As in the case of today, there were 2 completed patterns, of which one has a very little potential while the second has a very nice classic textbook setup.
The first pattern completed was a Bullish 5-0 pattern which lacked the RSI validation on the M15 (Primary) Timeframe. See attached chart.
As seen in the attached, there was no RSI extreme test which indicated that there might not be a great potential in this trade though. However, when we zoom into the M5 (Proximate) timeframe, there was a nice signal for entry which might have prompted a light long on this trade. See attached chart.
As in this case, I may consider this trade as the trade would have been executed in the direction of the predominant trend, which is to say that we have the wind at our back which would have increased the probability of the trade. As seen in the attached H1 (Distal) timeframe, we can actually see that the pattern completed in a rising channel and there was a support at 0.382 retracement level at 121.272.
Since I was not very keen on taking this setup, I decided to avoid it while documenting it as this is part of the education when it comes to trading. As I monitor this pair was the day passes, the market presented another nice opportunity and in this case, a nice classic textbook setup which pointed to a very high probability trade.
In this setup, there was a Bullish Shark pattern completion which allowed us to have a better entry and at a better price as compared to the earlier Bullish 5-0 pattern as there was a nice RSI validation at the completion of the pattern when the price action tested the whole PRZ.
Firstly, for this Bullish Shark pattern completion for the second setup of the day, the price action traded to the bottom of the rising channel which became a support in the distal time frame and this happen to coincide with the 0.50 Fibonacci Retracement level seen on the Distal timeframe as show in the attached chart.
Knowing that the setup was in the direction of the predominant trend, the pattern completed on the Primary timeframe (M15) nicely with a valid test of the PRZ with a RSI validation which was a nice textbook setup. However, in this case, although the Terminal Price Bar was a little extreme which might point to a warning, the RSI exit from the extreme oversold area was an indication of a valid entry. In addition, the following price bar after the Terminal Price Bar did not violate the low of the Terminal Price Bar which gave us added confidence as seen in the attached chart.
On the completion of the pattern, we would have to sync the Proximate timeframe with the Terminal Price Bar completion and with that, there was a nice setup for the trade to be triggered, which turned out to be a nice trade.
In the case of the Proximate timeframe, there was a nice bullish engulfing pattern which occurred after the RSI exited from the oversold extreme area and that was the signal to go long within the PRZ.
As we can see from today's example, there will always be an opportunity in the market so long as we give ourselves a chance. Patience and discipline is key to trading success and it is okay to miss trades sometimes. This will always happen and we will just have to wait for another opportunity to come along.
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