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EUR/JPY To Resume Recent Downtrend?

Last updated 4/7/2009 7:54 PM EST (GMT -5) 0 Comments - Add your comment

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The EUR/JPY has shot down over the past day after trending up for the past couple of months.  The bearish Gartley pattern is relatively short term and may continue the recent move down.  The trade has plenty of additional convergence beyond the standard bearish Gartley and double top.  On the 1hr Chart, we see there are actually 3 retracement levels that occur near our entry based on the three most significant highs in the downtrend. 

We are looking the sell the EUR/JPY if it rises to 134.76 (Point D).  Point D is located at the convergence of the following points:

We have already gone over the different components of the pattern, so we will now go over what to watch for assuming the pair continues rising towards our entry at 134.76.  First, we need to watch how quickly CD completes.  We are looking for the CD leg to rise slowly and enter the trade where we have drawn the hypothetical entry.  If there are long bars near the completion of the CD leg, we will not take the trade.  Also, if the pair comes within 15 pips of reaching our entry, does not enter, and reaches T1 before entering, the trade is invalid.  The trade is also invalid if the pair falls below 132.85 before hitting our entry.

To recap, we will look to sell the EUR/JPY at 134.76 with our stop placed at 135.15.  Our initial profit targets are 134.22 (38.2% of CD) and 133.72 (61.8% of CD).

1hr Chart - Three Fibonacci retracement levels converge near our entry.	30min Chart - Bearish Gartley; sell @ 134.76.

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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.