Distal (H4) - Type 1 Reversal
As seen on the attached chart, we can see that this pair has been trending up since late Jun 11 and this set us up for a continuation trade.
At the Type 1 Reversal setup, there was an impulsive RSI structure which gave me some confirmation too and thus there were 2 confirmation factors which we can see from here. (This was observed for both the Type 1 and 2 Reversals)
Primary (H1) - Type 1 Reversal
The whole pattern was completed when price tested the lower end of the PRZ as seen in the attached chart.
Despite an extreme price action at the establishment of the Terminal Price Bar, the price was able to stabilize after the pattern completion which was an early indication that there was a reversal at hand and this was ideal as it was telling us that there was possible reversal at hand. This was later confirmed when the RSI rolled out from the extreme oversold area which was an additional confirmation for the Type 1 Reversal trade.
Proximate (M15) - Type 1 Reversal
For the Type 1 Reversal in this case, our cue to go long on the trade was when there was a downtrend trend line violation signalling a change of trend and thus a reversal.
Despite a short move of about 20 plus pips, this was characteristic of the quick natural reactive move of the Type 1 Reversal. The trade was closed when the price action violated the accelerated trendline.
Type 2 Reversal
When it comes to the Type 2 Reversal, it got a little tricky and I took a loss of approximately 30 pips when I triggered wrongly on the Type 2 Reversal.
After some reflection, I had another go at the long on a better setup.
Primary (H1) - Type 2 Reversal
In the case of the Type 2 Reversal, there were more technical setups that came into play.
Firstly, at the completion of the Type 2 Reversal, there was an impulsive RSI structure which is supportive of our entry. In addition to it, there was a nice divergence which gave me added confidence.
Despite price action violating the Terminal Price Bar's low, it was within the 1.13 to 1.618 Fibonacci Extension and thus there was some discretion needed in this case as to whether to take the trade or not. In the case of my decision, it was the divergence which was key in the final decision making part which made me took the trade.
Proximate (M15) - Type 2 Reversal
This is where it gets interesting. There was even more technicals at play on the Proximate time frame.
We had an impulsive RSI structure at the Type 2 Reversal entry setup which preceded a trend line violation. This is pretty common since the RSI will always be early.
The most important consideration was when the RSI completed a RSI BAMM formation which was a very strong signal for a reversal and thus the trade was triggered.
The trade was later squared when the price violated the accelerated trend line. I have decided to close the whole position instead of a partial close was that since it was the weekends, I do not wish to take any risk over the weekend.
The whole trade netted 58 pips which covered my initial loss on the first Type 2 Reversal attempt.
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