BTCUSD 08-15-18 Cypher Pattern
Updated
Price looks to be forming a Cypher Pattern. Cypher Patterns differ from most patterns due to the extension of the C leg beyond point A. The Potential Reversal Zone (PRZ) is calculated casting a retracement Fib from the most extreme points which are Point X and Point C and also and extension Fib from the BC move. The most important Fib ratio in the Cypher Pattern is the .786 of the XC move and is complimented by confluence of the BC move between 1.13 and 1.414 however 1.618 is a golden ratio and should not be ignored. There is also a 4hr TDST resistance line as well as a decent resistance cluster from our previous breakdown just below the 7000 area. When taking a short position on this pattern you would scale in through the PRZ zone with a stop loss set 20-50 pips above point X.
TARGETS: (The Targets posted are only approximations as they cannot be validated until Point D has been established)
Once Point D is established, two targets should be at the .382 and .618 levels. Break your positions into three even Lots. Once the Lot 1 Target at .382 is hit you should move your overall Stop Loss to breakeven. After Lot 2 Target at .618 is hit, Lot 3 (remaining balance) should use a Trailing Stop Loss starting at the .236 of the Target Fib cast.
VIP NOTE: While this pattern looks promising, I am very hesitant to enter the short trade at the PRZ due to the potential short squeeze. A short squeeze could easily push price thru the PRZ area and trigger the Stop Loss.
TARGETS: (The Targets posted are only approximations as they cannot be validated until Point D has been established)
Once Point D is established, two targets should be at the .382 and .618 levels. Break your positions into three even Lots. Once the Lot 1 Target at .382 is hit you should move your overall Stop Loss to breakeven. After Lot 2 Target at .618 is hit, Lot 3 (remaining balance) should use a Trailing Stop Loss starting at the .236 of the Target Fib cast.
VIP NOTE: While this pattern looks promising, I am very hesitant to enter the short trade at the PRZ due to the potential short squeeze. A short squeeze could easily push price thru the PRZ area and trigger the Stop Loss.
Note
The pattern is still not active yet as price could not hold above Point B. On the other hand, price has not traded below Point C and therefore is not invalidated. Pattern Activated = Significant close, and hold, above Point B.
Pattern Invalidated = Price trades below point C
Trade active
Point D has now been established and the Target Fib cast has been updated to show the targets. The .236 is currently acting as support. Still hesitation due to a potential larger short squeeze. Note
Lots 1 and 2 have been hit!!!
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