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British Pound Short to Trigger at 1.42

Last updated 3/4/2009 1:08 PM EST (GMT -5) 0 Comments - Add your comment

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FX360 Technical Analyst Staff

Technical Analyst, GFT

In this morning's GBP/USD intraday technical report  ( here ) we highlighted two scenarios...a rally to 1.42 triggering a short on bearish 30min Gartley pattern completion, while a drop to 1.38 could potentially trigger a buy of bullish 8hr butterfly pattern (this bullish setup was also discussed in yesterday's technical feature, " GBP-USD: 2 Reasons Why 1.38 is the Level to Watch ").

Well, the pound managed to stage an intraday rally today, and is now approaching converging Fibonacci resistance near 1.42. This presents a true swing trade possibility as the bearish 30min Gartley may lead prices down to the bullish butterfly pattern completion at which point we may switch gears and reverse positions. There are still some warning signs to watch out for regarding the completion of the bullish Butterfly pattern (discussed in yesterday's feature) so we won't go as far as saying this is set in stone by any means, but it will be interesting to see what happens.

As for the 30min bearish Gartley pattern, we are looking to sell at 1.4194 just below pattern completion at 61.8% of XA and 127.2% of BC. Stops have been set at 1.4306 just above 78.6%/161.8% convergence (and the 1.43 handle). Initial profit target currently sits at 1.4080 (T1) just above 61.8% of the projected CD leg, and T2 at 1.3853 just above 161.8% of CD.

30min Chart - Bearish Gartley pattern projected to complete near 1.42, may lead down to bullish 8hr butterfly pattern completion...	8hr Chart - Bearish butterfly pattern projected to complete near D (see yesterday's technical feature for details)

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