Price didn't make it to my target which was quite a bit of disappointment; but I at least made a little bit over what I risked, in which I may take comfort. It was a beautiful setup and my entry was timely.
Price had gapped over the weekend which accounts for the "jump" in price action. But that didn't deter me from this analysis. I just filled the space with imaginary bearish bars and all was set. The trend was a downtrend and a demand channel formed (regard blue lines) on 4-hour time frame.
On 1-hour time frame, as a rule, I checked for sub-pattern and Fibonacci retracement cluster was consequently spotted. It began by drawing a Fibonacci retracement tool from swing "1" to swing "3", and another was drawn from swing "2" to swing "3". Fibonacci levels (from the two Fib tools) with close proximity, and in confluence with the resistant side of the channel was marked out by the green horizontal lines,
When price traded into the confluence, it bounced. I sold at 132.00, stop loss at 132.40 ( 40 pips - above the most recent swing high), and target was set at 130.77 ( 123 pips - below the most recent swing low).
EVENTUALLY
My entry was delicious as price declined with no draw-down. Market structure low formed soon after but I didn't exit because there was a resistance nearby. However, I moved my Stop to break even. Fortunately, it declined further and an MSL (and bullish divergence) formed soon afterwards and I was forced to exit at 131.55 in accordance to my exit rule.
Profit/Loss: + 45 pips
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