EUR/CHF Could See Support at 1.5187
08/05/2009 10:15 am EST
The EUR/CHF has formed a bullish trend line over the past month and a half. The move up has been somewhat erratic, but the bullish trend line is solid. The pair is now falling in the form of a possible bullish Gartley. The Gartley has two points that could possibly point X, each with a Fibonacci level that converges with the ABCD. The potential Gartley also would enter near the bullish trend line that we mentioned earlier.
We are looking to buy the EUR/CHF if the pair falls to 1.5187 (Point D). Point D is located at the convergence of the following levels:
- 70.7% Fibonacci retracement of X1A
- 78.6% Fibonacci retracement of X2A
- 127.2% Fibonacci extension of BC
- Bullish trend line on the eight-hour chart
- If RSI falls below 30
We will now go over what to watch for assuming the EUR/CHF continues falling toward our entry at 1.5187. If the pair moves down rapidly and has long bars near point D, we will not enter the trade. Also, if the pair comes within ten pips of reaching our entry, but does not enter and reaches T1 before entering, the trade is invalid. The trade is also invalid if the pair rises above 1.5320 before hitting our entry.
To recap, we will look to buy the EUR/CHF at 1.5187 with our stop placed at 1.5151. Our initial profit targets are 1.5230 (38.2% of CD) and 1.5262 (61.8% of CD).
By Bradley W. Gareiss of GFTForex.com