Short Selling setup (How to build it right)

Short Selling can be scary, but when done correctly it’s just any other regular trade.

Typically we’re short selling stocks but today’s opportunity (discussed below) is on a Forex pair.

Is there any difference?

Not really because the principle of short selling is exactly the same.

And most importantly, the same short selling setup is valid for stocks, forex, crypto, or any other asset that you want to sell.

The trading indicators for TradingView that we’re using today, combined with rigorous chart analysis, clearly suggest that we can open a short position.

We have a potentially great short setup because:

1. 1. The price is moving sideways  (it’s pretty much at the same level), while the RSI Exhaustion is going down. It means that we have divergence and the current price level is not sustainable.
   2. The RSI Exhaustion is bullish exhausted (colored green), which means that, considering the overall setup, the price doesn’t have too much room to move higher.
   3. We have a confirmed top, which is a sell signal

We just need to pay attention to the fact that the price is currently above a support level, but it looks rather weak because it started as a resistance.

Moreover, it was previously an even higher resistance.

This means that the price is being pushed down!

The trading target will be all the way down to the major support level at the bottom of our TradingView chart.

The setup is clear and the trade is a high probability trade.

If we got it right, then the return is going to be 6x so we must remember to stay rational throughout the whole trade because it might get long, considering the big target.

The price has moved lower and, most importantly, below the support, which has now turned into a resistance as we initially assumed.

The price kept moving lower until we got a bottom, signaled from the Bottoms Tops Signal.

This bottom, however, is not sustained by any technical evidence and so we can ignore it because, probably, it’s not going to be a major bottom.

The price is now lower and the RSI Exhaustion just became slightly oversold.

Considering it’s just slightly oversold and not even bearish exhausted we can expect that the downward movement in the price can continue without any big issue.

That’s because the RSI Exhaustion can now become way oversold and exhausted and remain in such condition for a prolonged period of time and, at the same time, the price can continue to fall.

The RSI Exhaustion is now moving a bit higher and the price is moving sideways.

Nothing major, but for the sake of safety, and to maximize our profit, we move the breakeven level lower.

By doing so, we guarantee that our short position will end up with a profit.

The price went even lower and we can now expect it to ultimately reach the target.

A new major support level appeared which could prevent us from reaching the target.

We decided to stay in the trade but moved the breakeven even lower so that we will maximize the profit should the price continue to move against our target.

In the end, the price went straight down and reached our target.

Just as we initially predicted, the price eventually moved significantly lower.

This allowed us to close a winning trade for a total 6x profit, which is absolutely excellent.

This forex trade took a little bit of time which, however, was justified by the fact that we were aiming for a rather big Profit Target.

We traded safely throughout the whole trade by progressively moving down our breakeven level as the price moved down.

All this careful trade management, allowed us to close this short selling opportunity with a great return and without taking any big risk.

What about you? Do you feel comfortable shorting a stock or other assets?

Share your short selling experience by leaving a comment on the YouTube video above!