Has EUR/CAD Bottomed Out?
04/17/2009 11:25 am EST
The EUR/CAD recently entered a previously established major support zone (see daily chart below) completing a bullish Gartley pattern in the process. In other words, a bullish 161.8% ABCD extension pattern (beginning with the March 19th high of 1.6972) has recently completed near 78.6% support of the XA rally which began with the February 1st low of 1.564.
This alone is enough to raise bullish eyebrows, however, there's additional bullish confirmation in the form of a second bullish ABCD pattern (127.2% ABCD extension) also having just completed as indicated in orange on the eight-hour chart below. Prices have already begun to rally so we will look to buy dips* (assuming a favorable risk/reward ratio) with conservative targets near 1.60, 1.62 set just below 38.2% retracements of both CD legs as this currently represents a counter-trend opportunity. Risk currently sits just below pattern completion (point D) at 1.5830.
* We will look to buy dips by monitoring smaller timeframes (typically 30 minutes or less) for bullish pattern completion (ideally a bullish Gartley or butterfly pattern) in order to quantify risk and assure a favorable risk/reward ratio.
By Roger A. Stojsic of GFTForex.com