An interesting thing happened with a recent trade I took. The chart above was a chart of the EURAUD last week. If you've been keeping up with my post then you'll remember me saying that when identifying this trade opportunity I wasn't too excited about the setup. Regardless my rules said I had to enter so I went ahead and did it. Long story short this double top high with divergence (above) morphed into a head and shoulders top, before rolling over for target 1, then gapping over the weekend putting me close to target 2. I don't know what to call it, and honestly I don't care. I had a valid entry reason at the start and after that the rest is out of my hands. I don't mind calling it luck or anything else as long as it keeps filling the account up. But I just found it interesting to see once pattern morph into another in front of my eyes.
The other day I posted a chart of a Bat pattern on the USDCAD 5min chart. Well here is one on a little bigger timeframe. I didn't notice this pattern until I did my weekend analysis, but this pattern actually completed on Friday. However, because price action only moved about 5 pips above what my entry would have been, depending on how the market opened on Sunday, I knew I still might have chance to get involved. When I loaded up my charts on Sunday I noticed that the market formed a bearish gap of about 25pips or so which worked out perfect for me because it provided me with a reason to get involved. First of all, even though the market gaped downward, it still opened above the structure level at "X" which would give me the chance to lengthen my reward and minimize my risk on the trade. (This is shown by the 2 blue and red lines on the right side of the chart. Th e1st set is what my risk/reward ended up looking like and the 2nd set is what the original ratio would have been). Secondly, I know that when the market makes gaps, they usually get filled. Not all the time, but in the back of my head this gave be even more confidence that this trade would end up being a winner. And as you can see that's just what it did. Target 1 was hit sometime early this morning and now stops are breakeven.