What a rhyme :). Pattern which has been generally very profitable (so far 7 out of 11 patterns this year reached a min target of 3R. So how do you trade this pattern?
Timing: min.15mins after any major news release like NFP, PMI, TRADE BALANCE, ADP, etc. (let the dust settle)
Direction: go in the direction of overall trend of the pair (nice moves has been lately in GBP or GOLD)
Mechanics: once you see the drop, you do not want to see further follow through. The pair cannot move massively lower for this play to be valid. After the release it should start retracing slowly. Ideally but not necesarilly, you see a drop and immediate 50% retracement of the news spike. After you see the pair is not dropping anymore. look for a level which is an immediate barrier in the opposite direction. It can be a post news intraday level or even better respected historical level. This will be your entry point once the level breaks.
Entry: on the break of described barrier (see mechanics). If the RR is less than 1.5R to pre-release price, do not take the trade. It is not worth your emotional capital.
SL: just below the latest swing
SL management: once first troubled area ahead is reached and breached. In general I like to move SL after first swing extreme has been create and surpassed.
Exit: go for min. 2-3R, ideally 5R.
A setup: ideal setups are where strong S/R stopped this news spike. The stronger the area and reaction, the higher chance that you are on the right side. The nicer the triangle within you direction the better.
Here is how it should looks like: