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NZD/CAD to Resume Downtrend at 0.7320?

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Last updated 3/16/2010 7:26 PM EST (GMT -5) 2 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

A bearish Gartley pattern is forming on the NZD/CAD 4hr Chart.  This pattern has nearly perfect price symmetry.  Additionally, the trade would enter near the top of the bearish channel on the Daily 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.

We are looking the sell the NZD/CAD if it rises to 0.7320 (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 0.7320.  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 10 pips of reaching our entry, does not enter, and reaches 0.7235 before entering, the trade is invalid.  The trade is also invalid if the pair falls below 0.7105 before hitting our entry.

To recap, we will look to sell the NZD/CAD at 0.7320 with our stop placed at 0.7363.  Our initial profit target is 0.7255 (38.2% of CD).

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  • Daily Chart - Trade would enter near the top of the bearish channel.
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  • 4hr Chart - Bearish Gartley; sell at 0.7320.

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)

FX Engineer

March 16, 2010 at 08:31 PM ET

Brad,

What would you say about the possible double (triple?) top near .7390? Would that make the profit target at .7255 a short term target with the potential for prices to rally back up to .7390?

bgareiss

March 16, 2010 at 08:37 PM ET

We are looking just for the move from 0.7320 to 0.7255. If that happened, I wouldn't do anything else, and I don't think the pair would be any more likely to rise to 0.7390 than to continue dropping from the profit target. If there are long bars in the CD leg I would consider moving the entry to 0.7390, but otherwise I don't plan on using that area for anything at this point.

Brad

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