A “potential” Butterfly pattern might be in the making. Price has bounced off the lower trend line … point C retraced 61.8% of AB.The potential reversal zone is a confluence of – 127.2% of XA- 200 % FibPRoj of BC- 161.8% FibProj of ABWe also have a supply zone (resistance area) around those price levels, established in late Nov/early Dec 2010.
– Break of BC trend line (SL below C)
– A more conservative entry would be a break above point B. In that case a SL below C would not make sense from a risk/reward perspective. Go to a lower timeframe to trade the move up to D if a price break above B is taken as the entry trigger.
– Eventual target would be around point D if the pattern completed.
– The recommendation would be to take profits at intermediate targets e.g. 61.8%/78.6% of XA.