EURUSD Analysis Part 3c - DAILY CHART (Taking Profit)

As you will recall from my last IDEA post on this subject I had identified a breakout candle indicating an ideal price level to enter a "Short trade" (see link below for reference). Now it is time to identify a price level to take a profit. There are several different "Take Profit" strategies, in this IDEA post I will point out one of them. I will point out other strategies in the next IDEA post.

One such strategy is to look for a "take profit" price level that will provide at least a 2:1 reward to risk ratio of better. In identifying a 2:1 reward to risk ratio "take profit" price level I want to make sure there are no support levels to keep me from reaching my price target. In looking to see if there are any support levels that would keep me from reaching a price target with a 2:1 reward to risk ratio I look back at the monthly chart analysis (see link below for reference). In fact, I don't see any support level that would keep me from entering a profit target having a 3:1 reward to risk ratio. So I will enter a price target of 3:1.

I find setting price targets greater than 3:1 do not get hit very often. Generally what I find is that price will go through a period of consolidation before hitting a price target greater than 3:1. Having said that I have experienced a period of consolidation occurring before hitting a price target with a 3:1 reward to risk ratio, but this doesn't happen very often.

Keep in mind that just because I set a price target (take profit) of 3:1 doesn't mean I have to let price hit my price target and close out the trade. If I am not monitoring my trade at the time price hits my price target I do want the trade to be closed out. However, if I am monitoring my trade at the time price starts to approach my price target I will close out my hard "Take Profit" price level with my broker and let the profit run until I see price action stall out, at which point I will then take profit.