Perfect reversal from 5-0 PRZ @ 61.8% (2650) with IDEAL RSI confirmation as mentioned in previous posts. I know most understand M&W-Type harmonic patterns but the 5-0 is a different animal. I outlined the identification rules in HTVol2 but I was a bit light on some of the management relationships that are associated with this structure. Here is some clarification: As with all TYPE-I harmonic reactions, we look for the 38.2% target (2450) HITTING NOW! I am watching closely because the EXPECTED HARMONIC REACTION w/ a 5-0 is beyond Target-1 @ the 886 retracement of the CD leg (2200), and then a 1.618 continuation (1900 - where Bat completes).
Two Thoughts for this TRADE Setup: 1. Targets are clear with stop at breakeven because continuations SHOULD BE demonstrative. The entry was ideal but no complacency just because the HARMONIC REACTION worked well. 2. Manage the reversal on price and RSI to scale out if no follow through.
Position Mgt:
__________________ 2650 = 618
____________________ 2600 STOP
YOU ARE HERE 2475
____________________ TGT I 2200
____________________ TGT 2 1900
Properly measured harmonic patterns manifest these types of reactions and provide a "cushion" to manage the reversal in ideal situations but require immediate continuation. No follow thru, MANAGE AGGRESSIVELY! Again, this trade setup is an analysis of the harmonic price action - which has been overwhelming lately. Stick to the harmonic #s as they work for YOUR plan.