USDJPY: Bearish Gartley After a Strong US Jobs Report
This pair rose strongly after a higher than expected non-farm payroll number came out (257K) together with a favourable wage gain percentage (0.5%). Because of this strength in US the labour market, the USD immediately became bullish, driving USDJPY up 185 pips. This moved the price of this pair above the B point of a potential bearish Gartley on the 4H and now this set up qualifies as a “trade candidate” and goes on my watch list. Price has already travelled 80% of the way from C to D.
When defining the potential reversal zone (PRZ) for a Gartley pattern, we look at the projection of three harmonic levels. I: the 786 retracement of XA, II: an AB = CD pattern and III: a BC expansion converging in the same area (in this case 1414 BC). This defines a tight zone, about 22 pips wide, represented by the orange lines in the chart. There is also some structure in this zone, which increases the edge of a reversal. Should price action test the PRZ and reverse convincingly, I would enter short. SL goes 10 pips behind the next resistance level. TP1 = 382 retracement of AD and TP2 = 618 retracement of AD.
There are 235 pips to be made (if this pair follows the script) and the trade has a reward-risk ratio of 2.2!
UPDATE 1: Price is testing the PRZ.
UPDATE 2: PA did exceed the PRZ somewhat, but did not invalidate the Gartley and quickly reversed. I entered short at the lower limit of the PRZ and am currently 92 pips in this trade, which I am holding over the weekend.
UPDATE3: PA hit TP1 and I took profit on 1 position for 142 pips. I rolled SL into profit, so from now on I have a risk free, profitable trade. The trade management of the second position has become a management of profit. Lets see how far it can reach!
When defining the potential reversal zone (PRZ) for a Gartley pattern, we look at the projection of three harmonic levels. I: the 786 retracement of XA, II: an AB = CD pattern and III: a BC expansion converging in the same area (in this case 1414 BC). This defines a tight zone, about 22 pips wide, represented by the orange lines in the chart. There is also some structure in this zone, which increases the edge of a reversal. Should price action test the PRZ and reverse convincingly, I would enter short. SL goes 10 pips behind the next resistance level. TP1 = 382 retracement of AD and TP2 = 618 retracement of AD.
There are 235 pips to be made (if this pair follows the script) and the trade has a reward-risk ratio of 2.2!
UPDATE 1: Price is testing the PRZ.
UPDATE 2: PA did exceed the PRZ somewhat, but did not invalidate the Gartley and quickly reversed. I entered short at the lower limit of the PRZ and am currently 92 pips in this trade, which I am holding over the weekend.
UPDATE3: PA hit TP1 and I took profit on 1 position for 142 pips. I rolled SL into profit, so from now on I have a risk free, profitable trade. The trade management of the second position has become a management of profit. Lets see how far it can reach!
You don´t need to be a weatherman to know which way the wind blows - B. Dylan
