26 Oct 11 - GBP/JPY - M15 - Bullish Shark Pattern which failed to complete

I was initially looking for a Bullish Shark pattern to be validated on the GBP/JPY today to continue to go long on it as a continuation signal in a rising channel.

In this posted example, it shows the importance of waiting for the whole PRZ to be tested before executing a trade. It might be exasperating sometimes to be monitoring a setup for a few hours only to be it invalidated, but face it, this is trading. Therefore, discipline and patience are key in trading.

As a result, the trade was aborted and I will have to wait for another signal to come in again.

Although price reversed nicely before testing the whole PRZ, this will be one of the cases where we will just ignore it even if price runs as we are only looking to trigger a trade in a zone (PRZ) where we expect the price action to reverse. Other than that, we will not do anything despite the RSI having an early validation signal.

I was also thinking if a short could be taken when price moved up and formed a possible Bearish 5-0 pattern, but then, i realised that the 1.618 AB extension was not tested in the first place and thus invalidating the setup. In most valid patterns, we want to see precise ratios tested before we would consider a trade.

As in this case, it highlights the importance of respecting the structural signals. Once a point of out of structural alignment where it exceeds the pattern's limit or it is shy of the pattern's minimum ratio, we do not do anything. We are looking at precision here and therefore it will be okay to stay away.