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.

Update: Bonus GBP/USD Long Opportunity at 1.5606

Last updated 12/2/2011 10:46 AM EST (GMT -5) 10 Comments

• Share this:

Bradley W. Gareiss

Technical Analyst, GFT

We wrote that the trade idea below would be invalid after 8 am today.  However, the setup is still valid due to the lack of volatility generated by non farm payroll. 

_______________

A bullish Gartley pattern is currently forming on the GBP/JPY 2hr Chart below.  This trade does not conflict with the GBP/USD trade on our  swing technicals .  The trade has good price symmetry and is currently dropping with solid time symmetry.  For proper time symmetry, we would like the CD leg to drop with approximately the same slope as the AB leg.  This trade would be invalidated if it rises to 1.5759 before entering. 

We are looking to buy the GBP/USD if it falls to 1.5606 (Point D).  Point D is located at the convergence of the following points:

To recap, we will look to buy the GBP/USD at 1.5606 with our stop placed at 1.5573.  Our initial profit target is 1.5656 (38.2% of CD).

• • 
    
  • 1hr Chart - Bullish Gartley; buy at 1.5606.

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 (10)

mbrad77

December 02, 2011 at 11:56 AM ET

did it hit the stop?

bgareiss

December 02, 2011 at 11:57 AM ET

At the time of my comment, it has not reached the stop. Of course, this should be pretty easy to check on the chart too.

Brad

mbrad77

December 02, 2011 at 12:00 PM ET

yes it hit a low of 1.55759, this is again one of those times it barely reached the stop
my concern was not actually with being it so close to the stop, but with the rapid drop in the pair
thanks for the quick response

bgareiss

December 02, 2011 at 12:19 PM ET

The stop is 1.5573, so 1.55759 hasn't "barely reached the stop". Who knows what will happen next, but for now the trade is still going.

Brad

mbrad77

December 02, 2011 at 12:05 PM ET

i'm not in the trade, but considering entering it if it goes above 1.56
do you think it's still valid?

thanks

bgareiss

December 02, 2011 at 12:20 PM ET

I think it is fine to enter at or below the entry unless it has hit the stop or profit target. This isn't the ideal way for the trade to play out, but they aren't all going to look pretty.

Brad

Jackie

December 03, 2011 at 06:52 AM ET

For those who understandably didn't enter because of the rapid drop, I would suggest a second possible entry ONLY if the pair continues to rise to 23.6% of CD (i.e. first rises to about 1.5620 without making a new low). If this happens, then I'd look to buy a 50% pullback of this rise (i.e. buy around 1.5603) and a stop just below the low (1.5575). Regarding targets, for this specific trade setup, it seems a pity to exit at standard 38.2% of CD (1.5643) when we're buying into a confirmed 4HR uptrend (and the rapid drop was halted by this same uptrend line which began at 1.5422 and which [to me] already has 3 reasonably spaced touches). My target will be between 1.5800-1.5850 (i.e. approaching the 61.8% CD). This target range is supported by my Elliott Wave count. With this uptrend starting at 1.5422, I have wave 1 ending at 1.5593 (so wave 1 is 171 pips long), wave 2 ending at 1.5468, wave 3 ending at 1.5779 and wave 4 ending at the current low of 1.5575. I'm estimating wave 5's length to be 1.618 times the length of wave 1 (171x1.618=277 pips), which when added to the wave 4 low (1.5575) makes wave 5 end near 1.5852 (close to the 61.8% of CD being 1.5859). The only other nearby resistance I can see may be the 127.2% of AD at 1.5834.

Gogolando

December 04, 2011 at 08:29 PM ET

Ok jackie, but your wave 4 is below wave 1. I'm learning Elliot wave now; and i thought that wave 4 was not alowed to do this. Could you explain why you picked 1.5575 as wave 4? I am currently in this trade with my target at Brads pick. The price action did seem strong and it did close beond the reversal zone. And it's' just hanging out below the harmonic entry zone. However, i would like to juice this if you are right.

Jackie

December 05, 2011 at 03:56 AM ET

I too was taught that Elliott wave 4 can NEVER overlap wave 1, but it is wrong. Elliott waves are either "motive" (five waves) or "corrective". Motive waves are either "impulse" or "diagonal". Diagonal waves often have wave 4 overlap wave 1. Impulse waves (the more common type) should normally never overlap, but for leveraged instruments, "short term price extremes" can occur, and such overlapping is "usually confined to daily and intraday price fluctuations".

In this GBP/USD case, if you look at the 4 hour chart, you'll see that the closing price of the overlapping candle is above wave 1 (wave 1 high 1.5593, 4hr candle low 1.5575 but closed 1.5595) and no other subsequent candles have closed within wave 1 (right now, we have four 4HR candles after this one).

By now, you should have adjusted Brad's target to 38.2% of the real CD (1.5644) and your trade has won. I'm now reevaluating the price action and might have to change my labels to just waves 1 and 2 (instead of 1 to 4).

Remember, waves 1, 3 and 5 should divide into 5 smaller waves (so you may need to check a smaller timeframe) and waves 2 and 4 into 3 smaller waves.

Gogolando

December 05, 2011 at 10:08 AM ET

Thanks Jacky. I owe you.

Add Your Comment

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

Loading...