Trade Idea for April 30th 2013 – Short EUR/JPY

Tuesday, April 30, 20130 comments

Trade Idea: Sell EUR: JPY on a break below the 50 day moving average at around 124.20
This trade idea is based mainly on the fact that Euro: Yen has completed a butterfly chart reversal pattern.
Charting literature usually requires this pattern to have Fibonacci “symmetry” with the corrections inside it finishing at Fib retracement levels. However, I find this can be a useful pattern without Fibonacci retracements. The basic shape of the pattern indicates potential reversal behaviour.
My basic requirements for this pattern are:
  • It should sit at the top of a long lasting and/or steep up trend
  • The correction from b/c correction must be inside the X/a correction
  • The final swing to D should take out the high at X but fail not too far above that level
As you can see, this all gives the pattern a butterfly shape.
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