After looking through couple of charts, I have identified an interesting Bullish Bat Pattern. Now I usually stay away from the CHF pairs (mostly because of the nightmare that I saw in that drop... wasn't part of it so I wasn't financially hurt by it at all). But when I see harmonics matching levels of structure with Fib ratio confluence... bells start ringing in my head :D
Here is what I see:
(1) The pattern completes right at a level that has been recent support/resistance (green dashed line with circles identifying the touches).
(2) The pattern also has a 2 BC and 1.618 AB close confluence which makes up the PRZ (purple rectangular region).
(3) I have set my first target to be somewhat below the 0.382 retracement because of the main resistance level (blue dashed line)
(4) If it breaks this level, then I will look for a 0.618 retracement target (orange dashed lines)
Trade wisely, Trade Responsibly
Comments
Alexander_Nikitin
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due to that dashed line, it may not be completed at all))
akhostov
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are you referring to the blue dashed line? If so, then yes that is a possibility. And if it doesn't complete, then that is fine. Off to the next trade :)
akhostov
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that blue dashed line can easily act as support for which the pair would bounce up. May be a great spot to actually do structural trading. a bounce up to 1.0664 would be nice from the blue dashed line. then a possible continuation down to the PRZ.
Alexander_Nikitin
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yes, i meant the blue one. Do you use limit orders to enter?
akhostov
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I actually am paper trading. Was in once with real money two years back in options trading. Lost a majority because I had no plan and no risk+money management. Now I am just testing my strategies and outlining my plan. If I were to use money, then I would go with limit orders but also make sure that the PRZ is respected. Because there are cases where the pair may blow through the PRZ but reverse back. In that situation, if you just head in first, then you could have been stopped out.
But when prices do get to the PRZ, the method of entry is based ONLY on your own trading plan. I only present the idea. You as the trader and business owner have to find the best method of entry based on your own trading plan. Hence the phrase I made up that I add to all my ideas: Trade wisely, Trade responsibly :D
Alexander_Nikitin
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oh, thank you for your detailed answer. I appreciate your advice inspite of the fact that i already have a written out trading plan. It contains a set of rules and you just remended me not to break them. Thank you for your care.
ok. back to my topic. If you use a limit order, where will you place it: @0.886XA retracement or @1.618AB expantion(projection)?
akhostov
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your welcome. Well in this case, the 1.618AB and 0.886XA are at the same price. That is why I personally think this is a highly probable trade. Also the fact you have a level touched 3 times (2 as support 1 as resistance) really raises the probability. Of course I may be 100% wrong.
You must have meant the 2.0BC extension. In this situation, I personally would want it to complete right at the 0.886 XA. mostly because of the structural level.
Alexander_Nikitin
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no I didn't mean the 2.0 BC "extention" (which I call inversion). I meant the 1.618 extention of AB)).
In some cases, 1.618AB and 88.6 differ much. If you take a daily chart, the difference may be at about 10-30 pips))
akhostov
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oh ok. well the 0.886XA is at 1.0577 and the 1.618AB is 1.05785 so just 1.5 pip difference. The green dashed line is also at 1.05776