Here we have a valid bullish flag pattern on FX:AUDNZD and now we are just waiting for a breakout to the upside. Flag patterns are also consolidation patterns, just like any other harmonic patterns ( cypher , bat, butterfly , crab , gartley ). This pattern is usually formed after a strong movement in price action. There are 3 main parts to this pattern: the flag pole, flag portion, and the continuation portion. After a strong movement, a buying in this case, the market starts to consolidate and we expect the market to breakout in the direction of the flag pole, in our case to the upside.
After getting the breakout, the target is equal to the length of the flag pole, which is 385 pips for this setup. Also a key point to keep in mind is that, the longer the market stays within the consolidation zone (flag portion), the stronger the breakout to the upside will be. The invalidation point for this flag pattern is when we get a break AND close below the bottom falling trend line of the flag portion. Also note that Market has recently broken downward structure and put in a new Higher High (HH) Higher Close. See the chart above for more details.
NOTE #1: Partial profits can be taken at the 4hr resistance level of 1.09564, which is very close to the 127.2% fib extension level (drawn from LL to HH leg).
Please feel free to AGREE or DISAGREE with this idea by leaving a comment below. Hit that thumbs up button (top left corner of this chart) if you like the idea. Thank you everyone for all the SUPPORT that you have given me so far, I truly appreciate it. Good luck everyone :)
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UPDATE #1: Hello traders, I actually forgot to add the "favourable" and "non-favourable" directions for this particular setup. And also in the main chart above, I wrote "break and close ABOVE this falling trend line", BUT actually I meant to write "break and close BELOW this falling trend line". So just needed to make a correction there. I have included these two corrections in the updated chart below. All the BEST to everyone :)
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UPDATE #2: Hello Traders, we just got a huge breakout to the upside thanks to 2 AUD high impact news "Employment Change" and "Unemployment rate" that came out today @ 7:30 pm. Now only waiting for valid re-test of the broken level before entering into this setup :)
Hey, i would say that it really depends on your personal style of trading. if you are more of an aggresive type of trader, than yes you can but the breakout. But I consider myself more of a conservative type of trader, so I would be waiting for a valid retest of the broken level after a strong breakout before entering into this setup. All the BEST :)
moneymaking
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A great example of why I don't trade breakout is becuase sometimes you can fall into the false breakout trap, which is illustrated quiet nicely by the AUDJPY bearish flag pattern setup shown below. There the initial breakout was a false one, so by staying on the conservative side I was able to protect myself from that trap. Later on we did get strong breakout, but the retest candle close so far away that I was not able to make the risk to reward work in my favour. So that also kept me out of that setup. And recently we just got a 2618 trade setup at the breakout level, so I was able to enter into the bearish flag pattern theorugh the 2618 trade setup. This also gave me a great risk to reward on it as well. Currently I am short on AUDJPY from the 87.04 level and I am risking only about 62 pips in order to potentially make 252 pips in profit. That's almost a 4 times greater reward than the risk involved, which I am willingly to take very happily :)