This price structure on the USDJPY daily chart is a little more complicated because there is a conflicting 4H bearish CURCT price structure (yellow arrow). The price structure is in place on the 4H but it has not triggered with a LCT candle yet. The daily has triggered with a HCT candle, so it is a valid bullish RCT.
There are a few different ways to trade a situation like this where I have a valid signal at the same time there is a conflicting price structure in place. The safest stop is the second stop level but that really throws off the RR for the Daily set up. The 4H bearish CURCT will usually make a move that is equal to the AB leg so it's an AB=CD price move which means the move would likely hit the daily bullish RCT stop level (the first one). The higher time frame (daily) pattern is the dominant pattern, so one option is looking at a position using half my normal risk so 1% with a stop that is below the 4H CD leg at 113.75.
Also, I could just enter now on the daily price structure using the second stop level (lowest) using normal risk of 2%. The idea I like is If I enter now at 1% and price does pull back, I can always enter the other half of the position if the larger bullish price structure holds after the possible 4H correction (I would need a second daily HCT candle to enter a second position). If I enter now using half the risk and price runs away, I didn't miss out on the move entirely. Missing out on a move is just as painful as being wrong on an idea so it's my way of managing my emotions along with risk. There are losses but the large winners do come, and the small ones come more often. So ultimately for me to win it's all about managing my risk and my emotions. If I was already long on this position using the 4H HCT trading into the daily price structure, I would take half the profit off the table.
The highlighted bullish pattern I believe is valid which creates a B extension on a larger bearish pattern.
There are a few different ways to trade a situation like this where I have a valid signal at the same time there is a conflicting price structure in place. The safest stop is the second stop level but that really throws off the RR for the Daily set up. The 4H bearish CURCT will usually make a move that is equal to the AB leg so it's an AB=CD price move which means the move would likely hit the daily bullish RCT stop level (the first one). The higher time frame (daily) pattern is the dominant pattern, so one option is looking at a position using half my normal risk so 1% with a stop that is below the 4H CD leg at 113.75.
Also, I could just enter now on the daily price structure using the second stop level (lowest) using normal risk of 2%. The idea I like is If I enter now at 1% and price does pull back, I can always enter the other half of the position if the larger bullish price structure holds after the possible 4H correction (I would need a second daily HCT candle to enter a second position). If I enter now using half the risk and price runs away, I didn't miss out on the move entirely. Missing out on a move is just as painful as being wrong on an idea so it's my way of managing my emotions along with risk. There are losses but the large winners do come, and the small ones come more often. So ultimately for me to win it's all about managing my risk and my emotions. If I was already long on this position using the 4H HCT trading into the daily price structure, I would take half the profit off the table.
The highlighted bullish pattern I believe is valid which creates a B extension on a larger bearish pattern.