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How Will Obama's Plan Impact Intraday Technical Opportunities?

Last updated 2/10/2009 2:45 PM EST (GMT -5) 0 Comments - Add your comment

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FX360 Technical Analyst Staff

Technical Analyst, GFT

In this morning's technical report, " Intraday Technicals: Opportunities Galore! (risk management will be crucial) " several opportunities were discussed across 5 of the most commonly traded currency pairs including the EUR/USD, GBP/USD, USD/JPY, USD/CAD, and USD/CHF.

Typically, this amount of volatility is a major warning sign in relation to Geometric Pattern Recognition--the cornerstone our technical trading methodology. We generally watch out for wide-ranging candles or gaps prior to pattern completion--which typically defines market entry as well as stop-loss and profit target placement--as these two indicators oftentimes signal strength and that a potential continuation move may be in progress increasing the odds of pattern failure.

That said, today's USD/CAD sell opportunity--a potential bearish 3-drive pattern discussed here --is invalidated as the wide-ranging candle coming up off point C (which did in fact manage to hit 78.6% of A2 before jumping nearly 200 pips) negates the necessary time symmetry for a valid 3-drive pattern to occur. However, the bearish butterfly pattern is still valid although completion is projected at the 78.6% of YZ near 1.2450 as opposed to the 61.8% at 1.2377. In this case, stops would be set just above point Y (1.2537).

The USD/CHF has almost completely retraced the near 300 pip spike that began on yesterday's NA open, which defines the secondary point C retracement at 1.1502 within the projected bearish butterfly pattern. As we noted in this morning's USD/CHF report, this pattern is invalidated on a move below this point C prior to the projected entry of 1.1855. Prices did manage to barely stay above this level with a current intraday low of 1.1505 technically keeping this setup valid although less likely to complete.

The EUR/USD is somewhat similar as the projected butterfly pattern discussed here is still technically valid, but less likely to complete.

That leaves us with the GBP/USD, and the USD/JPY. Both trades have already been triggered, and both have achieved initial profit targets at which point stops are typically moved to break-even, and/or partial profit taken. The GBP/USD managed to close below 1.4670 triggering our short, and steadily dropped taking out both profit targets at 1.4635 (T1), and 1.4542 (T2).

The USD/JPY spiked down to a low 90.27 triggering our buy set at 90.35, then quickly turned reaching a high of 90.95 knocking out our first profit target (T1) at 90.84 at which point stops were moved to break-even mainly due to the sharp, wide-ranging move down to our entry. The pair has since turned and is currently at new intraday lows stopping us out (at a profit) in the process.

Finally the GBP/AUD...This pair has seen phenomenal price and time symmetry lately, and has thrice been a technical feature article with the most recent post coming yesterday in, " GBP/AUD Continues to Impress ." The projected rally discussed in yesterday's article completed with near perfect price and time symmetry reaching a high of 2.2297 completing the anticipated bearish Gartley pattern (see chart below).

The GBP/AUD then took another 500 pip dive over the course of approx. 6 hours in turn re-testing 50% support near 2.1800 only to take a gut-wrenching 500 pip swing right back up to 2.2300 in less than 1 hour off Treasury Secretary Tim Either’s Financial Stimulus Plan roll-out.

The pair has since stabilized on a 38.2% correction of todays wicked up swing. Stops will now be tightened/adjusted to 2.2335 because if the current 38.2% support near 2.2100 holds, and prices move above 2.2330, this could signal a potentially strong bullish continuation. T3 as discussed in yesterday's GBP/AUD update is no longer valid, and we will be mindful of that 2.1800 level of 50% support which has held on three separate drops of 400+ pips.

2hr Chart - Yesterday's potential bearish Gartley pattern completion at D	2hr Chart - Bearish Gartley pattern completed at 2.2997, dropped to nearly 500 pips, then spike back up in less than 1hr following Financial Stimulus Plan roll-out.

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