GBP/USD Harmonics Crab 01 part 2

Yesterday I took this crab pattern to study how it would go. My initial thought that this pattern would indicate a deeper correction before a reversal would've taken place to continue the uptrend.

Unfortunately It didn't happen. Better yet it took hours to try and test the 38.2% fib level of leg CD.

We can see now from the fib extension that the PRZ is broken through but the market moved back into the range. I am not going to trade this pattern anymore because the zone has been breached which usually indicate a trend continuation. Right now the market is trading at the border and in the next hours nothing we can do then see how it goes.

Zooming into PRZ zone I can explain how I dealt with the situation. Yesterday my pending order at 1.5690 was perfectly executed. To be honest this was already my second try for this pattern as the first order stopped out at break even. I had my second pending order and last try at the next hight. My last try is always as close to the border of the PRZ zone Once that fails I have to accept reality. It is the last line of defence.

For the next hours I was pretty much behind my computer following the market so I could react quickly should a swing happen. And it did! I saw the market finally moved closer to the 38.2% fib of leg CD but formed a bullish pin bar rejecting it. That was the first sign. But yeah because of my experience to pull out too quick, this time I didn't made my exit just yet. As you can see right after that it also formed a double bottom! And suddenly it became a bit hot. The market moved right back up but rejected a mid resistance level. I thought this is my chance to find myself an exit as it was clear for me the bulls are winning. I think I was a bit of lucky also I exited on the retest of the double bottom and could squeeze about 40p out of this trade. I feel relieved in worse case it could rally back up and stopped me out again... Pfff...

Lately I've been more successful in catching the first 2 legs of a harmonic pattern then when a pattern actually completes. I've concluded that in this case with the GBP/USD I often find double bottoms as a first reversal indication. When a double bottom forms near an important fib. It usually indicates the beginning of a leg. Let me explain it with a chart.

Here we can see the total trades I've made in the last week regarding harmonics. The first double bottom I check it with a fib level and stochastic. If the bottom forms between 5 and 10 of the stochastic RSI I highlight it and draw a horizontal line at the close and opening of these bars. This is my level of entry. I always do that because in my experience with the pound dollar a retest will follow at that level.

After the first bottom market moved up and then sideways.  Couple hours later the market execute my first pending order and market rallied back up. After the market rallied back up to 1.56 I moved my stop to 50% of X to A. It's funny a bit... right after I adjusted my order market stopped me out giving me a 86pip reward.

My second pending order was at 1.5515 as you can see it just missed it with just 5 pips or so! Bit shamed it could have been a perfect entry! but yeah it happens. I'm more happy with seeing the market move in my direction then seeing it opposite way if it was executed. Anyway I followed the market and saw another double bottom half way and entered manually... There was still room for profit and I could squeeze out 90pips! In total I've earned more during the forming of a pattern then when it actually completed. I've noted it down and this is a good case study for future trades. Also I want to point out the bottoms. Notice how it nicely crossed between 5 and 10 of the stochastic RSI. I want to see bar formation in this range. If it happens near or outside the range I stay out of the trade. It usually indicates a trend continuation with a possible next lower low.

I also think that the success rate of this method was higher because of the overall bullish trend going on. Remember that on the day chart you can find a possible bat/Gartley pattern. All of my entries except the last one which was at the completion are bullish entries and the trades were made with the trend.

There is been a discussion or still going on about why not take "this leg" instead of waiting for a pattern completion. I don't want to judge those people and I think any proofed strategy is fine. But I'm not married to one strategy. Right now I define my edge around price action bars and support and resistance level in combination with harmonics. Support, resistance levels and price bars are the basics of basics in Forex... And I believe if I don't understand the basics it's no use diving into indicators etc. For me price bars are telling me the current situation and harmonics is giving me the bigger picture. Just of recent I found the stochastic RSI indicator works well to support my entries. I either put pending orders at a logical level based on previous important highs or lows or price bar formations or enter manually after a signal formation.