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EUR/CAD Short Opportunity at 1.6106

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.

Last updated 11/27/2009 7:09 PM EST (GMT -5) 6 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

A bearish butterfly pattern is forming on the EUR/CAD 2hr Chart below.  The pattern has pretty solid convergence, although it still has to rise through most of the CD leg to complete.  This pattern also has a lot of convergence on the Weekly Chart.  There are 3 separate Fibonacci retracement levels that all converge with the approximate location of the sell entry.  There was also a significant high near the sell level on the Weekly Chart.  We may have to update this trade if the pair drops below C, but this is a pattern worth keeping track of.

We are looking to sell the EUR/CAD at 0.7942 (Point D).  Point D is located at the convergence of the following points:

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 2hr Chart.  If there are long bars near the completion of the CD leg, we will not take the trade.  If the pair comes within 15 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 1.5840 before hitting our entry.

EUR/CAD

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  • Weekly Chart - Multiple levels of Fibonacci convergence near entry.
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  • 2hr Chart - Bearish butterfly; sell at 1.6106.

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.

The views of the authors and analysts are not necessarily those of Global Forex Trading, its owners, officers, agents or other employees. FX360.com and the currency research team will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on FX360.com. Global Forex Trading and the currency research team do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

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Comments (6)

pipchaser

November 27, 2009 at 09:17 PM ET

the header indicates EUR/CAD, and the first paragraph describes the pair, but then the chart and trade recommendations are for NZD/CAD????which is it?? also this is my third comment/question and none have recvd a response???

bgareiss

November 27, 2009 at 09:22 PM ET

Sorry for the typo, it is the EUR/CAD. Also, I only see one comment. Are you sure you sent previous messages? Brad

raulin

November 28, 2009 at 10:50 AM ET

I don't think chart is correct. For eur/cad using 1.5251 low A and 1.6000 high as B and C point just below 50 % fib of AB at C = 1.5594 then CD to equal AB should be 1.6343 with 1.6326 being double top and fib confluence area which would be great short if it gets there

bgareiss

November 30, 2009 at 12:30 PM ET

You are looking at totally different levels than the bearish butterfly is drawn on, which is why you are getting different results. The pattern you are mentioning is much more long term. Regardless, the trade has been invalidated, but we may redraw a new version of this trade setup tonight. Brad

Roy

November 30, 2009 at 04:45 AM ET

Could you tell me that what's your RSI's period? Is it 14 or 28??

bgareiss

November 30, 2009 at 12:34 PM ET

I stopped posting RSI because I don't really base any of my trade decisions off it. I originally used it on this site as kind of a "bonus", but it never impacted the trades. If you do choose to use RSI, I suggest just using the default setting on Dealbook. Brad

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