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USD/CHF Forming Potential Short

Last updated 3/11/2009 9:14 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

The USD/CHF has recently begun to move down off of a major long term Fibonacci retracement level.  For our purposes, it is not important to know which ratio and where, but it is important to know that we have a bearish bias on this pair overall.  If the pair continues to rise up from this point, we could see a bearish Gartley complete.  The completion of this pattern would create a high probability opportunity to go short.

We are looking to sell the USD/CHF at point D (1.1765).  Point D is located at the convergence of the following points:

The bearish Gartley would complete at the bottom of a former channel that has now failed.  Although the bottom of the channel initially created support, former support can often become new resistance.  It will be important to watch time symmetry assuming the pattern completes.  We ideally will watch for the pattern to complete near the bottom of the failed channel.  It is very important to watch for long bars going into the entry on the CD leg.  Long bars would invalidate this trade.  Also, we may need to adjust the trade tomorrow if the pair moves lower than 1.1500 before entering. 

To recap, we will look to sell the USD/CHF at 1.1765 with our stop placed at 1.1820.  Our initial profit targets are 1.1691 (38.2% of CD) and 1.1627 (61.8% of CD).

2hr Chart - Pattern could complete near the bottom of the failed channel.	2hr Chart - Bearish Gartley; sell @ 1.1765.

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