Update: NZD/CAD Approaching Short Opportunity at 0.7942

Last updated 11/19/2009 7:54 PM EST (GMT -5) 2 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

We have slightly altered the Bearish Gartley pattern we posted a couple days ago. The trade was barely invalidated, so we have to post it again to make sure we are all on the same page. There is also a secondary ABCD pattern forming within the primary CD leg now. Otherwise the pattern is basically the same and is explained below.

The NZD/CAD has been trending down for over 5 years. However, the pair has recently risen. This provides us with an opportunity to watch for long term bearish patterns. We have seen resistance at 78.6% of YZ on the Weekly Chart. There is a bearish Gartley forming that could work within the context of the downtrend and possible longer term resistance.

We are looking to sell the NZD/CAD at 0.7942 (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. First, we need to watch how quickly CD completes. We are looking for the CD leg slow down and enter the trade near our hypothetical entry on the 4hr Chart. If there are long bars near the completion of the CD leg, 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 0.7725 before hitting our entry.

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  • Weekly Chart - Bearish resistance at 0.7980 provides a possible bearish context.
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  • 4hr Chart - Bearish Gartley; sell at 0.7942.

Comments (2)

pipchaser

November 23, 2009 at 09:12 AM ET

Brad...if we are looking for a short opportunity at .7942, why wouldn't we go long up to that point and mak money on both directions??

bgareiss

November 23, 2009 at 02:44 PM ET

We are not saying that the pair is likely to rise to the entry ta 0.7942. In fact, the trade has been invalidated since it was posted. We are simply saying that if the pair does rise to 0.7942, that would be a high probability opportunity to sell. Brad

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