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Bonus USD/JPY Trade: Sell at 90.11

Last updated 10/14/2009 6:41 PM EST (GMT -5) 10 Comments

We covered a completed USD/JPY bullish Gartley on the main report today, but a shorter term bearish Gartley is 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 78.6% Fibonacci retracement of AB on the Weekly Chart. That ratio originally provided support, but now could add resistance. There is also a significant high on the 30min Chart near our sell entry.

We are looking to sell the USD/JPY if it rises to 90.11 (Point D). Point D is located at the convergence of the following levels:

78.6% Fibonacci extension of XA.

127.2% Fibonacci extension of BC.

AB=CD.

Previous high on 30min Chart.

78.6% Fibonacci retracement of AB on the Weekly 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 7 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 88.99 before hitting our entry

To recap, we will look to sell the USD/JPY at 90.11 with our stop placed at 90.32. Our initial profit targets are 89.80 (38.2% of CD) and 89.53 (61.8% of CD).

- Weekly Chart - Trade would enter near the 78.6% Fibonacci retracement of AB.
- 30min Chart - Bearish Gartley; sell at 90.11.

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Comments (10)

amarbir

October 15, 2009 at 02:18 AM ET

i am new in forex i want to know about about for example you wrote if the pair comes within 7 pips of reaching our entry does not enter how you calculate 7 pips and what is CD like you write how quickly CD completes can you tell me in detail about this
and you write it reaches T1 before entering can explain me please

bgareiss

October 19, 2009 at 05:40 PM ET

It means just what you said. If the pattern nearly completes (7 pips in this case), and hits T1, I believe the edge has been negated in the trade. The theory is that we missed the entry, and the trade is no longer wise to enter at that point. Brad

wrtm_19

October 15, 2009 at 05:21 AM ET