EUR/CAD Short Opportunity at 1.6106

6 Comments

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Last Updated: 10 min ago

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:

  • 200% Fibonacci extension of XA.
  • 161.8% Fibonacci extension of BC.
  • AB=CD.
  • 38.2% Fibonacci retracement of X1A on the Weekly Chart.
  • 50% Fibonacci retracement of X2A on the Weekly Chart.
  • 78.6% Fibonacci retracement of X3A on the Weekly Chart.
  • Significant high near entry on the Weekly Chart.
  • 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.

    To recap, we will look to sell the EUR/CAD at 1.6106 with our stop placed at 1.6160. Our initial profit targets are 1.6028 (38.2% of CD) and 1.5964 (61.8% of CD).


      • Weekly Chart - Multiple levels of Fibonacci convergence near entry.

      • 2hr Chart - Bearish butterfly; sell at 1.6106.

    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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    TRADE RECOMMENDATIONS

    • Trades to Watch
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    currency recommendation
    GBP/JPY
    Short term



    Sell Sell at 139.1200
    Stop at 139.82
    Target at 137.51
    GBP/USD
    Medium term



    Sell Sell at 1.5284
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    NZD/USD
    Medium term



    Sell Sell at .7141
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    Target at 0.7045
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    QUOTEBOARD

    • Key Quotes
    • Currencies
    • Markets
    •  
    • current
    • high
    • low
     
    • EUR/USD
    • up
    • 1.3650
    • 1.3656
    • 1.3620
    EUR/USD
    5 min chart
    • GBP/USD
    • down
    • 1.5004
    • 1.5007
    • 1.4945
    GBP/USD
    5 min chart
    • USD/JPY
    • up
    • 90.46
    • 90.51
    • 90.20
    USD/JPY
    5 min chart
    • OIL
    • up
    • 79.77
    • 79.77
    • 79.77
    CLH0
    5 min chart
    • GOLD
    • up
    • 1107.0
    • 1111.2
    • 1105.0
    .GOLD
    5 min chart
    • US Stocks
    • down
    • 10557
    • 10569
    • 10523
    .US30
    5 min chart
    • UK Stocks
    • down
    • 5635.5
    • 5638.0
    • 5611.5
    .UK100
    5 min chart
    • DEM Stocks
    • up
    • 5941.8
    • 5943.8
    • 5900.0
    .DE30
    5 min chart
    • JP Stocks
    • down
    • 10676
    • 10681
    • 10571
    .JP225
    5 min chart
    •  
    • current
    • high
    • low
     
    • EUR/USD
    • up
    • 1.3650
    • 1.3656
    • 1.3620
    5 min chart
    • GBP/USD
    • down
    • 1.5004
    • 1.5007
    • 1.4945
    • USD/JPY
    • up
    • 90.46
    • 90.51
    • 90.20
    • USD/CHF
    • down
    • 1.0700
    • 1.0726
    • 1.0696
    • USD/CAD
    • down
    • 1.0262
    • 1.0269
    • 1.0245
    • AUD/USD
    • down
    • 0.9162
    • 0.9165
    • 0.9113
    • NZD/USD
    • down
    • 0.7002
    • 0.7017
    • 0.6974
    • USD/MXN
    • up
    • 12.6092
    • 12.6152
    • 12.5925
    • EUR/JPY
    • up
    • 123.49
    • 123.56
    • 123.01
    • GBP/JPY
    • up
    • 135.73
    • 135.78
    • 134.90
    •  
    • current
    • high
    • low
     
    • OIL
    • up
    • 79.77
    • 79.77
    • 79.77
    5 min chart
    • GOLD
    • up
    • 1107.0
    • 1111.2
    • 1105.0
    5 min chart
    • SILVER
    • down
    • 16.958
    • 17.058
    • 16.815
    5 min chart
    • US500
    • up
    • 1144.1
    • 1145.9
    • 1139.9
    5 min chart
    • UK Stocks
    • down
    • 5635.5
    • 5638.0
    • 5611.5
    5 min chart
    • DEM Stocks
    • up
    • 5941.8
    • 5943.8
    • 5900.0
    5 min chart
    • JP Stocks
    • down
    • 10676
    • 10681
    • 10571
    5 min chart
    • AU Stocks
    • up
    • 4818.5
    • 4841.5
    • 4803.5
    5 min chart
    Data source: GFT

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