06 Dec 11 - USD/CHF - M15 - Bearish Crab Pattern - Type 1 Reversal

This was the second trade for the day which allowed my to cover my earlier losses and made a small profit for the day.

A beautiful trade I would say and a trade which I was very pleased with the trade execution and management aspect of it.

Distal (H1)

As seen in the attached chart, the pair is currently in an uptrend but there was a resistance at the 0.786 Fibonacci Retracement Level. In addition, the RSI has previously tested the overbought region and has since rolled out of the zone and we can also see that it has been trending down which indicated the pair's weakness.

Primary (M15) - Type 1 Reversal

After the establishment of the Terminal Price Bar, it needed an additional 2 more candles before price stabilized and this is something which is expected of the Crab pattern as it will usually have some overspill.

In addition, the RSI only completed the complex structure after the Terminal Price Bar establishment which was also an early signal to indicate an overspill to the upside.

Proximate (M5) - Type 1 Reversal

With the RSI always being an early signal, my cue to sell was when price broke the uptrend trendline while staying above the PRZ for a nice entry.

The confirmation factor in this case was the trendline break and the RSI complex structure which rolled out of the overbought area and started to trend down.

For the trade management aspect of the trade, the trade was split into 2 trades, with the 1st Batch closed when price went beyond the 0.382 AD swing with a profit of 31.6 pips.

The 2nd batch was closed when the price action broke above the accelerated trendline with a profit of 42.6 pips.

Type 2 Reversal


There was indeed a Type 2 seen in the chart, but the only reason why I chose to avoid it was that the pattern was a little stretched already and that it has exceeded the 1.618 Fib Time Projection which could have lowered the probability of the trade. Regardless of the move, I will still stay away from this trade as I firmly believe in taking only the setups which will give me a higher chance of success. This of course is still in progress and along the way, this is something which I will expect myself to get better at.