Post-NFP, this pair has reacted to the upside as was expected technically. Prices bounced right off the bottom uptrend line of the larger contracting triangle. It has also respected the Gartley pattern I had identified last week that is now already in profit (+123 pips). Recent PA has now created a bearish bat pattern that has just completed. I expect that prices may respect this bat as well and head back down slightly before resuming an uptrend.
WEEK:LY CHART This up move might be the beginning of a much larger uptrend in a wave C of a possible ABC zigzag correction that may see prices heading up SIGNIFICANTLY. Or it may be in the wave C of a ABCDE contracting triangle.
DAILY CHART A little bit messy but I think the message is clear: LONG!
CONCLUSION AND MY TRADE PLAN My analysis is telling me that this pair has a ways to go to finish this corrective consolidation phase it's in so I am not expecting any significant new downtrend to start. Not right now. So in that case, I am only playing this pair to the LONG side. Yes, it may still head down as I'm not infallible and the market will do whatever it will do regardless of how many pattern, lines, wave counts or whatever I put on the chart. But the rewards if I am correct are well worth it. If prices head down from the bearish bat that is currently in play, I expect only a small retrace and then head up from there without retesting the bottom trend line of the contracting triangle. However, if it heads down and through the trend line, then all bets are off and I'll need to re-evaluate what is happening.
*DISCLAIMER: Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!
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Thank you for your post. Perfect as always. I have a question. If the prices complete the bearish Butterfly first then the bearish Gartley is on the way. Now, which is the pattern that we have to focus ? We have to sell on Butterfly or Gartley ?
EverythingForex
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That's a good question. What must be understood is that all these patterns are "complimentary" patterns and not "conflicting" patterns. Each lower level pattern is within the price action of the next higher level pattern. So in your question, if/when prices were to fill the butterfly (which has a lower D point than the Gartley) and reverse down to hit TP1 and/or TP2 of the butterfly, that PA does not invalidate the Gartley but rather is all happening within the CD leg of the Gartley. So in a perfect world, what will happen is that prices hit the butterfly, reverse down to give profit on the butterfly and then head back up to fill the Gartley, head back down again to give profit on the Gartley, turn around and head up again to hit the first crab (pink one), reverse back down to give profit on that crab, then head back up again to hit the second crab (purple) and then reverse back down to give profit on that one as well. Do you see what is meant by "complimentary" patterns now? Of course, that's all in a PERFECT world, that's what will happen. But we don't live in a perfect world so must watch the PA as each pattern gets filled to see what happens next...
KlejdiCuni
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Thanks a lot :)
FullTimeTrader
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Agree, this pair is inverse correlated with the DXY (USD index), i have the same bias on my post. Regards.