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Today’s Trading Edge: Aussie Dollar Forms Bullish Gartley Pattern

Posted by Edward Moya on Nov 14, 2013 9:55:00 AM

WWM AUDUSD Nov14 2013

The Australian currency has tentatively respected the 100-day Simple Moving Average (SMA) and formed a potential bullish Gartley pattern.  If the bullish reversal pattern is valid, AUD/USD may strengthen towards .9600. 

Price action on the daily chart above displays the potential bullish reversal at point D.  The X to A leg confirms point D with the 50% Fibonacci retracement level, while the B to C leg uses the 200% Fibonacci expansion level.  This technical reversal pattern typically will see an immediate rebound at the very least targeting point B. 

The trade: Go Long AUDUSD at market (currently trading at .9295), with a stop loss at .9245, and a take profit at .9595.  The Risk/Reward Ratio is 1:6. 

If this is the beginning of a major bullish move, traders may decide to keep this trade going and only exit half the position if a Golden Cross is formed.  That occurs if the 50-day SMA crosses above the 200-day.  Traders may exit half their position at the initial profit target and set the second target at .9750 while moving the stop loss to a level just above breakeven.     

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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