USDJPY - Potential bullish cypher pattern

FX:USDJPY   U.S. Dollar/Japanese Yen
868 21 8
Depending on how the market will continue the reaction of Friday's news events, we might see the completion of this bullish cypher pattern or not.
Personally I will not enter with a limit order as there is no structure at the pattern completion, there is however some 10 pips lower (orange dotted line). If price reaches this point I will look for confirmation for a reversal as this increases our Risk/Reward ratio.

Let me know if you have any questions
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*UPDATE* This pattern has been invalidated by price actions in the early hours of the Asia Monday session. As the 1.414 extension has been exceeded for C, this is no longer a valid Cypher pattern.
PA might still retrace downwards but Cypher pattern rules no longer apply.

=> Erase & rewind, looking for new opportunities :)
I got the same idea published on Friday. Do you use an ATR based stop? It seems to me that your risk is slightly more then the first target.
+1 Reply
Nico.Muselle MOD Alexander_Nikitin
Hi, thanks for your reaction. The stop loss is 10 pips below previous lows. I did not measure exactly as we'll first have to see whether it will reverse at pattern completion or a bit lower @ structure, which would make it approximately a 1.3/1 RR for the first target
Alexander_Nikitin Nico.Muselle
Point X is structure itself. You're risking to miss a winning opportunity rather then avoid a loosing one.
-1 Reply
Nico.Muselle MOD Alexander_Nikitin
X is the structure that is the nearest, I agree, however this does not mean that it should go that far down. Determining the exact entry point is always a balance between risking not to enter a trade and how much you accept to risk when the trade does not go your way. Personally I am experimenting with a scale-in method at this moment, meaning that there are multiple entry points for me for this trade.
+1 Reply
Alexander_Nikitin Nico.Muselle
You're right, of course. It's your way of trading. I just wanted you to keep in mind that changing the ROE you change the set of variables that consist your edge. Sometimes this changes may lead to wins, sometimes to losses. To know the probability of these two outcomes of your changes, you must do a backtesting of them. Without backtesting, the changes you suggest will lead to random results.
Nico.Muselle MOD Alexander_Nikitin
My ROE say that I don't enter a trade with a 1/1 or lower RR ratio. If however I get an entry at a another point which does not invalidate the pattern I trade it. :)
Alexander_Nikitin Nico.Muselle
Why don't you just modify your cypher and place limit orders at 88.6? This will give you a very nice r/r)). The only answer I have is that you didn't tested the changes I suggested. You don't know the probabilistic outcome of these changes. If you don't like the r/r of cypher, then don't trade it. Trade only bats))
-1 Reply
Nico.Muselle MOD Alexander_Nikitin
I appreciate your help, I am in progress building my trading plan and RoE, and instead of backtesting I am forward testing. Anyway, as far as I know, it is not written anywhere that you HAVE TO enter exactly at the 0.786 retracement in order to be profitable. If my tests show that I have a better edge using my entries, that is what I will do.
I do not want to critize your approach and I appreciate you trying to help, but every trader has got to find the edge, the risk & reward that he/she is comfortable with, that is why the RoE and trading plan are different for every trader that takes it seriously.
By the way, scaling in and out is an often used technique to reduce risk and/or optimize profits. :)
Alexander_Nikitin Nico.Muselle
If you do backtesting, you will build your ROE much faster. Backtesting gives you years of experience within several days. If you do only forward testing, one unpleasant thing may happen. You may loose your depo BEFORE you have built you ROEs.
-1 Reply
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