Today’s Trading Edge: EUR/USD week-long rally forms Gartley Pattern.

WWM EURUSD APR 30 2015

EUR/USD is in the midst of a strong rebound and partial recovery after a major collapse that prompted the pair to tumble to a 12-year low.  After six consecutive bullish trading days, the currency pair has tentatively formed a bearish Gartley pattern on the 240-minute chart.  Point D of the reversal pattern was targeted by both the 141.4% Fibonacci expansion level of the B to C leg and the 70.7% Fibonacci retracement of the X to A move.

Earlier in London, the rise from 1.1080 to the session high of 1.1248 also appeared to be a short squeeze.  If this last surge did trigger many stop losses, we could see price be ready to resume its longer-term bearish bias.  Critical resistance will come from both the 100-day SMA and the 1.13 handle.

Immediate downside targets include the 1.10 handle followed by the 50-day SMA which is currently trading at 1.0878.

The trade: Sell EUR/USD 1.1180, with a stop loss at 1.1330 and take profit at 1.0880.  The risk/reward ratio is 1:2

Edward J. Moya

Senior Market Strategist

WorldWideMarkets Online Trading

Edward J. Moya is the Chief Market Strategist for edmoya.com, an educational website for foreign exchange and commodity traders. He has over 15 years of investment industry experience in forex, stocks, options and futures. At edmoya.com, Mr. Moya writes daily currency and commodity analysis and has authored numerous articles on trading using both technical and fundamental analysis for major financial publications. He is a contributor of technical and fundamental analysis in currencies and commodities to SFO, Market News International, and Forex Factory.

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