$CAT Day chart shows price completed a bearish harmonic pattern, called a Butterfly when price dipped above 95.60.  Since this initial test of the PRZ (Potential Reversal Zone aka the completion region of a harmonic pattern), price has consolidated into a triangular formation as to ponder whether to go into Retrace Mode or to test all the levels of the PRZ or stretch for extended PRZ target 111.94.

A break down of the triangle with momentum holding below its midpoint increases the probability of the Retrace Mode scenario, having an ideal minimum target at 81.72 and dreamed of target at 56.36.  The gray levels represent points of interest to be considered scaling points or areas to protect profits if in a short position.

When price is in Decisive Mode, it is best to be prepared for a break of either direction, there’s nothing worse than being married to a bias only to find that it was wrong.  The markets are always right and unless you’re one of the “Big Boys” that can move the market, wanting it to move your way doesn’t make it so.  Retail traders only have probabilities, no guarantees.  Harmonics offers probability scenarios.

That being said, a breakout of the triangle and momentum holding above its midpoint increases the probability of testing all levels the Butterfly PRZ, the top at 100.08.  That would be another decisive point to retrace this pattern to the downside or hold above there to head on up to the extended PRZ target of 111.94.

An hour chart does show that there are opposing harmonic patterns inside that triangular consolidation region.  This is indicative of Decisive Mode.  I’ve left the Day chart triangular formation and PRZ’s on this chart for reference.

Notice that if the green pattern plays out, it will help price break down the Day chart’s triangular formation.  The orange pattern initial completion will help retest the top of the triangular formatioln as well as the PRZ bottom, the extended target will help price test all the levels of the Day chart PRZ.

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