The Aussie looks positioned for a bullish Gartley set up if the “risk on” sentiment carries through for the rest of this session and we get a firm close to today’s candle
I’ve outlined the set up on the charts below
The first chart below is the weekly showing the entire rally since the 2008 low. If the current downtrend doesn’t overlap below the last major peak labelled “1” ,the odds favour the major uptrend maintaining its strong, impulsive character.
The stochastic oscillator on the weekly chart is also poised to trend upward out of the oversold zone if a rally gets under way in the near future.
The daily chart below outlines the potential ABC correction. Price has arrived at a Fibonacci cluster which has the potential to represent the end point of the current downtrend. The cluster consists of:
- 50% retracement of the last major swing up and
- A projection that the swing down to C will be the same size as the initial corrective swing down to A
One way of handling the entry strategy is to buy on the first close above yesterday’s high provided the stochastics are trending up on the weekly chart by then. This would be a potential confirmation that price has rejected the Fib cluster zone.
The initial stop can be placed just under the recent low which represents attractive risk:reward if the major uptrend resumes from here and moves past the high at 1.108