NZD/USD Long Opportunity at 0.7161

Last updated 10/12/2009 9:31 PM EST (GMT -5) 6 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

A bullish Gartley is forming on the NZD/USD 2hr Chart. This pattern is similar to the pattern we drew on the main report today, but we had to update it after a new high was made above the original point C. The pattern has decent symmetry and could complete a day or two. Additionally, the trade would enter near the bottom of the bullish channel on the Daily Chart.

We are looking to buy the NZD/USD if the pair falls to 0.7161 (Point D). Point D is located at the convergence of the following points:

We will now go over what to watch for assuming the NZD/USD continues falling toward our entry at 0.7161. If the pair moves down rapidly and has long bars near point D, we will not enter the trade. Also, if the pair comes within 25 pips of reaching our entry, does not enter, and reaches 0.7260 before entering, the trade is invalid. The trade is also invalid if the pair rises above 0.7415 before hitting our entry.

To recap, we will look to buy the NZD/USD at 0.7161 with our stop placed at 0.7108. Our initial profit targets are 0.7241 (38.2% of CD) and 0.7299 (61.8% of CD).

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  • Daily Chart - Trade would enter at the bottom of the bullish channel.
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  • 2hr Chart - Bullish Gartley; buy at 0.7161.

Comments (6)

garyw

October 13, 2009 at 03:49 AM ET

HI Bradley, i am a new trader(2 mnths), and i was studying your recommendation for a buy on the NZD/USD in a medium term time frame.At the time of typing this, the current price is 0.7360 .Why cant we sell ,go short if we are expecting the price to get down to your Point D at 0.7161? ie +/- 200 pips

bgareiss

October 13, 2009 at 03:05 PM ET

I do not think buying/selling at point C is a high probability trade. The reason is that there is not the major convergence seen at the completion of our major patterns (at point D). In other words, I am not saying that I think the price will go from point C to point D. I am saying that we will look to buy at point D if the price moves to that level from point C. Brad

jojoba

October 13, 2009 at 11:47 AM ET

I think Bradley prefers to trade along the major trend, which is UP.

bgareiss

October 13, 2009 at 03:06 PM ET

I do prefer trading with the long term trend if possible, but please read above to see my thoughts on buying/selling at point C. I do not suggest doing that. Brad

JimmyGlitch

October 13, 2009 at 06:20 PM ET

Hi Brad. I'm studying technical analysis (independently) and wanted to know a) which resources (books, websites) you'd suggest to help me better understand Gartley patterns and b) what you might recommend as a prerequisite to tackling this. Thanks.

bgareiss

October 13, 2009 at 06:24 PM ET

"Trade What You See" by Larry Pesavento is a good start for learning more about the patterns we use. "Trading in the Zone" by Mark Douglas does not specifically discuss this methodology, but it covers a lot of great trading psychology that applies to this methodology. That is a good start. Brad

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