I have taken a 'blind' short entry here. I say blind, because I did not wait for confirmation of a fully formed to enter short. The reasoning for this trade is that the drawn horizontal level has behaved as a very strong area of resistance in the recent past. As of May 19th there have been 7 unsuccessful attempts at driving price significantly beyond this range.
Furthermore, the size of the candle leading up to the critical zone is quite large and extended compared to the previous few candles. This suggests to me that this may be a last strong push from buyers, including those who did not get in from the start of the upward move leading into this critical zone. As previous buyers take their profits, my analysis is that this will start some selling momentum which will grow in strength as the late buyers' will seek to cut their losses or have their stops begin to be triggered.
Because this is a blind entry, I set a tight stop loss just above the critical zone at 1.50660, and a target at the next major area of support at 1.49550. My entry is at 1.50497 This blind entry allows for a much better risk to reward ratio of 1:6.
I could have simply widened and moved my stop loss, but this would mean I am now trading based on belief, and not on strategy and analysis. I am now waiting for confirmation, most likely a long-wicked bearish pin bar on the hourly chart to go short once more.