Bonus AUD/USD Short Opportunity at 0.9074

Last updated 11/3/2009 7:21 PM EST (GMT -5) 10 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 short term bearish Gartley is forming on the AUD/USD. This does not negate the longer term bullish butterfly we have been watching on the primary report; they are independent trade ideas. So far this pattern is moving very symmetrically in both price and time. The trade would also enter near the bearish trend line on the 2hr Chart. This a well above average trade setup because of the strong bearish trend line at the completion of the pattern as drawn.

We are looking to sell the AUD/USD if it rises to 0.9074 (Point D). Point D is located at the convergence of the following points:

This is a fairly straightforward trade so we will jump into possible red flags that could invalidate this trade. We will watch for long bars in the CD leg. If there are long bars near the completion of the pattern, we will not 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 0.8980 before hitting our entry.

AUD/USD

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  • 2hr Chart - Trade would enter near bearish trend line.
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  • 30min Chart - Bearish Gartley; sell at 0.9074.

Comments (10)

DMW

November 03, 2009 at 07:51 PM ET

Brad

Does the quick spike down below .8980 on the release of retail sales invalidate the set up. I know the text says it does but wondering if the situation is different as it was a data release spike?

Regards

bgareiss

November 04, 2009 at 11:12 AM ET

As I wrote above, "The trade is also invalid if the pair drops below 0.8980 before hitting our entry." It doesn't matter what caused the pair to move before that level. The trade was invalidated. Brad

Doobp

November 04, 2009 at 01:41 AM ET

I think despite the date release spike had disrupted the pattern. we will see in a few hours time? a long CD bar may also appear?

bgareiss

November 04, 2009 at 11:14 AM ET

The trade was invalidated because the pair dropped below 0.8980. After that point, this trade was no longer on the table. Brad

HiZa

November 04, 2009 at 08:35 AM ET

?????????????????????????????????????????????!!!!!!!!!!!!!!!!!!!!!!!!!!!

bgareiss

November 04, 2009 at 11:15 AM ET

I am not sure what that is supposed to mean. Brad

Doobp

November 04, 2009 at 11:26 AM ET

SO even a spike will invalidate the trade? hmm.. got it. thanks

bgareiss

November 04, 2009 at 11:28 AM ET

A spike itself won't necessarily invalidate a trade. The trade was invalidated the moment the pair dropped below 0.8980 as we described above. It doesn't matter if it is a "spike" or a slow long movement below that point. Brad

arapahoe

November 04, 2009 at 05:27 PM ET

Brad,

Your email about taking this trade came at 7:21 PM EST on 11/3/09 This pair did not trade below 0.8980 between the time you sent out the email and now 1:01 EST 11-4-09???

I'm confused as to how this could be the reason for invalidation?

Looking at the chart again I see that it did spike below 0.8980 at 7:20???? Wow this must have happened even as you were writing the email alert...

How weird is that?

bgareiss

November 04, 2009 at 06:15 PM ET

Yes, the trade was invalidated about 10 minutes after I submitted that trade (published around 6:20 pm central, invalidated around 6:30 pm central). That can happen with shorter term trades on occasion when prices move fast. Brad

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