Here we are looking at EUR/JPY on a 4h chart with a perfect bullish butterfly harmonic pattern, price is currently bearish but I am looking for price to stall out on our D point followed by a major reversal heading towards resistance at 113.900 before continuing to make a moving lower.
Spotting a 'perfect' bullish butterfly can be difficult, here are the ratios: B: 0.786 C: 0.50 or 0.886 D: 1.618 (Almost perfect) X to D: 1.272
All-round we have a very good opportunity, price is oversold and we are trading with a 1:2 risk to reward. I will be waiting for further confirmation before entering!
My experience with Butterflys is i usually get a better bounce at .618 (point D)....all depends on the shape of the pattern..at the moment it looks quite bearish still to me..downtrend is crushing the impulse...I always find Butterflys work best when price approaches the d point as laterally (sideway) as possible....then theres no resistance to the impulse, but these are rare moments !
LewisGlasgow
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Yes that is very true, every situation is different from the next. It was my only concern when analysing this pair hence the target price being 113.923, we are sitting nicely in profit at the moment but only time will tell. I couldn't agree with you more and in this situation I went with my judgement as price was heavily oversold which gave me the extra confirmation to take the trade. Thank you for commenting!
BLUE43
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good job i did the same + cadjpy too
LewisGlasgow
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Welcome back :) thanks man, I checked your analysis... Ilove trading yen pairs