To create a trading plan, we must look for a configuration where the insights from both timeframes align, providing a clear direction for entry.
Confluence of Timeframes: The daily chart suggests a potential upward movement within a range, while the 4-hour chart indicates a bearish continuation pattern. The best trading configuration would involve alignment in directional bias from both charts.
Trading Plan Criteria:
Entry Point: If the price on the daily chart shows a bullish breakout from the range, and the 4-hour chart breaks above the bearish flag pattern (above 1.08050), an entry point for a long position could be considered.
Stop Loss: A reasonable stop loss could be set below the most recent swing low on the 4-hour chart or below the bearish flag pattern to protect against a return to bearish momentum.
Take Profit: The first take profit level could be at the next significant resistance level on the daily chart, with subsequent targets set at higher resistance levels (e.g., D1 R1, D1 R2).
Risk Management: The trade should not risk more than a small percentage of the trading capital, and the position size should reflect this.
Conclusion:
If the market conditions align with the bullish scenario outlined above, the following plan could be considered:
Buy Entry: Above 1.08050 (after the bearish flag breakout on the 4-hour chart).
Stop Loss: Below the most recent 4-hour swing low or the bottom of the flag pattern.
Take Profit: At the next daily resistance level.
However, if there is no alignment between the daily and 4-hour charts, it's advisable to wait for a clearer setup before entering the market.
