Update: GBP/CHF To Resume Uptrend at 1.6767?

Last updated 11/23/2009 7:15 PM EST (GMT -5) 6 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

This trade has entered and is currently in progress. We have updated our profit targets because the pair dropped farther than we anticipated. Our new profit targets are 1.6829 (38.2% of CD) and 1.6896 (61.8% of CD). It is still possible to enter this trade if it is at or below the original entry (1.6767). Of course, if the pair drops below the stop (1.6713) or rises above T1 (1.6829) before entry, then you should no longer enter this trade. Below is an updated version of the rationale behind the trade unless you missed it the first time around.

A bullish Gartley pattern has completed on the GBP/CHF 2hr Chart below. The trade setup has nice symmetry in both price and time. The trade has entered just below the bottom of the bullish channel on the 8hr Chart, which increases the probability of a successful trade.

We can still buy the GBP/CHF if it falls to 1.6767 (Point D). Point D is located at the convergence of the following points:

To recap, we will look to buy the GBP/CHF at 1.6767 with our stop placed at 1.6713. Our initial profit targets are 1.6829 (38.2% of CD) and 1.6896 (61.8% of CD).

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  • 8hr Chart - Trade has entered just below the trend line.
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  • 2hr Chart - Bullish Gartley; buy at 1.6767.

Comments (6)

Semaj

November 23, 2009 at 07:34 PM ET

B, technically speaking I see a lower trendline break of an up channel to the downside & a very deep retracement of the prior swing. Next I would think that trendline to be resistance @ a possible right shoulder on a H&S pattern. That does line up nicely with T2 or even a bit past it. If so, then 1.64 ish is a possibility if price starts to rollover into a downtrend. Will you be watching the patterns you focus on for this setup? Thanks

bgareiss

November 23, 2009 at 07:57 PM ET

It is possible if the price rose from this point and then fell back down there could be a new patter that develops, but I think it would be above the spot you are looking at. First we will see if the pair rises or falls, but that is something that could be on the radar at a later date. Brad

JamesC

November 24, 2009 at 02:37 PM ET

It looks like this pair fell to 1.6684 on the 24th. past the stop in the post. If it stays above 1.6654 (4hour support) could this still be a buy trade in a range?

bgareiss

November 24, 2009 at 05:01 PM ET

I am not going to do anything with this pair until a new pattern emerges. Brad

rck66

November 24, 2009 at 11:35 PM ET

An strategy I have been using is that after the recommendation gets stopped out, I look for an entry in the direction of the recommendation, if i see that price is slowing down. In this particular case i went long @ 1.6651, before it got stopped out, placed a trailing stop and took me out for a 14 pip loss on 2 mini's. I then reenter @ 1.6626 and got out with around a 40 pip profit, but unfortunately i was only long 1 mini. I wonder if a study has been done of how far beyond the stop a pairs goes, thereby invalidating the expected move and reinforcing the previous trend. After all if the expected move does not come, it probably means that the opposing force is strong.
Rick

bgareiss

November 24, 2009 at 11:38 PM ET

I agree with you about going short after a long trade fails, but I don't incorporate it in my plan. The reason is that I haven't developed a way to consistently perform that action the same way every time. Additionally, once I lose in a trade, I wipe that trade from my memory. There have been too many painful experiences where I tried to win back the money I just lost based off the same pattern. So while your theory may hold some water, it isn't very compatible with my psychological mindset. Brad

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