$FXS is climbing in price, but there’s a warning you shouldn’t ignore:

The price is going up, but open interest (OI) is going down—a classic sign that the rally might not have enough fuel to continue. This divergence often signals a potential reversal, making it a prime setup for a quick short trade.

Here’s the trading plan to capitalize on this opportunity:

Trading Plan: Short FXS at $3.27

1. Entry Point:

• Enter a short position near $3.30 if the price continues testing resistance levels.

• Look for signs of exhaustion, such as a bearish candlestick (e.g., a shooting star or bearish engulfing pattern).

2. Stop Loss:

• Place your stop-loss at $3.50, above the recent high, to protect against extended upside moves.

3. Take-Profit Targets:

• First target: $3.10 (near-term support).

• Second target: $3.00 (psychological and key technical support level).

4. Risk-Reward Ratio:

• Risk: $0.20 (entry at $3.30, stop-loss at $3.50).

• Reward: $0.30 (target at $3.00).

• Risk-to-Reward: ~1:1.5, offering a solid short-term trade setup.

Position Sizing

Example with $10,000 Capital:

• Risk per trade: 1% = $100.

• Risk per share: $0.20 (difference between entry and stop-loss).

• Position size = $100 / $0.20 = 500 FXS.

Why This Setup Works

• Open Interest Decline: Falling OI while the price rises suggests profit-taking by early buyers, leaving less strength to push the price higher.

• Weak Momentum: Without fresh buyers, the rally is likely unsustainable.

• Low Volume: If volume dries up, it confirms the price action lacks conviction.

Indicators to Watch

1. RSI (Relative Strength Index):

• Look for overbought conditions (>70) to confirm the price is stretched.

2. Volume:

• Declining volume during price increases supports the bearish thesis.

3. Support/Resistance Levels:

• Monitor price action at $3.30 (resistance) and $3.10/$3.00 (support).

Key Takeaways:

• Short FXS near $3.30 with a tight stop-loss at $3.50.

• Target quick profits at $3.10 and $3.00.

• Stay disciplined and exit if the stop-loss triggers—shorting is inherently riskier in upward trends.

Do you think this FXS setup is the perfect holiday trade? Share your thoughts or strategies below!