FX:USDJPY   U.S. Dollar / Japanese Yen
55 0 0
As you see from my last post on usd/jpy             the price tested every line we had marked in the PRZ (potential reversal zone) of our gartley pattern and then went down hitting our target 1 and target 2. This has led us nicely into a potential bat pattern . The C leg retracement of A to B is slightly deeper than i would of liked as generally i would consider 0.886 as a maximum but the most important leg is the B and D. The D leg 0.886 retracement of X to A lines up almost perfectly with an 1.618 extension of A to B and an inverted 1.618 extension of C to B. This also is within the large support zone marked in blue.

Our stop loss would potentially be at the purple dotted line below X

Based on an estimate of a potential risk/reward for this trade i have taken the centre point of my 0.886 retracement and my two 1.618 extensions. Target 1 would be at the 1st pink dotted line (notice how this lines up nicely with support at the D point). (0.382 retrace of A to an estimated D)
Target 2 is our second pink dotted line again notice the line up with resistance above the X leg. (0.618 ret of A to potential D)
Target 1 would give us a 2.25 risk reward which if hit then stops would roll up to break even. If target 2 was hit we would have a 3.5 risk reward.

Of course the market could just rraleigh from here or it could come down and punch through our support zone . The important thing is to look at price action within our PRZ

Happy trading!
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