14 Jan 11 - Bullish Butterfly Pattern on USD/JPY - H1 Chart/ M15 Entry

A nice trade setup seen at the end of the week which allowed me to go long on this pair and since it was a very low risk trade, I decided to go ahead to enter the trade and manage it defensively.

A confluence of 3 Harmonic Ratios were seen which points to a Bullish Butterfly Pattern:

• 1.27 XA @ 82.434
• 2.0 BC @ 82.460
• AB=CD @ 82.470

Note: Since the 3 ratios were very close together, it gave me more confidence that this is a strong support.

Once price tested the PRZ and reversed (as confirmed by a Morning Star Formation), I proceeded to long this pair on the validation of the patten.

Note: In this case, this is a counter trend trade as we can see in the H1 chart attached where the price is moving down along a falling channel. Therefore, in this case, it is also wise to be more conservative in this trade since the D1 chart is indicating that a potential Bullish Butterfly Pattern is forming its CD leg now. Once the PRZ on the D1 chart is tested, I will be more willing to go long in the long haul. (Refer attached D1 chart)

Trade Details

Date: 14 Jan 11
Time: GMT 09:00
Entry Price: 82.540
S/L: 82.250 (29.0 pips) -> A very low risk trade.
T/P: 83.050 (51.0 pips)

Trade Update

Since I was looking to trade this pair on a very conservative approach, once the floating profit was approximately 20 plus pips, the trade was set to breakeven.

The 1st batch was closed on 14 Jan 11, GMT 09:44 at 82.822, netting a profit of 28.2 pips. The basis for this T/P is the 0.382 retracement level of the AD swing.

Final Update

The 2nd batch for this trade was closed on 14 Jan 11, GMT 13:31 when the protective stop was triggered at 82.799, profiting 25.9 pips.

Attached is the chart to which shows the trade outcome. In this case, this trade demonstrated that most Harmonic Patterns will allow some tradable opportunities and it does not always guarantee a home run. Therefore, it is important to protect our trades as we move along as no one can predict what the market will do next. Thus, discipline in the absence of greed and fear is important to consistently profit from the Forex market and this is certainly achievable so long as we stick to our trading plan. There is no doubt that there will be times where we will take lesser profits or even take a loss despite strict trade management, but the key here is to look forward and keep honing our trading skills while building up our experience.

It has been a learning journey so far for me and I believe it will always be this way and I am certainly glad to come to know of Forex trading as it has allowed me to know myself better and has since built a life long passion in me to do better in Forex.