Initial Play of Focus: Over-Extension into Significant Level

Title: Over-Extension into Significant Level

Strategy Description:

I trade this successfully on equities; and am looking to adopt it to fx. Will take some time to iron out the nuances; but from the examples I have seen it is very similar.

Want to identify levels that have had strong reactions off them before. The more significant the level the better the play. If it's support, get long with stop below, sell on reactionary pop. Vice versa for resistance.

The edge in this strategy comes from three things:
(1) Understanding when not to attempt this play: (i) When level isn't significant enough, (ii) Avoiding consistent trends.
(2) Tight risk: By having tight risk, even when you don't catch a significant bounce still may end up getting a 2R+ bounce.
(3) Having good patience and zero fomo, and being prepared to miss the trade. The hands off approach will help with this - set and forget orders.

Order Execution:

Entry: Want to be relatively picky with entry. If it's super clean and/or a super significant level may be ever so slightly less picky on entry. 5-10 pips above level would probably be relatively normal. Remember that the edge in this strategy comes from good entries and tight risk.

Stop-loss: Need to be prepared for a small flush of the level. Occasionally a bigger flush will happen and an immediate reclaim. Unfortunately just need to be prepared that will get stopped out this way sometimes.
As an initial observation it appears that stop should be set around 20-30% of the daily ATR below/above the level. 30% is a little large for my liking, but for some of the smaller daily ranges it's necessary.
A little bit of a fiddle around may be required if the level is close to a round figure.

Targets: It is an absolute must to scalp out of some of the position at 1-2R to maintain consistency. Ultimately this is probably where the biggest development (for me) is going to be in terms of development of edge.
I imagine it will come down to how significant the level is; have I got an entry counter trend or in direction of trend; is there upcoming news?

Example: Easy to find an example that has worked, so thought I would post one that didn't work; and maybe why you wouldn't take that trade. Or it could have just been a simple stop.
USDJPY has been in a strong uptrend. Holding the 7 day moving average, so it's a powerfully consistent uptrend.
Had a reasonable pullback from 113.90, so that becomes a level to trade off but it blew straight through the level.
One reason not to take the trade is the consistent uptrend/power-play. But to be honest I find the trade okay - wouldn't be too unhappy if I had taken it.

Daily:

Hourly: Worth nothing that if had taken the next one off 114.80 it would have worked for a 3-4R trade.