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Opportunity To Short GBP/CHF Forming

Last updated 4/1/2009 7:42 PM EST (GMT -5) 0 Comments - Add your comment

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There is a bearish Gartley and double top forming on the 4hr Chart of the GBP/CHF.  The pattern is fairly straightforward and relatively near its entry.  Additionally, the entry is near the 61.8% Fibonacci retracement on the 8hr Chart.  Although we cannot see this on the charts provided, this pair has been in a sharp downtrend since August 2007.

We are looking to sell the GBP/CHF if it rises to 1.6835 (Point D).  Point D is located at the convergence of the following points:

The most important thing to watch in this pattern is how quickly CD completes.  Ideally, we want the leg to rise slowly and enter with as little momentum as possible.  If there are long bars near the completion of the CD leg, we will not take the trade.  Also, if the pair comes within 10 pips of reaching our entry, does not enter, and reaches T1 before entering, then the trade is invalid.  Finally, if the pair drops below 1.6350 before reaching our entry, the trade is invalid.

To recap, we will look to sell the GBP/CHF at 1.6835 with our stop placed at 1.6950.  Our initial profit targets are 1.6640 (38.2% of CD) and 1.6480 (61.8% of CD).

8hr Chart - Entry is near the 61.8% Fibonacci retracement.	4hr Chart - Bearish Gartley; sell @ 1.6835.

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About The Author

Bradley Gareiss has been a technical analyst with GFT since 2008. Brad is known for his ability to identify high probability trading opportunities through geometric pattern recognition. He also focuses on trading psychology and risk management, and has written many extensive articles on these subjects.