AUD/JPY Near Short Opportunity at 83.37

Last updated 11/4/2009 7:15 PM EST (GMT -5) 2 Comments

Bradley W. Gareiss

Technical Analyst, GFT

A bearish Gartley pattern has nearly completed on the AUD/JPY 2hr Chart below. The patterns only has decent symmetry, but there is further convergence on the Daily Chart. Both the 127.2% Fibonacci extension of YZ and the 127.2% Fibonacci extension of AB complete near our trade entry. Although we can't see it here, this trade has been in an uptrend for some time, so this trade isn't a textbook setup. However, the extra levels of resistance suggest we may see a dip soon.

We are looking the sell the AUD/JPY if it rises to 83.37 (Point D). Point D is located at the convergence of the following points:

We will now go over what to watch for assuming the pair continues rising towards our entry at 83.37. Since this trade is so close to completing, there is only one condition that would invalidate this trade aside from the pair rising above the stop. The trade is also invalid if the pair falls below 82.02 before hitting our entry.

To recap, we will look to sell the AUD/JPY at 83.37 with our stop placed at 84.12. Our initial profit targets are 82.25 (38.2% of CD) and 81.49 (61.8% of CD).

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  • Daily Chart - Multiple Fibonacci extensions occur near the 83.37.
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  • 2hr Chart - Bearish Gartley; sell at 83.37.

Comments (2)

pipchaser

November 04, 2009 at 08:01 PM ET

Bradley..I like your analysis and projections..I have studied all the data on butterfly and gartley patterns and projections on your web site..I have printed and currently reading a 305 page book on Harmonic trading, which is butterfly and gartley projections.also has a spread sheet input for calculating the ab-cd points.But I have yet to see any calculations on how to project extensions past the "d" point...any suggestions,

bgareiss

November 04, 2009 at 08:05 PM ET

It is possible to extend CD to 127.2% or 161.8% of AB. We do this very rarely however, and only when there are long bars in the CD leg. In other words, i would avoid long bars and skip trying to extend the entry. The reason we buy or sell at point D is because it acts as a third level of convergence. Therefore we don't project extensions past point D except in the limited conditions I just mentioned. Brad

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