6.1.8.Family
Short

Potential Bearish Butterfly Pattern on USDJPY

FX:USDJPY   U.S. Dollar/Japanese Yen
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.
riskmode
2 years ago
How can you consider this a butterfly when the B point is well beyond the .786?
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6.1.8.Family PRO riskmode
2 years ago
Thanks for your comment. I understand why you might not consider this as a butterfly pattern. Perhaps, that is according to your trade plan. However, according to my trade plan, the B point must touch the .786 but doesn't go beyond the .886. Therefore, since price didn't break above, close above the .886 level, I trade this as a butterfly pattern in accordance with my trade plan.
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riskmode 6.1.8.Family
2 years ago
Even according to your trade plan this isn't a butterfly then. Point is beyond the .886, it's at .909. Not to mention this is against the trend.
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6.1.8.Family PRO riskmode
2 years ago
OK, so the immediate trend is up, but looking at the overall picture, the market is consolidating.
Regarding the ratio levels, if that is what you see then trade what you see, and I believe that is what every trader should do. So trade what I see which is 0.886 I don't use the 0.909 level.
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6.1.8.Family PRO 6.1.8.Family
2 years ago
The last sentence = So I trade what I see which is the 0.886, I don't use the 0.909 level.
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HarryPotter
2 years ago
This is still valid ?
Reply
6.1.8.Family PRO HarryPotter
2 years ago
The thing about patterns is that traders use different ratios, so in accordance with my trade plan, it's valid. Thanks for asking.
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