NZD/JPY Bullish 5-0 Type-II Entry
Updated
Hi guys,
Here I'm on the 4 hour chart, looking a potential type-ii entry on a bullish 5-0. The pattern has already made an absolutely PERFECT 5-0 formation; all key reversal areas are bang on our key retracement/extension levels. Price has already touched the 50% retracement for the D point, however if price returns to re-test this level we should be looking for a long entry!
With this pattern, price should be trader until it re-tests the previous high at the C point .Our stop-loss should be below the 0.618 level, as if price closes below here then the pattern is no longer valid. By keeping the stop below we are minimising the possibility of price testing our stop before the rally to our TP begins.
With this in mind, there is also an inverse head and shoulder pattern forming on the daily/weekly chart with the C point at the neckline. The right shoulder has not yet formed and I would not be surprised if this is it in the making. Should this be the case, I will adjust my stop loss once price either meets the neckline or the first TP level of 0.382 (whichever comes first).
5-0 Ratios
B = 1.13-1.618
C = 1.618-2.24
D = 0.5
I am also short the GBP/NZD AND expecting a drop on the AUD/NZD if similar support is broken (see below). Using this position as sentimental confluence, it is conceivable that the NZD strength may be present in the Yen pair also.
If price does return to the D point I will drop down to the 1 hour time frame to judge my entry. Analysis will be updated as time goes on!
Thank you.
Here I'm on the 4 hour chart, looking a potential type-ii entry on a bullish 5-0. The pattern has already made an absolutely PERFECT 5-0 formation; all key reversal areas are bang on our key retracement/extension levels. Price has already touched the 50% retracement for the D point, however if price returns to re-test this level we should be looking for a long entry!
With this pattern, price should be trader until it re-tests the previous high at the C point .Our stop-loss should be below the 0.618 level, as if price closes below here then the pattern is no longer valid. By keeping the stop below we are minimising the possibility of price testing our stop before the rally to our TP begins.
With this in mind, there is also an inverse head and shoulder pattern forming on the daily/weekly chart with the C point at the neckline. The right shoulder has not yet formed and I would not be surprised if this is it in the making. Should this be the case, I will adjust my stop loss once price either meets the neckline or the first TP level of 0.382 (whichever comes first).
5-0 Ratios
B = 1.13-1.618
C = 1.618-2.24
D = 0.5
I am also short the GBP/NZD AND expecting a drop on the AUD/NZD if similar support is broken (see below). Using this position as sentimental confluence, it is conceivable that the NZD strength may be present in the Yen pair also.
If price does return to the D point I will drop down to the 1 hour time frame to judge my entry. Analysis will be updated as time goes on!
Thank you.
Note
Have a look at the potential head and shoulders setup. We are essentially using the 5-0 to trade the right shoulder.Note
The RBNZ interest rate was revealed yesterday, followed by a speech from RBNZ's Spencer at the select committee. This cause the drop in NZD's value. Price has once again re-tested our entry price, however I am still awaiting a reversal candle on the 4 hour or 1 hour to confirm the change in direction. Watch this space!Note
I haven't entered this position yet- I am still not convinced of the reversal!Order cancelled
This trade was never taken and the pattern is now invalid- the 4 hour chart did not provide any signs of a reversal. Instead, price has formed a descending triangle and broken support to continue south. On to the next one.
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