardly be productive in the long run. For me to have a chance of success in my trading, I should achieve at least a R:R Ratio of 1:2 in most of my trades, and 1:3 or higher would guarantee long term profits.

The thing is, currencies don’t usually move in straight lines, and as I looked at the 4H chart bearish butterfly reposted below, I noticed that price has already reached the 0.786 fib ret of the AD leg, so the possibility of at least a consolidation period before resuming the downtrend is present.

 

EDIT:

(August 05,09) The 78.6% Fib ret level turned out to be the farthest this reversal went down.

Actually, if we take this 0.786 Fibonacci support as a bullish signal and the starting point of a new wave, we see that the move up is still in progress! In addition, is the one that has yielded the more pips so far. (not in real trading. I wish I had kept the hedging long that I opened here and closed the next day). Here are the stats so far:

valid signal: yes    success level: full     fib ret:  1.618     pips: 612      status: running