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CAD/JPY to Resume Downtrend at 85.00?

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Last updated 11/24/2009 7:30 PM EST (GMT -5) 2 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

A bearish Gartley is forming on the CAD/JPY.  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 8hr Chart.  This is a textbook setup at this point, but we need to watch the timing if the pair rises to the entry.  Thanksgiving will likely slow and move that might happen towards the end of the week, which could lead to the pair entering closer to the trend line.

We are looking to sell the CAD/JPY if it rises to 85.00 (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 83.20 before hitting our entry.

CAD/JPY

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  • 8hr Chart - Trade would enter near the bearish trend line on the 8hr Chart.
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  • 2hr Chart - Bearish Gartley; sell at 85.00.

The information, including Commentary and Trade Ideas, provided on FX360.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. Global Forex Trading and FX360 .com is merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite. Any projections or views of the market provided by FX360.com may not prove to be accurate.

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Comments (2)

fxandres

November 24, 2009 at 08:49 PM ET

Hello
Brad , there is a bearish butterfly pattern in GBPUSD in 1 H chart , point X 1.6674, point A 1.6459 and point D 1.6731 i would like to know if this pattern is correct, thanks for your help

bgareiss

November 24, 2009 at 09:09 PM ET

That is a questionable pattern, especially because your point X isn't really a significant high. We would also have to extend CD to 127.2% of AB, which isn't a sure thing at this point. Regardless, this pattern could generate a profit, but it doesn't quite converge well enough for my tastes. Brad

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