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EUR/GBP Forming Opportunity to Go Short.

Last updated 2/24/2009 8:01 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

The EUR/GBP reached its all time high at the very end of 2008 and has been trending down since.  However, there is now a small retracement back up.  If the pair continues to move up, we would form a bearish Gartley pattern.  If the pattern moves up in perfect time symmetry, we would enter the trade at the bearish trend line seen on the 8hr Chart.  This is exactly what we look for in a trade opportunity.

We are looking to sell the EUR/GBP if it rises to point D (0.9181).  Point D is located at the convergence of the following points:

The bearish Gartley on the 4hr Chart is showing excellent symmetry.  Both Fibonacci levels and the ABCD converge near the same point.  As we mentioned before, this convergence would happen at the exact bearish trend line.  Assuming the pair rises up to our entry, this would be an ideal trade.  The major concern is time symmetry.  If the pair rises too fast, it may blow past our entry.  If the pair rises to slowly, it may react off of the bearish trend line before reaching our entry.  Assuming time symmetry is decent, this will be an excellent trade however.

To recap, we will look to sell the EUR/GBP at 0.9181 with our stop placed at 0.9277.  Our initial profit targets are 0.9038 (38.2% of CD) and 0.8922 (61.8% of CD).  If this pattern breaks, we will have broken up out of the bearish trend line so a stop is essential for this trade.

8hr Chart - Bearish trend line provides additional resistance.	4hr Chart - Bearish Gartley; sell @ 0.9181.

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