GBP/NZD
Analysis:
AB = 78.6% Retracement:
This indicates that the AB leg was a deep retracement, forming the basis for the harmonic pattern. A deep retracement like 78.6% usually means the likelihood of a significant reversal increases when the D point is reached.
BC = 123.6% Extension:
The BC leg is extended, meaning the BC movement is wide. This could indicate that GBP/NZD is experiencing strong momentum, but it could also be a sign of "overextension."
CD = 141.4% Extension:
The CD leg is nearing the end of the harmonic pattern. The D point, which is where a reversal is expected, will be around the 141.4% of XA. This is the critical point where a decision can be made (buy or exit).
Risk and Reward:
Reward: If the D point holds (a reversal occurs), you can gain significant returns from the reversal. For instance, you could benefit from a strong upward (buy) or downward (sell) move when the price leaves the Potential Reversal Zone (PRZ).
Risk: If the D point is breached, GBP/NZD may continue its movement and break the harmonic pattern. This could lead to losses if you hold onto the wrong position.
Recommendations:
Wait for GBP/NZD to reach the D point (141.4% Fibonacci Extension).
Look for confirmation signals such as:
Divergence (MACD or RSI).
Candlestick patterns (e.g., engulfing candles or pin bars).
Make sure to use a stop-loss to protect in case the D point is breached:
Set your stop-loss outside the PRZ.
Reward-to-Risk Ratio: Aim for a reward at least 2:1 in relation to the risk you're taking
AB = 78.6% Retracement:
This indicates that the AB leg was a deep retracement, forming the basis for the harmonic pattern. A deep retracement like 78.6% usually means the likelihood of a significant reversal increases when the D point is reached.
BC = 123.6% Extension:
The BC leg is extended, meaning the BC movement is wide. This could indicate that GBP/NZD is experiencing strong momentum, but it could also be a sign of "overextension."
CD = 141.4% Extension:
The CD leg is nearing the end of the harmonic pattern. The D point, which is where a reversal is expected, will be around the 141.4% of XA. This is the critical point where a decision can be made (buy or exit).
Risk and Reward:
Reward: If the D point holds (a reversal occurs), you can gain significant returns from the reversal. For instance, you could benefit from a strong upward (buy) or downward (sell) move when the price leaves the Potential Reversal Zone (PRZ).
Risk: If the D point is breached, GBP/NZD may continue its movement and break the harmonic pattern. This could lead to losses if you hold onto the wrong position.
Recommendations:
Wait for GBP/NZD to reach the D point (141.4% Fibonacci Extension).
Look for confirmation signals such as:
Divergence (MACD or RSI).
Candlestick patterns (e.g., engulfing candles or pin bars).
Make sure to use a stop-loss to protect in case the D point is breached:
Set your stop-loss outside the PRZ.
Reward-to-Risk Ratio: Aim for a reward at least 2:1 in relation to the risk you're taking
Disclaimer
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