Emerging Gartley & Completed 123 Pattern – AUDUSD – Daily Timeframe

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A “potential” Bullish Gartley pattern is in the making.  We also have a completed 123 formation.
– The initial impulse & two corrective waves formed – XA, AB, BC
– Note: In this case the AB=CD condition for a typical Gartley takes us to the 88.6 FR of XA.  This is beyond the 78.6 FR of XA requirement for an ideal Gartley.
The 88.6 FR of XA could be more in line with a BAT pattern.  However, for the BAT we should have AB retrace no more than 50% of XA, which is not the case here.
–  The 88.6 FR of XA coincides with 161.6 FibProj of BC.  This makes sense since BC retraced to 61.6% of AB.  If the BC leg had retraced to 78.6% of AB, then one would look for a 127.2 FibProj of BC as the more likely confluence point within the PRZ.
– One can trade the CD leg.  Usually I look for a trendline break of BC which has already occurred.  A break below B would be a safer entry.
The SL would be above point C if the trade is taken off the daily chart.  However, this doesn’t result in a good risk/reward ratio.
As such, one could look for shorting opportunities on lower timeframes, with tighter stops and profit taking objectives i.e. if the trade goes in your favor, then look to take partial profits before reaching the PRZ.
– The traditional way of trading this would be to wait and see if the pattern actually completes.  Look for signs of reversal if price makes it to the PRZ and then take a trade to the upside.

– We also have a 123 pattern on the daily chart.
– The 2-3 leg retraced to 76.4% FibFan level of 1-2 … within the 88.6 barrier.
– Price has broken the 2-3 trendline as well as retraced past 50% of 2-3.
– The 100% FE of 123 (a likely target for the 123 pattern), is within 10 pips of the 88.6 FR of XA (Gartley pattern referenced above).
A break below point 2 (same as point B in the Gartley pattern above) would be a safer entry.
– If traded off the daily chart, the SL for the 123 pattern would be above point 3.  However, this again wouldn’t yield a feasible risk.reward ratio.  As such, the recommendation would be to look at lower timeframes for shorting opportunities with tighter stops and profit targets.
This entry was posted in 123, AUDUSD, Forex, Gartley, Harmonic Pattern, Misc. Setups. Bookmark the permalink.

One Response to Emerging Gartley & Completed 123 Pattern – AUDUSD – Daily Timeframe

  1. One618 says:

    Price did not move in the expected direction. One should have been stopped out if the trade was taken at the identified level.

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