All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

AUD/JPY to Resume Downtrend at 81.33

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 3/4/2010 7:36 PM EST (GMT -5) 8 Comments

• Share this:

Bradley W. Gareiss

Technical Analyst, GFT

A bearish Gartley/double top is forming on the AUD/JPY 2hr Chart.  This pattern has nearly perfect price symmetry.  Additionally, the trade would enter near the bearish trend line on the 8hr Chart.  This is a a textbook trade that will be an ideal setup if the CD leg rises with roughly the same slope that AB has.  On another note, I would like to thank Andrei Tratseuski for his help in identifying this setup.

We are looking the sell the AUD/JPY if it rises to 81.83 (Point D).  Point D is located at the convergence of the following points:

We will now go over what to watch for assuming the pair continues rising towards our entry at 81.83.  First, we need to watch how quickly CD completes.  We are looking for the CD leg to rise slowly and enter the trade near where we have drawn the hypothetical entry.  If there is  are long bars near the completion of the CD leg, we will not take the trade.  Also, if the pair comes within 15 pips of reaching our entry, does not enter, and reaches 80.75 before entering, the trade is invalid.  The trade is also invalid if the pair falls below 79.05 before hitting our entry.

To recap, we will look to sell the AUD/JPY at 81.83 with our stop placed at 82.41.  Our initial profit target is 80.94 (38.2% of CD).

• • 
    
  • 8hr Chart - Trade would enter near the bearish trend line.
  • 
    
  • 2hr Chart - Bearish Gartley; sell at 81.83.

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.

• Share this:

Comments (8)

amm

March 05, 2010 at 04:32 AM ET

see also AUD/USD selling opportunity at 0.9075 formation

Ahmad

Stephan Smith

March 05, 2010 at 05:20 PM ET

Bradley,

Why do you concentrate only on non-US currency pairs? I see you only focus on crosses like AUD/JPY, EUR/JPY and so forth. Does it have anything to do with their interest rates?

bgareiss

March 05, 2010 at 05:34 PM ET

We post a technical report on the seven primary USD based currencies twice daily. That can be found on the front page of FX360.com. Here is the link: http://www.fx360.com/techAnalysis/2949/swing-technicals-nzdusd-short-at-0-7141.aspx .

Brad

kingnai

March 05, 2010 at 05:41 PM ET

Do you still feel this is a valid short

bgareiss

March 05, 2010 at 06:01 PM ET

I never would have entered because of the long bars at the end of the CD leg. I also wouldn't hold this over the weekend because the pair could always gap up, but that is up to each individual to decide. Brad

MoneyManager

March 08, 2010 at 01:02 AM ET

I couldn't agree more about your long-bar aversion, Brad. As you say, it signifies momentum that must be respected. What a trader can consider in this case, however, is simply reversing the trade direction if the target price is arrived at via long bars. In that case, the original stop becomes the profit target, and a very tight stop should be used to protect against a sudden reversal.

It is intuitively and strategically sound. One does not take the original setup, because one suspects that momentum offers a good chance of getting stopped out at a loss. So, that good chance becomes, by definition, a good chance profit target in the other direction.

Pitfalls? Precisely defining long bars -- although an experienced trader knows them when he or she sees them.

But momentum is to be respected, and a tool to be used when present.

The strategy I outlined above is one that I have used many times. It does require a nimble mind, and it must be protected by a tighter-than-normal stop. It's more or less a sophisticated scalp (albeit maybe a bit bigger than a true scalp), and that's exactly what short-term explosive momentum offers you: a short-term scalp with very decent odds, and very little more opportunity in any higher TFs.

bgareiss

March 08, 2010 at 01:20 PM ET

Here is an article I have posted about long bars: http://www.fx360.com/commentary/brad/2673/warning-signs-long-bars-review.aspx . The problem, as the article explains, is that there are far too many variables involved to have a simple rule such as "a bar with 30 pips is a long bar". I haven't come across an adequate definition of long bars that is purely objective, so there is a little art to it. Usually though, I think it is fairly obvious when there are long bars.

Brad

FXDragon

March 06, 2010 at 06:48 AM ET

Im long yen pairs next week then short.

Add Your Comment

Please login to post a comment or sign up for an FX360® account.

Loading...