Should price break the channel support at 132.4-ish and drop further, it would pass the B point and be well on its way to complete the pattern. When defining the 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: the BC expansion (in this case 2000 BC ). The three numbers define a clear zone of support, represented by the orange lines in the chart.
If this pair follows “the script” of this scenario, it would break the B point and reach the PRZ, where price action (PA) could test all levels, before stabilizing and reversing. Data will come out on Monday for both JPY and EUR that could give an impulse to this pair. Should this happen and should I see PA reverse convincingly in the PRZ, I would enter the trade long. SL goes 10 pips behind the next relevant . In principle, TP1 = of AD and TP2 = of AD, although in this case I have repositioned them slightly due to and resistance levels.
There are 222 pips to be potentially gained and the reward – risk ratio of this trade is 3.9.
UPDATE: I mentioned two potential scenarios with this trade setup: (1) a channel trade going long at channel support and (2) completion of the going long at the PRZ. PA followed the first scenario, reaching the upper channel line before breaking it.