Bearish Butterfly forming at C.
Updated
This is a good example of harmonics at work. This pattern can be ridden down to the D leg, then the trader can ride it back up once it reaches the price reversal zone.
From the chart we can see a descending trend line.
Risk & reward
Risk = 20pips
Reward to 1.27 of XA = 120pips R:R 1:5.7
Reward to 1.618 of XA = 166pip R:R 1:8.6
From the chart we can see a descending trend line.
- Price has reacted to the trend line and rejected it.
The price could head down from C to D.
The price is reacting to structure (yellow zone)
Numerous rejection wicks.
Divergence is evident on the 1hour chart RSI
Risk & reward
Risk = 20pips
Reward to 1.27 of XA = 120pips R:R 1:5.7
Reward to 1.618 of XA = 166pip R:R 1:8.6
Note
Unfortunately this trade failed. The trade was triggered however price rallied very quickly up. The beauty of this entry was a small risk of 20pips.
The price has broken through the trendline line (which price was respecting) now I will look for future opportunities.
Note
Further on the break out. The price came back with a minor retest before continuing upwards. Woould have made a nice small trade
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