Bullish channel on EURUSD weekly chart.
EURUSD is forming a bullish bat pattern on H1 chart exactly at the bottom of weekly bullish channel.
- B Point at 0.500XA retracement.
- C Point at 0.382AB retracement.
PRZ Zone :
- 0.886XA retracement at 1.4050
- 2.618BC retracement at 1.4030
- Extended 1.27AB=CD at 1.4020
PRZ Zone is below bottom bullish channel on weekly chart. This could signal high probability of false breakout on the weekly and uptrend continuing was on the way.
I will be looking to buy this pair on the retest of PRZ pivot level. This trade should give at least 4:1 risk reward ratio.
One thing to remember, as in this setup B point was at 0.500XA retracement, the pattern could be a Bat pattern or a Crab pattern. While PRZ we must use for Bat pattern is 0.886XA retracement,Crab pattern possess a more extreme PRZ which is 1.618XA retracement. This will make there are several entry possibility on this setup.
17 Jun 2011
After decline to 1.4070, just 40 pips above 0.886XA projection, EURUSD make a strong rally and close the week just below B point at 1.4320 which is about 200 pips. I did not take this trade as i'm waiting the price action to test the PRZ zone before execute my trade. This example show that not every harmonic patterns will produce a trade. The key point is every trade must be execute in the PRZ Zone, which sometime we will miss a good trade. But in my opinion it can filter a lot of bad trade.
Friday, June 17, 2011
Bullish channel on EURUSD weekly chart. 
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