From the last post in early April (see related idea). Price did not manage to complete the Harmonic Pattern and it dropped. This time around GBPCAD has been on the rise and has not reached a critical zone, completing the Pattern.
Pattern Identification Completed a Bearish Bat Pattern at this current levels. Starting to have a bearish bias. The H1 RSI has also reached the OverBought zone
Trade Execution Now we have just formed the T-Bar. Will have to watch the next and the next few bars. If price rejects the PRZ and fall, it will create a good opportunity to take the trade.
Next few candles will be critical
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Look at how the price disrespect the PRZ. it just bashed above the PRZ. There is no trade.
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Yesterday's move on the GBP was caused by a one off event. The British PM called for an early election and that made the GBP strengthened drastically.
Observation & Lessons learn : 1. See how the price just went through the PRZ. I posed the update just 1-2 hours after the completion of the pattern. That is a warning sign that the Harmonic Pattern might not work out to our favour. The hint here was not to take the trade and stay on the side lines.
2. A potential trigger to sell the bearish Pattern was when the price came back down below the PRZ. BUT noticed how the PRZ then becomes a support zone, that becomes the second warning sign the this bearish Pattern has a low chance of success.
Price eventually rallied as the early election is seen to be beneficial to the UK economic and political scene.
Hi Boon, isn't the PRZ getting nullified by the break and close of X? Will I be wrong even if I allow the price to go for 10 - 15 pips above X to still consider the pattern to be valid?
BoonHooi
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@Neofibs, When the price breaks above the PRZ, the pattern is still considered as valid. The fibonacci measurements ware correct to make it a valid pattern.
Just that when it disrespect the PRZ, the chances of the trade working out is lower.
Hope you see the difference between an Invalid pattern vs a 'poor' or 'low probability' pattern
Neofibs
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@BoonHooi, thank you for helping me avoid the loss & for the explanation and i will keep that in mind whenever the price is around the PRZ in order to execute my trades better.