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AUD/CAD rally to 0.8330 may provide ideal short

Last updated 1/28/2009 1:42 PM EST (GMT -5) 0 Comments - Add your comment

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FX360 Technical Analyst Staff

Technical Analyst, GFT

An AUD/CAD rally to converging Fibonacci resistance just below 0.8300 may lead to multiple Gartley sell pattern completion at point D (see 2hr chart below).

Today's sharp dive to 0.8052 (point C on 30min chart) has set the stage for two separate bearish Gartley patterns to complete near point D as long as point C holds. In other words, a move below point C before reaching point D would negate the pattern structure and possibly lead to a strong bearish continuation.

This pattern is in the early stages of development and is expected to complete sometime early next week. If this setup does in fact complete, we may see additional confirmation from the potential bear trendline (see 4hr chart below).

It may not be a bad idea to set an alarm around 0.8250 as both an early warning signal as well as a reminder to check the CD leg for bullish gaps or wide-ranging candles--both of which may lead to pattern failure. Stops at this point would most likely fall just above 0.8300 with initial profit targets at 38.2% and 61.8% of CD. Since this pattern has a ways to go yet, we'll hold off on specific entries and exits for now.

As always, we'll keep you posted as this pattern develops...

4hr Chart - Room up to bear trendline where the 2hr bearish Gartley patterns are projected to complete	2hr Chart - A bearish Gartley pattern within another bearish Gartley pattern projected to complete near D

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