12 Jan 12 - GBP/USD - M15 - Bullish Crab Pattern Type 1 and 2 Reversals

This is probably one of the most interesting trades I have ever done as it covered almost every aspects of the Harmonic Trading Approach where we see trades triggered on the Type 1 and Type 2 Reversals in addition to the Trade Management aspect of the Approach.

Distal (H1) - Type 1 Reversal

Following the Bullish Crab Pattern completion, it sets up a divergence on this timeframe on a 1.27 XA extension while the RSI was just rolling out of the oversold region.

In essence, the divergence seen on this timeframe was my confirmation for a long on this pair.

Primary (M15) - Type 1 Reversal

Following the completion of the Bullish Crab Pattern, the price action stabilized following an RSI impulsive structure completion which validated an entry for a long position.

The hammer was basically my early validation of a reversal at hand and the RSI's exit from the oversold region further confirmed the setup.

Proximate (M5) - Type 1 Reversal

When it comes to the Proximate timeframe, the completion of a Complex RSI strucuture together with a Pattern Pattern was the initial setup for a long. Following the initial setup, the falling trendline violation was the final confirmation a a long position.

The trade was triggered at 1.53038.

Trade Management

For this trade, the trade was broken into multiple parts to secure partial profits along the way.

The 1st Batch was closed at 1.53287 when the Accelerated Trendline was violated, netting a profit of 24.9 pips.

The 2nd Batch was closed at 1.53602 when the price action traded up to the 0.382 AD leg, netting a profit of 56.4 pips.

The 3rd Batch, which was also the final batch and also the batch left for a discretionary run for profit was closed when the price action violated the Primary Trendline which happened to coincide with the 0.382 Trailer at 1.53278, netting a small profit of 24.0 pips.

Type 2 Reversal


Primary (M15) - Type 2 Reversal

Following the initial reversal of the Type 1 Reversal, the price action traded back to the PRZ for a secondary retest which set me up for another long this time round.

Looking at the price action in the PRZ, although the price action traded past the 2.0 XA region which was also the Stop Loss Limit of the patter, the price action failed to close below the 2.0 XA limit and thus the pattern was still considered to be valid in my case. In addition to an Impulsive RSI structure completion, the whole setup was also a divergence which gave the trade a greater potential.

Primary (M5) - Type 2 Reversal

My cue for a long position was when the RSI completed the Impulsive RSI structure followed by a falling trendline violation. In this case, the trade could have been triggered at 1.5260 region, but since I was late, I only to managed to trigger the trade at 1.52985 which was still okay, although less than ideal, since the price was still slightly below the PRZ.

The trade was later closed at the start of a new trading week when price action violated the Primary Trendline at 1.53055, netting a profit of 7.0 pips.