- Trade entry 1.4190.
- Initial stop 1.4366
- First profit objective 1.2762
- Second profit objective 1.1941
In my post earlier this week on the potential EUR:CAD Gartley set up I said I’d provide an outline of a trading strategy if we got a set up
Price did make a peak very close to the first fibonacci cluster. This means you have a set up.Entry could be made on the first close below the low of the candle making the peak i.e around 1.4190
A good approach to setting stops is to set them at the first point at which the set up can be said to have failed. This trade has been entered in the expectation that the point C will be the end of the corrective rally and the OX downtrend will resume. So any move above means the theory is wrong and this is the logical place to put the stop.
If up trends or price swings correct down through the the most recent peak (i.e they overlap) this is a sign of weakness and indicates that they are likely to be corrective rallies rather than strong impulse trends. We are looking for the rally that began at X to be corrective. If we get down to around point A and bounce off it that’s not good. It means the current structure has not overlapped and may still be an impulsive uptrend. This also represents a point of failure. So if we bounce off a level close to the dashed red horizontal line the stop can be tightened, initially to the entry level
This strategy uses a scaled profit approach. Half the position would be bought back at 1.2762 which is the mid way point between B and X. At this level we have overlapped through A but it’s appropriate to take some defensive action and book some profit here in case the overlapping behaviour turns out to be a large wishy washy ranging situation and we don’t go on to move down through X
The 2nd profit objective is at this stage set a 127% expansion of the X/C move starting from C ( 1.1941). However, this may change if an impulsive downtrend gets under way and provides structures that make it possible to project a profit target based on Fibonacci clusters