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This is an update of a previous trade set up we outlined on February 3, 2009 ( "EUR/CHF May See Strong Resistance Soon" href="http://www.fx360.com/commentary/brad/588/eurchf-may-see-strong-resistance-soon.aspx"> EUR/CHF May See Strong Resistance Soon ).  We still had a long way to move up when we first published the trade opportunity, but now we have a better picture of what is going on.  The price action has gone as expected and has fit the criteria we needed to move forward with this potential trade.

 The 2hr Chart shows that our sell entry (1.5041) would be at almost the exact 61.8% Fibonacci retracement of the sharp move down.  The nearly vertical slope of the move down suggests the downtrend may continue, which strengthens the probability of the trade working.

 There is also a bearish butterfly forming on the 1hr Chart.  This pattern has nice symmetry and matches up almost perfectly with the retracement seen on the 2hr Chart.  We have extended the CD leg to 127.2% of AB because of the long bars seen in the CD leg.  Additional convergence at Point D (1.5041) is created by the 127.2% Fibonacci extension of XA and the 141.4% Fibonacci extension of BC. 

To recap, we will look to sell the EUR/CHF at 1.5041 with our stop placed at 1.5085.  Our initial profit targets are 1.4977 (38.2% of CD) and 1.4919 (61.8% of CD).  As with all trades we set up, it is extremely important to use a stop because any pattern can fail at any time.

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