Here I'm on the 4 hour chart, looking a potential type-ii entry on a . The pattern has already made an absolutely PERFECT formation; all key reversal areas are bang on our key retracement/extension levels. Price has already touched the for the D point, however if price returns to re-test this level we should be looking for a long entry!
With this pattern, price should be trader until it re-tests the previous high at the C point .Our stop-loss should be below the 0.618 level, as if price closes below here then the pattern is no longer valid. By keeping the stop below we are minimising the possibility of price testing our stop before the rally to our TP begins.
With this in mind, there is also an inverse head and shoulder pattern forming on the daily/weekly chart with the C point at the neckline. The right shoulder has not yet formed and I would not be surprised if this is it in the making. Should this be the case, I will adjust my stop loss once price either meets the neckline or the first TP level of 0.382 (whichever comes first).
B = 1.13-1.618
C = 1.618-2.24
D = 0.5
I am also short the GBP/NZD AND expecting a drop on the AUD/NZD if similar support is broken (see below). Using this position as sentimental confluence, it is conceivable that the NZD strength may be present in the Yen pair also.
If price does return to the D point I will drop down to the 1 hour time frame to judge my entry. Analysis will be updated as time goes on!