When defining the potential reversal zone (PRZ) for a , we look at the projection of three levels. I: the of XA, II: an extended AB = CD pattern (in this case 1618 AB = CD) and III: a BC expansion (in this case 2618 BC ). This defines a very tight zone, about 10 pips wide, represented by the orange lines in the chart. There is also some structure near this zone, which increases the edge of a reversal. Should price action test the PRZ and reverse convincingly, I would enter short. SL goes 10 pips behind the next . TP1 = of AD and TP2 = of AD.
There are 155 pips to be made (if this pair follows the script) and the trade has a reward – risk ratio of 4.0!
UPDATE: This pattern never completed, so I did not enter any trade here.