This is a potential bearish butterfly pattern on USDJPY as price is in consolidation on the Daily Chart. Of course this trade wouldn't be of any interest to me if there was no resistance zone. This is because since trading is a business of probabilities, I want to know where the sellers are so I can get involved. Now a list of what this trade has to offer in terms of price action:
1. A resistance zone.
2. RSI Divergence.
3. RSI overbought.
4. A potential bearish butterfly pattern.
5. And a potential 1:2 risk : reward... During the weekend I spent time going through some of the trainings from one of my mentors on risk : reward. And risk : reward is one of the things I'm working on at the moment. Basically, if one trades a 1:1 risk : reward trade set-up then it will probably take another one losing trade to give the profits back. However, if one trades a 1:3 or 1:2 risk : reward trades then it probably take 3 or 2 losing trades to give back the profits. Hence, risk : reward ratio is what keeps us in the market.
1. A resistance zone.
2. RSI Divergence.
3. RSI overbought.
4. A potential bearish butterfly pattern.
5. And a potential 1:2 risk : reward... During the weekend I spent time going through some of the trainings from one of my mentors on risk : reward. And risk : reward is one of the things I'm working on at the moment. Basically, if one trades a 1:1 risk : reward trade set-up then it will probably take another one losing trade to give the profits back. However, if one trades a 1:3 or 1:2 risk : reward trades then it probably take 3 or 2 losing trades to give back the profits. Hence, risk : reward ratio is what keeps us in the market.