Here we have 2 valid patterns currently formed on FX:USDJPY . The recent one that has just completed is the bullish flag pattern and the second one is the bearish bat pattern which is much further away from its completion point. So let's talk about these 2 setups in more detail and how to take advantage of them:
Bullish Flag Pattern
So for this setup we have recently gotten a breakout in the (note: the candle has not closed yet). Need to wait for the current candle to close before considering it a valid breakout. If this indeed is a valid breakout than wait for a re-test of the broken level before entering long on this pair. The target for the is the length of the flag pole itself, which was measured to be about 207 pips. But keep in mind that we have the pattern completion point at the previous BEFORE we can get to the full target of the . So partial profits can be taken at these levels to avoid giving back some of the profit made. Stop loss will be placed couple of pips below the re-test candle (not yet formed).
Bearish Bat Pattern
By looking left we see that this pattern completes at a really good . There is also some fib levels confluence at the completion point. If we can get a deeper completion of the that would give us even a better risk to reward and could potentially allow us to take full profit targets for the as well. We need to get a deeper completion of the in order to place our stop loss above the previous swing high @ 125.82 level. This would allow us to give the market enough room to move and not takes us out of the trade. But keep in mind that, a break AND close above the X point would invalidate the pattern. So for stop placement, if we get deeper completion of the pattern, than they go above 125.82 level, make sure to take the 126.00 even handle into accont. I personally would not be taking the short trade right at the 88.6% fib level, since the risk to reward will not work in my favor.
NOTE #1: After hitting the full target for , we will switch from long positions to short positions, based on the pattern.
NOTE #2: I did not label the target levels for the , since we will be looking for a deeper completion point before entering into short positions. Will update the chart regularly.
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