19 July USDJPY Harmonic pattern analysis: Bat Pattern?

USDJPY is about to complete a Bat pattern on the daily chart. This might lead to a dip in the coming days/weeks as the 19 July USDJPY Harmonic pattern analysis below shows.

USDJPY bullish run has been strong since March. Price is now heading to the 113 handle. There is a likelihood that price would continue upside as the dollar strengthens further. But around 113.3-113.6, a Bat harmonic pattern is set to complete. If this pattern completes, there is a high chance that price will drop. The trend might not change completely. The chart below shows the Bat pattern.

USDJPY Daily chart; Bat harmonic pattern?

Charting tools from TRADINGVIEW

The pattern is set to complete at 113.60 as the chart above shows.

Pattern Features

The pattern start from 114.75 back in November 2017. The first leg XA ran from 114.75 to 104.60. The second leg AB corrects XA at 67%. The third leg BC corrects 48% of AB while the last leg is expected at 113.60 to make 88.9% correction of XA (as a Bat pattern requires). At this zone, there will be 167% extension of the BC leg (Bat requires from 161.8%-261.8%) which makes for a proper Bat pattern.

How to trade Bat pattern

There are different ways to trade Bat pattern depending on the users preference. The following looks at a few methods.

Method 1: Since Bat is a deep corrective XABCD patterns, user can place a pending order at the exact price reversal zone, 113.6 in this case with stop loss few Pips above X (114.75 in this case). Target can range from 1:1 to 1:5

Method 2: Waiting for the pattern to complete and sell at about 20-30 pips below 113.6 with stop loss at 10 pips above 113.6. Target can range from 1:1 to 1:5.

Method 3: Waiting for the pattern to complete and wait for a reversal signal. The reversal signal can be from any other technical methods.

INVALIDITY: The pattern will be invalid if price breaks significantly above 113.6. The wick of a candle can be above but not the full body.

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