13 Jan 12 - USD/JPY - M15 - Bullish Butterfly Pattern Type 2 Reversal

In this example, the Type 1 Reversal was not triggered at all as the pattern completed before the 0.382 Alternate Time Projection which did not present an ideal trade execution zone.

Following the initial Type 1 Reversal's brief move, it set me up for a small buying opportunity.

Distal (H1)

In the case of the H1 timeframe, it was clearly supportive of the trade as there was a 0.886 XA leg on this timeframe which was providing a support and this was converging with the PRZ of the Bullish Butterfly Pattern.

In addition, there was previously an impulsive RSI structure seen at the completion of the Type 1 Reversal which indicated that this support was likely to hold.

Primary (M15)

As seen in the attached chart, although there was an initial setup seen at the Type 1 Reversal, the only reason that I held back on the trade was for the fact that the pattern completed outside the 0.382 Alternate Time Projection.

After the initial rally from the Type 1 Reversal, the price action went back to retest the PRZ. Despite a lack of a secondary RSI retest, the price action held at the point of the retest which made me consider a long on this pair.

Proximate (M5)

The trade was executed when the RSI exited from the oversold region after completing an impulsive RSI structure. In addition to the RSI confirmation, the was a Piercing Pattern seen on the price action which gave me added confidence to go long from here, which happened to be within the PRZ.

After triggering on the trade at 76.729, the trade took some heat before the price action actually reversed and traded out of the PRZ. The Target Profit was triggered at the later part of the day at 76.888, netting a profit of 15.9 pips.

In the case of this trade, the profit potential was not really fantastic and my basis of this trade was purely for the testing of the technical condition setups so as to ensure that I have consistency in my trade execution.