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EUR/CHF To Resume Downtrend At 1.5169?

Last updated 5/1/2009 5:58 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

The EUR/CHF has been slowing trending down for just over a month.  During this drop, the pair has traded in a relatively tight range and has met resistance several times at the bearish trend line seen on the 8hr Chart.  Notice that the bearish Gartley pattern would complete near the bearish trend line as well.  This Gartley is especially symmetrical.  We are anticipating point C will hold because it is near the exact 61.8% Fibonacci retracement of AB.  If the pair does indeed rally from point C, this could become an extremely symmetrical pattern.

We are looking to the sell the EUR/CHF at 1.5169 (Point D).  Point D is located at the convergence of the following points:

This trade does not have too many extras, it is simply shaping up to be a very symmetrical pattern.  Therefore we will jump straight into possible ways the trade could be invalidated.  First, we need to watch how quickly CD completes.  We are looking for the CD leg to rise 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.  If the pair comes within 5 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 falls below 1.5045 before hitting our entry.

To recap, we will look to sell the EUR/CHF at 1.5169 with our stop placed at 1.5193.  Our initial profit targets are 1.5137 (38.2% of CD) and 1.5109 (61.8% of CD).

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  • 8hr Chart - Bearish trend line at entry.
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  • 4hr Chart - Bearish Gartley; sell @ 4hr Chart.

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