Bonus EUR/USD Shorter Term Sell at 1.5205

Last updated 12/3/2009 8:37 PM EST (GMT -5) 17 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

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Last Updated: 10 min ago

A secondary bearish butterfly pattern is forming within the EUR/USD. This pattern is shorter term than the longer term bearish butterfly posted on the Swing Technicals report today. This does not invalidate the longer term trade, both trades are independent and valid. This trade has a long way to go before entering and has been hovering just above point C for a while. Therefore, we may have to update this pattern in the coming days. Regardless, this is a good setup to watch for.

We are looking to sell the EUR/USD if it rises to 1.5205 (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.
  • Top of the channel on the 2hr Chart.

    • 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 1.5025 before hitting our entry.

    To recap, we will look to sell the EUR/USD at 1.5205 with our stop placed at 1.5242. Our initial profit targets are 1.5150 (38.2% of CD) and 1.5106 (61.8% of CD).


      • 2hr Chart - Trade would enter near the top of the channel.

      • 1hr Chart - Bearish butterfly; sell at 1.5205.

    Comments (17)

    YP
    December 03, 2009 at 09:35 PM ET
    my qestion is why you dont long EURUSD from here,it will be about 150 pips gain if it hit 1.5205, rather sell at 1.5205 to hit target 1.5150 for 50 pips?
    bgareiss
    December 03, 2009 at 09:43 PM ET
    I am not saying that the pair will rise to 1.5205. I am saying that if the pair does rise to 1.5205, then there could be a high probability opportunity to go short. Brad
    4xTrader
    December 04, 2009 at 12:07 AM ET
    Hi Bradley, first of all I want to say that you guys do a phenomenal job analyzing the markets. I've been watching this website closely for months and check it before any trade I make. But I have a question about what you posted here. Is this trade based only on technical analysis or did you factor in some fundamentals as well? I've noticed the trades you post only become valid if a certain 'pattern' emerges which indicates an only technical trade.
    bgareiss
    December 04, 2009 at 12:10 AM ET
    These trades only are based off of technical levels. I don't place trades based on fundamentals for a variety of reasons. However, I do watch when announcements come out because I prefer not to enter a trade around a major news announcement. Brad
    FXDragon
    December 04, 2009 at 03:33 AM ET
    I wouldnt get caught long before todays nfp release. My analysis say you would hurt your wallet. Just a friendly warning. Good luck...
    engin
    December 04, 2009 at 04:24 AM ET
    allways see probabilities allways say if it do this and i would do this and IF I AM LUCKY then i can collect some money...
    bgareiss
    December 04, 2009 at 12:59 PM ET
    I am not sure I understand your question/comment. Could you please rephrase? Brad
    Semaj
    December 03, 2009 at 10:05 PM ET
    If the bulls do take control it seems to me a higher probability trade would be on the buy side. It's much easier to swim with the current, not against it.. Just a thought :)
    bgareiss
    December 03, 2009 at 10:24 PM ET
    Everyone is entitled to their own opinion. Otherwise trading couldn't exist because there would be no one offering to sell when you want to buy or vise versa. But in my opinion, this would be a high probability trade if the pattern completes as drawn at 1.5205. Brad
    Brian
    December 03, 2009 at 11:19 PM ET
    Hello Bradley, that's a very interesting level. 5206 is the 161.8% fib retracement From today's hi of 5141 to the low of 5036 also I have a R3 pivot at 5115 and from current price @5055 that's about a 150 pip move which is above the atr for the euro. There's a lot of confluence at this level that I like.
    bgareiss
    December 04, 2009 at 01:05 PM ET
    After the announcement, the trade is now invalid. But I agree this was a solid setup had it reached the entry. Brad
    FXDragon
    December 04, 2009 at 03:30 AM ET
    So you dont consider nfp a major news event Brad?

