Ending with this cycle dedicated to the japanese reversal patterns, that we have done this week let me show a chart of USDMXN in daily showing the concept of confirmation:
Here we can find a Harami (not so good reversal) some what in the middle of nowhere, it was formed relatively far from the 76.4 fibo support and beyond the 61.8% retracement, but then after a few more candles appear a big candle to the upside.
Can be discussed if this is a benchmark or if this is a bullish engulfing, the difference is that the benchmark retraces more than one candle and have an extraordinary big body. Well thats why i think we can debate it,
In the entrance point the benchmark due to its big advance in the new direction, thends to fall back at least a 50% so thats why is recommended the entry afther that occurs, if im wrong ill be loosing the trade.
Given the yet no so decided continue of the upside movement I more inclined to think this is a benchmark waiting for its pullback than a big allmost doji engulfing (the other way to look this reversal pattern)
Im using the most visible phantom resistance to set my objective with this pattern of course if a new resistance appears beyond the high of the benchmark Ill need to re adapt to the chart and take provision to that.
The point here is to show how a not so good reversal can gain traction if is confirmed for a new reversal a bit afther its formation. Have a nice weekend
Here we can find a Harami (not so good reversal) some what in the middle of nowhere, it was formed relatively far from the 76.4 fibo support and beyond the 61.8% retracement, but then after a few more candles appear a big candle to the upside.
Can be discussed if this is a benchmark or if this is a bullish engulfing, the difference is that the benchmark retraces more than one candle and have an extraordinary big body. Well thats why i think we can debate it,
In the entrance point the benchmark due to its big advance in the new direction, thends to fall back at least a 50% so thats why is recommended the entry afther that occurs, if im wrong ill be loosing the trade.
Given the yet no so decided continue of the upside movement I more inclined to think this is a benchmark waiting for its pullback than a big allmost doji engulfing (the other way to look this reversal pattern)
Im using the most visible phantom resistance to set my objective with this pattern of course if a new resistance appears beyond the high of the benchmark Ill need to re adapt to the chart and take provision to that.
The point here is to show how a not so good reversal can gain traction if is confirmed for a new reversal a bit afther its formation. Have a nice weekend