Bonus GBP/USD Short Opportunity at 1.6102

Last updated 10/7/2009 8:19 PM EST (GMT -5) 15 Comments

Forex Trading involves high risks, with the potential for substantial losses and is not suitable for all persons. Past performance is not necessarily indicative of future results.

Bradley W. Gareiss

Technical Analyst, GFT

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Last Updated: 10 min ago

We have a bullish butterfly pattern drawn on the primary swing technical report. That trade is still valid, however there is also a shorter term bearish Gartley/double top forming as well. This trade has very nice symmetry although it still has a long way to go up before entering. If this trade completed as drawn, it would enter near the bearish trend line drawn on the 8hr Chart.

We are looking to sell the GBP/USD if it rises to 1.6102 (Point D). Point D is located at the convergence of the following levels:

  • 100% Fibonacci extension of XA.
  • 127.2% Fibonacci extension of BC.
  • AB=CD.
  • Double top.
  • Bearish trend line on the 8hr Chart.
  • If RSI rises above 70.

    • We will now jump into possible red flags that could invalidate this trade. First, we need to watch how quickly CD completes. If the pair rises with long bars, don't take the trade. If the pair comes within 10 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 1.5850 before hitting our entry.

    To recap, we will look to sell the GBP/USD at 1.6102 with our stop placed at 1.6154. Our initial profit targets are 1.6024 (38.2% of CD) and 1.5962 (61.8% of CD).


      • 8hr Chart - Trade would enter near bearish trend line.

      • 2hr Chart - Bearish Gartley; sell at 1.6102.

    Comments (15)

    rickyshuang
    October 08, 2009 at 03:04 AM ET
    Hi Bradley, are you trading GBP/JPY or EUR/JPY pairs? why there is no pattern analysis regarding these pairs?
    bgareiss
    October 08, 2009 at 03:02 PM ET
    I trade any liquid pair, but recently there haven't been many EUR/JPY or GBP/JPY patterns. Or if there is a pattern, there has been a pattern on another pair that I like better. Rest assured, I am checking those pairs every day. Brad
    fishmanszmit
    October 08, 2009 at 01:39 PM ET
    Hi, I am not finding GBP?USD Sell at 161.02 in the trades to watch. Nor do I find it in the invalidated trades section. On my MetaTrader4 Australia this trade has already opened. Are you still recommending this trade? Thank you.
    fishmanszmit
    October 08, 2009 at 01:45 PM ET
    Nevermind, I just noticed the trade has opened! Thanks again. GBP/USD Sell at 161.02
    bgareiss
    October 08, 2009 at 03:03 PM ET
    Ok, good. If there is ever a typo or a missing trade on the trade tracker, simply use common sense as to whether the trade is still good. In this case, this was a perfect setup that we would clearly take. There shouldn't be many typos, but these things happen from time to time. Brad
    AndrewB
    October 08, 2009 at 06:05 PM ET
    Brad,

    How much weight do you put on RSI? The GBPUSD trade entered at 1.6102, but RSI was only in the 50s.

    Thanks.

    Andrew
    bgareiss
    October 08, 2009 at 06:07 PM ET
    I put almost no weight RSI. But some people feel more comfortable having a common indicator tacked on there. Brad
    AndrewB
    October 09, 2009 at 06:08 AM ET
    Ok. Thanks. :)

    Andrew
    juanflorez
    October 08, 2009 at 08:51 PM ET
    Hi Brad, Thanks for the trade,
    I am in (a little late at 1.608)
    I am just wondering if are you planning to move the S/L at some point? what's your strategy?

    Thanks again!

    JF
    bgareiss
    October 12, 2009 at 05:38 PM ET
    The only way I would move the stop is if your plan was to take half the position off at T1 and half off at T2. In that case, I would move the stop to the original entry (1.6102) after we hit T1. Of course, this is irrelevant with this trade since we already hit both profit targets. Brad
    Raymond Chin
    October 09, 2009 at 01:49 AM ET
    how do i know the system is profitable in the long run?is't base on the 50 to 100 trade or based on the time i trade?
    bgareiss
    October 12, 2009 at 05:47 PM ET
    We have 115 trades posted on our trade tracker as well as many more examples that go back before we began using the trade tracker. You are welcome to use those results in anyway you see fit to determine our results. Of course, past results are not necessarily indicative of future results. Brad
    pipster
    October 09, 2009 at 09:20 AM ET
    Great call on this pair Brad, it blasted through the T2 and hit a low of 1.5932 and still going down.
    anby
    October 11, 2009 at 05:07 PM ET
    Gbp/Usd short at 1.6102 was like a magic to me.Eur/Jpy short at 132.21is now blasting away in Our favour,thanks.please post an update on the Usd/Cad long &Gbp/Usd long are they still valid?Anby.
    bgareiss
    October 12, 2009 at 05:54 PM ET
    The GBP/USD long was invalidated per the article's invalidation list. The USD/CAD long entered and lost. The CAD/JPY trade also lost. For future reference, I would advise using half of your usual risk with trades like that because they are highly correlated (both short the CAD). Brad

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