    Anyway i say no way to this trade. I think also the usdjpy progress will stop out at that SL level.
    bgareiss
    December 04, 2009 at 12:57 PM ET
    Obviously non-farm payroll is a major event. I had a trade stopped out (USD/JPY), but it had entered long before the announcement. That is the the cost of doing business, and another reason we use stops. This trade was far enough from its entry that I figured the announcement went the other way, it likely wouldn't blow through our stop. Keep in mind I don't care if I trade loses or wins. If I win 50% of my trades, I will be highly profitable on a consistent basis. Brad
    FxZ
    December 04, 2009 at 04:43 AM ET
    what s the matter with nfp,is technical not based on fundamental and before reaching 1.5205 level nfp will be already gone
    FXDragon
    December 04, 2009 at 05:12 AM ET
    I think nfp will create long bars anyway so. Mybe the other recommend. might hold next week, which i again doubt bec. of long bars. Didnt mean to be a partycrasher.

    Best of luck,
    bgareiss
    December 04, 2009 at 01:00 PM ET
    Regardless, the trade is invalid now. I was thinking with the same logic you were, however, if the announcement went the other way. Brad
    FxZ
    December 04, 2009 at 05:46 AM ET
    :) i am short 1.5M since 1.5132 so my party is on

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    QUOTEBOARD

    • Key Quotes
    • Currencies
    • Markets
    •  
    • current
    • high
    • low
     
    • EUR/USD
    • up
    • 1.3615
    • 1.3626
    • 1.3598
    EUR/USD
    5 min chart
    • GBP/USD
    • up
    • 1.5203
    • 1.5254
    • 1.5175
    GBP/USD
    5 min chart
    • USD/JPY
    • down
    • 90.47
    • 90.59
    • 90.35
    USD/JPY
    5 min chart
    • OIL
    • down
    • 81.86
    • 82.12
    • 81.69
    CLJ0
    5 min chart
    • GOLD
    • down
    • 1123.8
    • 1126.2
    • 1121.7
    .GOLD
    5 min chart
    • US Stocks
    • up
    • 10778
    • 10780
    • 10769
    .US30
    5 min chart
    • UK Stocks
    • up
    • 5652.0
    • 5652.0
    • 5643.5
    .UK100
    5 min chart
    • DEM Stocks
    • up
    • 6033.3
    • 6035.3
    • 6026.8
    .DE30
    5 min chart
    • JP Stocks
    • up
    • 10808
    • 10823
    • 10768
    .JP225
    5 min chart
    •  
    • current
    • high
    • low
     
    • EUR/USD
    • up
    • 1.3615
    • 1.3626
    • 1.3598
    5 min chart
    • GBP/USD
    • up
    • 1.5203
    • 1.5254
    • 1.5175
    • USD/JPY
    • down
    • 90.47
    • 90.59
    • 90.35
    • USD/CHF
    • down
    • 1.0566
    • 1.0588
    • 1.0565
    • USD/CAD
    • down
    • 1.0164
    • 1.0176
    • 1.0134
    • AUD/USD
    • down
    • 0.9219
    • 0.9223
    • 0.9192
    • NZD/USD
    • down
    • 0.7146
    • 0.7156
    • 0.7137
    • USD/MXN
    • up
    • 12.5092
    • 12.5142
    • 12.5054
    • EUR/JPY
    • up
    • 123.19
    • 123.34
    • 122.95
    • GBP/JPY
    • up
    • 137.56
    • 138.08
    • 137.26
    •  
    • current
    • high
    • low
     
    • OIL
    • down
    • 81.86
    • 82.12
    • 81.69
    5 min chart
    • GOLD
    • down
    • 1123.8
    • 1126.2
    • 1121.7
    5 min chart
    • SILVER
    • up
    • 17.344
    • 17.371
    • 17.219
    5 min chart
    • US500
    • up
    • 1166.1
    • 1166.4
    • 1164.6
    5 min chart
    • UK Stocks
    • up
    • 5652.0
    • 5652.0
    • 5643.5
    5 min chart
    • DEM Stocks
    • up
    • 6033.3
    • 6035.3
    • 6026.8
    5 min chart
    • JP Stocks
    • up
    • 10808
    • 10823
    • 10768
    5 min chart
    • AU Stocks
    • up
    • 4874.0
    • 4876.5
    • 4860.5
    5 min chart
    Data source: GFT

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