climbing_stars
Short

XHB Bearish Butterfly

AMEX:XHB   SPDR S&P HOMEBUILDERS ETF
120 7 4
We could see it retest the $32-$33 area before fully reversing. But a Bearish Butterfly that finished at a 61.8% of the entire chart is a good bet to place on the downside. On a fundamental side, if interest rates rise we will see these guys get hit hard.
motleifaul
2 years ago
It is asimiliar picture as in other geometry patterns in other trading items at moment. The patterns suggest a southern move but we are to close to resistances in the daily charts. This makes me reluctant to take fresh positions at moment.
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climbing_stars motleifaul
2 years ago
We will retest the highs. Then the pattern will work. If $2 is too much risk for you I would wait then. You can't time every entry perfect.
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motleifaul
2 years ago
Seems it is the medium line of your Donchian channel that breakes the downmove.
Neertheless the appearence of the Butterfly is worth to watch XHB for a downmove further.
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climbing_stars motleifaul
2 years ago
That isn't how these patterns work. We may retest $32-33. Which may create even more of a negative divergence. If you are expecting an immediate large decline, just know one touch reversals are rare. Price may bounce around in the $30-32 range. But judging by the bearishness of the pattern I do expect to see $26. Will you get a better entry if you wait for the highs to retest, maybe. Or we could just get taken to the downside quickly. Either way no entry will be perfect. That is why you scale in. Whether you choose to trade the pattern or not good luck to you mate.
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motleifaul climbing_stars
2 years ago
Thank you for the comment. I had watched these patterns. I know that this one is a weekly chart and the pattern has been forming for years. I know it. Nevertheless I will look for my entry because of I have to bear the risk and I am not willing to wait until I have a drawdown of 10 %. I chose not to draw the pattern if you allow. But I take into account that there is a such one for my trading. Sorry to have bothered you. I won't do it anymore. Good luck to you as well.
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climbing_stars motleifaul
2 years ago
It's no bother. If you have to manage risk I understand. I was merely stating facts from trading harmonics for a while. Most pattern don't reverse at the PRZ. Most might push higher or lower (bullish patterns). It just gives you an idea of a good entry. Yes sometimes they don't pan out. Like you said though the longer the pattern the more likely it is to succeed. Sorry if I was too blunt. I'm here if you have further questions. Take care.
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davis284
2 years ago
just looking at these ratios and lining them up with the ones in this video. it seems your butterfly harmonic pattern's b point is not high enough to qualify the pattern? http://www.fxgroundworks.com/butterfly-pattern/ ?
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