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CHF/JPY Facing Strong Support.

Last updated 4/15/2009 7:30 PM EST (GMT -5) 0 Comments - Add your comment

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The CHF/JPY has been in a bullish channel as seen on the Daily Chart.  The pair has bounced off the top of the channel and is dropping towards the bottom of the channel.  As the pair is dropping, it has formed a bullish Gartley pattern as well.  The pattern would complete near the bottom of the channel.  This is an ideal scenario because the bottom of a bullish channel is the best place to go long.

We are looking to buy the CHF/JPY if it falls to 84.90 (Point D).  Point D is located at the convergence of the following points:

The pattern is fairly straightforward as described above.  This pattern is a textbook setup at this point.  We will now go over what to watch for assuming the pair continues falling toward our entry at 84.90.  First, we need to watch how quickly CD completes.  We are looking for the CD leg to drop slowly and enter the trade near our hypothetical entry on the 4hr Chart.  If there are long bars near the completion of the CD leg, we will not take the trade.  Also, if the pair comes within 15 pips of reaching our entry, does not enter, and reaches T1 before entering, the trade is invalid.  The trade is also invalid if the pair rises above 87.75 before hitting our entry.

To recap, we will look to buy the CHF/JPY at 84.90 with our stop placed at 84.10.  Our initial profit targets are 86.19 (38.2% of CD) and 87.14 (61.8% of CD).

Daily Chart - Bullish Channel.	4hr Chart - Bullish Gartley; buy @ 84.90.

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About The Author

Bradley Gareiss has been a technical analyst with GFT since 2008. Brad is known for his ability to identify high probability trading opportunities through geometric pattern recognition. He also focuses on trading psychology and risk management, and has written many extensive articles on these subjects.