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EUR/JPY to Resume Downtrend at 103.79?

Last updated 9/26/2011 8:15 PM EST (GMT -5) 4 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

A bearish Gartley pattern is emerging on the EUR/JPY 2hr Chart below. The pattern has decent price symmetry, although it is much too early to determine the time symmetry. For proper time symmetry, we would like the CD leg to rise with the same general slope as the AB leg.  The trade idea would also enter near the bearish trend line on the 8hr Chart.  The trade is invalid if the pair falls to 102.58 before entering. 

We are looking to sell the EUR/JPY if it rises to 103.79 (Point D).  Point D is located at the convergence of the following points:

To recap, we are looking to sell the EUR/JPY at 103.79 with our stop placed at 104.07.  Our initial profit target is 103.37 (38.2% of CD).

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  • 8hr Chart - Trade would enter near the bearish trend line.
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  • 2hr Chart - Bearish Gartley; sell at 103.79.

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Comments (4)

Gogolando

September 27, 2011 at 02:53 AM ET

This is a nice pattern forming. Very harmonic. Although, according to the books I've read, it would not be considred a Gartley. But i guess it doesnt matter what you call it. Good AB=CD with nice fibs converging. Trend line is nice too. There is also a bearish Bat forming right above it. Very tight fibs converging at the 88.6 of the X high at 1:00:00 9/22/2011. However, it would have to break the trendline. Both patterns look nice to me. I don't think I've seen you trade the bat. What do you think? There is also a nice bearish butterfly forming on the 30 minute AUD/USD chart tht you might want to check out.

F

bgareiss

September 27, 2011 at 03:10 PM ET

The "bat" is one specific type of Gartley, essentially. Occasionally I extend the CD leg, but only if I feel the momentum of the CD leg indicates a move past the typical AB=CD. Although the Gartley pattern I posted ultimately failed, I still think it was the right pattern to trade in this case because the CD leg rose more slowly than the AB leg.

Brad

DukeMeg

September 29, 2011 at 08:57 AM ET

Hi Brad

What is actually behind the strength of the JPY
-Japan is the most indebted G20 Nations
-Japan has sluggish economy which is export oriented
-Japanese citizens are savers not spenders.
-Japan has no staple government
-Slow or no economic growth

With all these factors why the JPY getting stronger and stronger day after day, month after month and year after year.

JPY increased since April 07, 2005 versus other currency pairs with an usual value

Increased versus USD by 29.2%
increased versus Euro by 25.24%
increased versus AUD by 9.5%

And increased since March 06, 2007

increased versus GBP by 47.5%
increased versus NZD by 26.80%

What is behind the JPY strength?

Best regards

bgareiss

September 30, 2011 at 12:38 PM ET

I don't really consider macroeconomic factors in my trades because these facts don't really impact such a short term trade. I am trading off of price action rather than attempting to predict the long term movement of a given currency pair.

Brad

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