I'm back with another 5-0 pattern but this time on the 1h timeframe with EUR/AUD.
This pattern has fully complete and I'll be ready to enter this week coming, the 50% retracement is a solid support level providing us with an excellent entry point.
The measurements for a valid 5-0 pattern are detailed below. B: 1.13 - 1.618 C: 1.618 - 2.24 D: 0.50
I hope you all have a great weekend!
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Just breaking down what I see on the charts, price has now returned to the D point and hit the support level which appears to be the neckline of a head and shoulders pattern.
As you can see we recently completed the move of an inverted head and shoulders pattern sending price all the way up to 1.41800 to form the C point of the bullish 5-0 pattern.
I suspect the head and shoulders pattern will be a false breakout, tricking a lot of traders to go short and reverse in the opposite direction.
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A false breakout just as I predicted... Many traders would've been caught out shorting the head and shoulders pattern, resulting in an instant loss.
Knowing when and where to use certain patterns can be extremely beneficial to your trading.
Price has now reached resistance at the left shoulder, there will be a pullback before continuing the move higher.
You can take your profit and re-enter later today.
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Just updating you guys on what I see happening, most of you should be up 150-200 pips at the moment.
Price seems to have reached a support and resistance zone between the 0.786 and 0.618 retracement of the C to D leg.
You can take profit here and re-enter later today, just like we done yesterday or you can continue to hold.
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Another successful trade this week, we cleared over 270 pips on this alone.
Thats a great trade you landed there. However, my view about your final TP is a bit different.
Based on the following chart, I am skeptical that it will hit that double top. Personally I'm taking the short trade her 0.7 fib. What is your view on this?
LewisGlasgow
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@Petaryot, hey man :)
Thanks very much indeed, I can see where you're coming from and it definitely could happen but I was basing mine off the bigger picture.
If you look at the daily chart shown below you'll see what I'm talking about.
Thabiso89
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Is it possible for me to enter now or should I wait for later?
LewisGlasgow
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@Thabiso89, I would hold off until later, wait until price comes back down to the 0.618 level (see idea update).
If you decide to enter now use a tighter stop loss below the support level.
majtor
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I'm spewing my stops where to tight
LewisGlasgow
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@majtor, lol I use to have the same habit, bet it hit by a few pips too