Euro Futures (6E) Trade 4/3 - Resistance-Turned-Support With Inside Bar Setup

Bought a "W" formation (in the form of an Inverted Head & Shoulder). Trigger was an Inside Bar (see chart above - inside bar's highlighted in yellow). The Outside Bar is highlighted in grey. I went in long at the candle following the Inside Bar, at slightly above its high.

This is also a Resistance-Turned-Support (1.3434 - indicated in chart) with Inside Bar setup. 2 bullish candles closing above support validated the setup.

I've used a Fib ext 138.2 (instead of 161.8) as target given the many resistance above. Seed for drawing the Fib ext levels is highlighted in blue.

This is a very familiar pattern to me, and I've chosen to enter before the confirmation of the Inverted Head & Shoulder (confirmation level is indicated in chart). It's a risk that I have to take. With futures, you don't get rewarded for seeing the obvious. My mental stop was 2 ticks below the low of my entry candle.

I've covered before price hit 138.2 target coz candle was getting exceedingly long. Had it been a series of average body candles, I would have covered on the 5th bullish candle, which would probably be the one that hit 138.2.

This is my first trade of the day, and I started watching my charts only an hour before entry, instead of the usual 8 hours. Sure says a lot about the hazard of sitting in front of your screen for too long.

I might take another trade only after US market opens. That's 4.5 hours from now. It's a busy day for me, but I'm glad I had something to occupy my time and take me away from the charts that I've gotten too addicted to.

Update:

Chart above shows what would have happened had I pushed my luck by chasing. A very long bullish candle that hit a fib target is usually a warning of a change in trend. The mistaking of the non-inside-bar indicated in the chart as a valid inside bar wouldn't have caused any harm though, since price never went anywhere near its high, so there wouldn't have been an entry.

Next step would be to draw a fib retracement from the "head" part of the inverted head & shoulder pattern to the high. A retracement of 38.2%, or to support at 1.3450 (the confirmation level for IHS pattern) are good signs. If price falls below both, I would WAIT to see what happens. If price finds support at the "head", that will be a double bottom pattern.

Anyway, I'm really not going to enter another position until much later today.