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Will GBP/JPY Resume Uptrend at 120.65?

Last updated 12/9/2011 6:08 PM EST (GMT -5) 3 Comments

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Bradley W. Gareiss

Technical Analyst, GFT

A bullish Gartley is forming on the GBP/JPY 4hr Chart below.  The pattern has nice price symmetry, although the pair needs to drop more slowly in order for the trade idea to have good time symmetry.  For proper time symmetry, we would like the CD leg to drop with approximately the same slope as the AB leg.  On a longer term basis, the trade idea would enter near the bullish trend line on the Daily Chart  The trade is invalid if the pair rises above 122.36 before reaching the entry.

This pattern suggests buying the GBP/JPY if it falls to 120.65 (Point D).  Point D is located at the convergence of the following points:

To recap, this pattern suggests buying the GBP/JPY at 120.65 with our stop placed at 120.33.  Our initial profit target is 121.14 (38.2% of CD).

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  • Daily Chart - Trade would enter near the bullish trend line.
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  • 4hr Chart - Bullish Gartley; buy at 120.65.

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Comments (3)

Gogolando

December 10, 2011 at 07:36 AM ET

Brad, I picked 120.59 as the entry. Why did you pick 65? Shouldn't the pair test some harmonic resistance for it to be a valid set up? I have been gravitating to your method but am having some problems picking my stops. Mine are usaully wider. But I do feel like I am giving up some money because, since my stop is wider, i have to risk less on each trade giving me less on my limits. Do you pick your stops by % or by resistance? For example, i picked my stop just beond the 70.6 XA becuase of the convergence of the 127ABCDextention at the 78.6. I figurred that if it got to the 70.6 it would head on down to the 78.6. I picked my stop just 120.28. I also took the 3 pip spread because the sell. I keep all my trades on powerpoint and have noticed that you do have a very good nack for picking your stops. But when I try to pick as you do, as i said I am usaully giving up more money.

Gogolando

December 10, 2011 at 09:04 PM ET

Ok Brad forget the fist question, i wasn't thinking about the spread. 120.65 would be at a 120.57 bid price and that is in the harmonic zone--given that there is an 8 pip spread.

Jackie

December 14, 2011 at 06:12 AM ET

Will this pair reach the target? So far, it got within 0.7 of a pip, and has retraced nearly to the entry. Don't worry ... I'm so confident you'll get your extra pip that I bought more around 120.70/80. Don't be so hard on yourself ...

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