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Attractive GBP/JPY Selling Opportunity...

Last updated 2/12/2010 11:33 AM EST (GMT -5) 7 Comments

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FX360 Technical Analyst Staff

Technical Analyst, GFT

We have an attractive GBP/JPY selling opportunity should prices rally to around142.60-143.0 this week based on an emerging 2hr bearish Gartley pattern projected to complete at the following Fibonacci/pattern convergence:

The key will be for prices to rally to our projected entry of 142.52 (just below pattern completion near point D) without first moving below point C (139.40), which negates pattern structure and invalidates this particular setup. Additionally, any gaps and/or wide-ranging candles (2-3x's average) prior to the projected entry may invalidate this particular entry as they are signs that a continuation move may be in progress. This may take prices up to secondary pattern completion near 143.76 (78.6% of XA) in which case stops would be set just above X. From a risk/reward standpoint, it makes more sense to have these two separate bearish entry/exits versus simply widening the stop.

As it stands now, the initial target of 141.49 represents a 38.2% correction of the projected CD leg, at which point stops will be moved to break-even (B/E) and is also a valid exit for more conservative traders as it still represents a decent risk/reward. However, the daily chart shows there's still a bit of room down where a longer-term bullish butterfly pattern is projected to complete which in turn defines the extended target of 136.23 (set just above the daily butterfly pattern completion).

Potential strategy: Sell if prices rally to 142.52 with stop-loss at 143.22 targeting 136.23 (T1). Stops will be moved to break-even at 141.49.

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Comments (7)

pp22

February 10, 2010 at 04:01 PM ET

Hey Roger
Just curious about the profit targets. I noticed that both you and Brad arent using T1 and T2 anymore, just "targeting". Can you tell me the reasoning for that?

rstojsic

February 11, 2010 at 09:46 AM ET

There are a couple reasons, and a whole lot of reasoning, but above all we wanted to avoid confusion and simplify how results are posted. Similarly, and perhaps most importantly, we wanted to avoid any notion that because there were 2 targets this somehow translated to a 2 lot trade which is contradictory to what we believe to be good risk/money management in regards to this particular methodology.

TraderPinoy

February 14, 2010 at 07:03 AM ET

Hi Roger,

Just have a question, the current retracement of XA (which is B on your 2HR chart) is somewhere around 38.2 retracement. Correct me if im wrong but i dont think this is a bearish gartley.

Thanks.

NeoFX

February 14, 2010 at 12:34 PM ET

Roger, why was this trade taken off the table?

thanks

silver

February 14, 2010 at 06:14 PM ET

it is still on the table you have to click on view more trades and it is the fourth one since three were added over the weekend.

silver

February 14, 2010 at 06:15 PM ET

it is still on the table you have to click on view more trades and it is the fourth one since three were added over the weekend.

Dario Fuentes

February 17, 2010 at 12:29 PM ET

Hi Roger,
I am gald you guys are talking about target 1and 2. A while ago I tracked a good portion of your trades and made a conclusion.
if the target 1 was reached and then the target 2 also, the number of pips obtained became relative because the position is divided by two. (In oder words, the risk money managing will be invalidated).
On the other hand if you take profits just in target one, you wil make profits on the whole lot which in the long term is more money and of course a most exact approach of the risk/reward. I always wanted to point that to you guys but for some reason I never did.
I hope all this make sense.
Best regards
Dario

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