Nico.Muselle
Short

EURUSD - classic 2618 trade

FX:EURUSD   Euro Fx/U.S. Dollar
6303 42 87
They say that consolidation is the best time to trade harmonic patterns and this definitely is not a lie.
If you trade bat patterns, usually you take profit at the 0.382 and the . 618 retracement of the AD move.

We have reached that . 618 retracement now and it's time to take profits. And immediately we have another setup, the classic 26.18 (or twenty-six eighteen) trade.

What is required for a 26.18 trade :

1. Double top : the A and C points of our bat pattern
2. Break below close below of the neckline : D -point of our bat pattern
3. 0.618 Fibonacci retracement of previous move : where we take profit now

=> all requirements for 26.18 trade are met.

What is expected to happen :

4. price retracement into previous low (Target 1)
5. 1.272 Fibonacci extension of the previous move down (Target 2)
- a potential completion of an AB=CD pattern

Stop Loss : should go minimum above the red dotted line but it is safer to put it above the structure of the double top , which would make Target 1 approximately a 1:1 risk/reward ratio.
I concur ;-)
EURUSD: Trading a la Carte
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Yes, I saw you had it on your "a la carte" menu as well ... excellent ! :)
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I'm new to FX trading and i've been using predominantly Elliott wave, to date. Your charts have highlighted the importance of watching for harmonic patterns and I will be using them far more extensively now. Thanks for the charts guys, you folks rock :)
EURUSD Wave 5 targets
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Thanks for your praise, much appreciated.... What I like the most is when people with very different types of technical analysis come to the same conclusion which seems to be the case here again :)
Great stuff !
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this triple top and reaction, looks a bit special, Nico. cool chart.
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Not sure what you mean with "looks a bit special", but thanks for your comment ! :)
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rv Nico.Muselle
thanks, it just looks cool,
the one prior to this one, mostly.
keep up the good charts.
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Hehehe, thanks, will try to do so ... I'm following less pairs now but I will keep on posting charts for those ! :)
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Thanks so much for publishing this!
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You are very welcome, thanks for your comment !
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Nice technical analysis. There was supply coming in the market on Friday. My analysis of supply and demand tells me to wait for confirmation before taking the trade and it seems like we could have the confirmation on Monday.
Supply has entered the EURUSD market
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Thanks for your feedback. Indeed we'll have to see what the market brings, but as I don't place any trades on Monday before the NY open it should be clear by that time what way we are heading. What your chart tells me is that the market was undecided last Friday (close is almost equal to Thursday's).
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TheShakeOut Nico.Muselle
Thursday's bar closes on the highs, that is a major sign of strenght and it attracts buyers (low quality demand). The only thing that can cause the price to close below the close of the previous bar is having supply (high quality supply) matching the demand. Every bar is a battle and every battle has a winner, understanding who wins each battle helps us understand how is going to win the war and when.
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TheShakeOut TheShakeOut
who*
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Hehehe, excellent ! :)
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Excellent analysis Nico. Your charting is clear and your commentary is easy to understand. Thanks heaps :)
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Thank you for you kind words ! :)
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interesting chart :)
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Thanks a lot !
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Woo hoo as a pattern trader it doesn't get much better then this, nice detailed post
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Absolutely, it fills me with joy when I discover a pattern like this. Even if it does not turn out the way it's expected to, it's wonderful to find such patterns :)
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ohitsZoya Nico.Muselle
It looks like it is turning out the way you expected :)
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For now it's indeed following the script to the letter :)
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Is this valid at all? Doesn't look like it fits a gartley to me, just checking....
snapshot
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Market says no :D
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Thanks for taking the pain to explain the harmonic pattern. Even a novice trader would understand it! Five Stars to you.

Would surely like to see more such articles from you.
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Thank you very much ... and it was not a pain at all. :)
Being a novice trader myself I know that we often crave for such kind of information so I try to provide it when the right pattern occurs ... I'm not making promises on future releases but I'll try to keep the same standard of information :)
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dear mates i am starting to study harmonic patterns, my question is, do they have to touch the correct fibo leverl (618 - 886 and so on) or they can even go over them like in this case?
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Hi Dan, there are specific rules for each pattern. For all of them though, there is a minimum requirement, a retracement level they have to reach in order to be valid. Most of the time there is also a level that they cannot exceed. I've explained one of the patterns (Cypher) here :
USDJPY - the Cypher pattern explained.
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Looks good but have you thought about the zew index coming up?
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The Zew index may have a positive outlook for Germany, the sentiment for Europe is still negative (although it came up a little as you said). Even so, I do not use it to base my analysis upon, I perform a technical analysis of the price action and try to keep in mind important upcoming news events (fundamentals) like CPI, interest rates, employment and for the EUR any news coming from the ECB. All these numbers influence the ZEW index as well :)
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**** UPDATE ****

EURUSD retraced and put in another (smaller) 2618 trading opportunity which could now lead into the completion of a bullish bat pattern, let's see how it works out
snapshot
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Be cautious, traders. The imbalances of supply and demand points to a possible bullish reaction.
EURUSD is showing strength: Hidden buying above support area.
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Hi Nico, I am a novice and one of your followers. I see on the 4 hour chart a potential Cypher, that is if the price starts going down from here (1.088 at time of writing). What is your idea?
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Mincealors99 Mincealors99
Just realized that I omitted to write that my comment was for the EURUSD.
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No worries, we all make mistakes ... as long as you don't make them while trading no harm is done ;)
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Sorry, I just saw it now and you posted 8hrs ago ... EUR rallying quite a lot today due to poor numbers from the US the whole week
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Nico you have quite a following! You seem like a genuine cool dude! Love your analyses
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Thanks a lot for you praise ! Will be looking forward to your posts
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do you guys think that i could be forming a gartley or a bearish crab pattern? if it will go for the crab the target will be around 1.13

any comment?
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Is a double top only valid at the peak of the price action?
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@revesrenard, if it is not at the peak of the price action, you can hardly call it a top, right ? :)
Once the high of a double top is broken, it is no longer valid as a pattern. Same goes of course for a double bottom.
Hope it makes sense.
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