This setup looks complicated in so many ways. It looks like at every instance, price was torn between large numbers of buyers and sellers (then again, isn't that exactly what Forex is all about?). Only that in this case, there was so much distortion done to price that one (at least me) would find it difficult at first to make head or tail out of the price action. Though I am conservative, but I do well to appreciate my efforts when I cannot resist the urge: spotting this setup is a testament to how polished (though, still has room for improvement) my skill is.
Setup was originally spotted on 4-hour time frame. Fibonacci retracement tool was drawn from swing "1" to "2". Fibonacci expansion tool was drawn from swing "2" to "3", and then to swing "A". The two Fibonacci tools' levels projected downward to form a cluster (region covered by the green lines).
For a quick, precise entry, and tight Stop Loss, Fibonacci tool was drawn from swing "B" up to swing "A"; another was drawn from swing "B" up to swing "C". This pattern is one of the famous harmonic patterns; and it is referred to as "ABCD". The swing "D" is the reversal zone (swing "D" was calculated to form within the region covered by the indigo lines) . It is also referred to as the "Potential Reversal Zone" (PRZ). The zone is in confluence with the Fibonacci retracement-expansion cluster. This enhanced my bias.
When price traded into the confluence and formed reversal bars, I went long at 132.00; stop loss was placed at 131.76 (24 pips -- below "D"), and Target was set at 133.17 (117 pips -- 4-hour resistance).
Fibonacci retracement tool was drawn from swing "A" to "D" and another was drawn from swing "C" to swing "D"; as a result, Fibonacci clusters were formed. Price levels marked out by the red lines are possible reversal levels before my Target. Trend line also was in confluence with the reversal levels (red lines).
EVENTUALLY
when the Bulls decided it was time price rallied, it did with a long bullish bar. It traded higher still and even broke the trend line, but it could only make it far enough to form a bearish divergence and an Evening Star at the confluence. Price declined after this had unfolded and took out my trailing stop which had already locked in 42 pips.
Profit/Loss: + 42 pips
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