On the technical side, we have the contour of a pattern developing on the 4H timeframe. Price has travelled 40% from C towards the potential reversal zone (PRZ) and this set up qualifies as a “trade candidate” for my watch list. When defining the potential reversal zone (PRZ) for a , we look at the projection of three levels. I: the of XA, II: an AB = CD pattern and III: a BC expansion converging in the same area (in this case 1414 BC ). This defines a tight zone, about 20 pips wide, represented by the orange lines in the chart. Should price action test the PRZ and reverse convincingly, I would enter short. SL goes 10 pips behind X. TP1 = of AD and TP2 = of AD.
There are 134 pips to be made (if this pair follows the script) and the trade has a reward – risk ratio of 2.0!
UPDATE: The pattern printed a new C point but was not invalidated. I published an update which you can find in the link under Related Ideas.