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BAT Bearish Pattern - why you dont click Sell on D point
So we have a pattern complete for example which has harmonically tested all PRZ values.
So what do I do know?
How do I validate this pattern to show it has a chance of reversing?
Very very rarely will a pattern instantly reverse off D, a reaction yes but trad-able? - its debatable.
First look at the Overbought state here 176 pips in OB on RSI
Where is the indication that is slowing down? there is not...
You do not sell or buy in a OB state, you need confirmation of slowing and reversing.
You want to wait until RSI has is cooling down and re-enters a normal state.
Monitor for a retest of the overbought state in conjunction with divergence of price or as Scott Carney teaches with RSI BAMM and his new HSI indicator of a similar nature.
Basically have a validation and plan for execution, patterns have rules to and rules are also needed to execute trades for best possible RR
Harmonics patterns are everywhere on every time frame, not all are obviously trad-able.
10% Pattern
40% Validation and execution
50% trade and money management
This may still be trad-able, but if your in the trade now you are guessing.
If you dont agree that is also OK, if you are profitable then fantastic, keep doing what you are doing.
So we have a pattern complete for example which has harmonically tested all PRZ values.
So what do I do know?
How do I validate this pattern to show it has a chance of reversing?
Very very rarely will a pattern instantly reverse off D, a reaction yes but trad-able? - its debatable.
First look at the Overbought state here 176 pips in OB on RSI
Where is the indication that is slowing down? there is not...
You do not sell or buy in a OB state, you need confirmation of slowing and reversing.
You want to wait until RSI has is cooling down and re-enters a normal state.
Monitor for a retest of the overbought state in conjunction with divergence of price or as Scott Carney teaches with RSI BAMM and his new HSI indicator of a similar nature.
Basically have a validation and plan for execution, patterns have rules to and rules are also needed to execute trades for best possible RR
Harmonics patterns are everywhere on every time frame, not all are obviously trad-able.
10% Pattern
40% Validation and execution
50% trade and money management
This may still be trad-able, but if your in the trade now you are guessing.
If you dont agree that is also OK, if you are profitable then fantastic, keep doing what you are doing.
Nota
Now we have moved back into RSI normal state of retesting the Overbought.We can consider the sell trade here.
Divergence is notable and can now look for a suitable entry on lower time-frames if this is of interest to you.
Notice the difference of RR compared to a D point click trade.
Nota
No break of TL for lower time frame entries.Failed pattern and a continuation move more likely at least to next resistance bracket.
No trade no loss :)
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.