EURUSD Wedge

In earlier posts I had been anticipating the breakout of EURUSD, then waiting for a subsequent pullback to make an entry; however, price didn't pullback to the levels that I was looking for. Recent commentaries that I have read for EURUSD are very bearish. Here is a contrarian view, based on the geometry of a bearish descending wedge formation.



Price has retraced to a confluence of 50.0% and 61.8% fibonacci levels. The last 2 lows appear just below a monthly pivot level, and are divergence against momentum indicators. Projections from the wedge formation anticipate that price could reach 1.4750 in Mid-October. I've indicated a potential entry level, based at the last low. However, its possible that this price won't be revisited and an alternative would be to scalp an entry on a smaller time frame somewhere close the the pivot level at 1.4545. Of course the NFP announcement tomorrow could cause a swing to the low side to trigger the entry. If the result of the NFP is further bearish movement, I still think there would be a possibility for entry at about 1.4450.

Gartley Pattern

Is this a Gartley Pattern? Hmmm, I'm not so good at detecting these! The ratios seem right, but it looks abit "squishy" to me. Anyhow, I've marked my trade setup (paper only!) to see how it performs.

Pullback Indicator

Following on from my previous posting, I have created a custom indicator to identify the pullback setup.

In the price chart below for EURJPY the fibonacci levels for a pullback have been marked, with levels for entry, stop and target prices marked with line segments (green, red and blue respectively).



Below the price chart is the custom indicator.

The black lines indicate price range, with the yellow line representing close price. When a pullback opportunity occurs, the yellow line splits into 3 lines - red representing the 100% pullback level for the stop, the green representing the 61.8% retracement level for the entry, and the blue line representing the target price with a 2.6:1 reward-to-risk ratio. During the period of the split lines, the yellow line represents a 1:1 reward-to-risk ratio that can be used to achieve break-even by scaling out 50% of the position of this price level.

A trade would be triggered if price crosses up through the green line.

My motivation for creating the indicator was to speed up manual testing of pullback strategies and to facilitate automated backtesting.