30 Nov 10 - Bullish Extreme Harmonic Impulse Wave on USD/JPY - H1 Chart

This is one of the patterns which I seldom trade for the reason that there are lesser confirming signals to confirm a trigger. Then again, when such signals occur, they do provide some nice trading opportunities.


In the case of this pair, there were a few good lessons to learn from this trade.


Price was in a strong up trend (0X) when it corrected (XA) and failed to rally further as expected and from there price took a plunge. After the plunge, price was well supported at the 1.618 extension of AB.

The signal to long was at the close for Piercing Pattern. 


Trade Details

• Date: 30 Nov 10
• Time: GMT 15:00
• Entry Price: 83.701
• S/L: 83.30 (40.1 pips)
• T/P: 84.281 (58 pips)

Note: Interesting, after I triggered the trade,  price rallied a little before going back to retest the support and created a divergence. As seen in the chart, the price has made a lower low but the RSI was not showing a lower low. In cases such as this, it creates a very powerful signal to show that a rally is impending.


Trade Update


The 1st batch was closed on 01 Dec 10, GMT 12:41 at 83.901, netting a profit of 20.0 pips while the 2nd batch was closed when the T/P was triggered on 01 Dec 10, GMT 14:22, netting another profit of 58.0 pips.


Reflection


In trading, there are many techniques which can be trades so long as we know what we are doing. In the case of this pattern, they do occur but it is just that I seldom trade them or should I say that I seldom pick them up unless the common harmonic patterns are not showing up as often that I will start looking for such impulse waves.


Thus, in this case, it has also instilled in me that I have to be more flexible sometimes as there are a lot of opportunities and that I will have to keep my mind and eyes open to see them instead of just fixing on patterns.