Setting different target modes when Passive and Engaged

At the moment there are 3 target mode types available which are all pretty confusing to me. So I came up with an Idea.

[Not in Party]
When in Passive mode Target mode is set to all

When Engaged in combat Target mode is set to:

(Left and Right Arrows keys or D-Pad) Target All
(Up and Down Arrow Keys or D-pad) Target Self and Enemies

[In Party]
When in Passive mode Target mode is set to all

When Engaged in Combat Target mode is set to:
(Enter or the X button) Targets Near by Enemy being attacked by your Party
(Left and Right Arrows Keys or D-pad) Target Enemies
(Up and Down Arrow Keys or D-pad) Target Party Members

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I feel that this would be simpler then having 3 different Target modes I don't see the need to target everything while I'm in combat during a party just the enemies around us and my party members switching modes is a pain. This could possibly be the default, I've messed around with the target system in game and I still think that it's to complicated when it could be as simple as this. Let me know what you think.

Also can't wait for you to put an arrow indicator on top of the enemies and within the party list interface! :)

This is one of the very few good ideas I've actually seen on these forums.

Would love to see the target mode swap to enemy and friendly automatically based on your engagement mode. Also a big fan of having a dedicated mode switch button other then the arrow keys, gets really frustrating some times when you accidental switch modes during combat.