EURJPY 12 Mar

Here’s my interpretation of price action for the chart above:

1. Bar A seems to suggest a bear reversal, which was supported by MACD divergence and resistance at the Fibo 50 level.
2. The next bar, Bar B broke below the low of Bar A. In fact, it broke below the low of the previous 5 bars, further lending support to the idea of a bearish reversal. It also suggests that the breakout at Bar A is a failed breakout.
3. Yet, by the close of Bar B, a totally different picture emerge. The bulls fought back and managed to close the bar near the high. This suggest that a failed failure (a failure of a failed breakout) might be happening. A failed failure is a very reliable signal and in this case, we expect many bears to be trapped.
4. The next bar had the same high as bar B.
5. Eventually, Bar C broke above the matching high of its previous 2 bars. 2 matching highs is actually equivalent to a double top on a lower time frame. Breaking above this double top makes Bar C the perfect signal to enter long.

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