Here we are on this highly anticipated March FOMC meeting where Mr. Bernanke and company are widely expected to increase the overnight borrowing rate by another 25 bps. Expect price action to whippy and directionless heading into the 2:15 pm EST announcement. The Euro products were firmly bid in overnight sessions as positive Eurozone economic data hit the tape sending our bullish Gartley EUR/GBP pattern to within 5 points of our initial target. Long trades where taken from the 0.6870-65 level which wound up being the dead low and price has advanced some 35 points, at $18 dollars per point, since entry. The most compelling feature of this chart which I failed to mention yesterday is the symmetry on the 240-minute chart of measured move AB=CD in not only price, but in time. Leg AB and CD both took 34 bars to complete while leg X-A took 55 bars to complete. Does anybody know the relevance of the number 34 and 55? They are the 9th and 10th members of the Fibonacci number sequence (1,1,2,3,5,8,13,21,34,55,89.) For a quick review if you divide any number in Fib sequence by the previous, you will find the divine ratio Phi, or 1.618.  It is time to push our analysis ahead of traditional retracements and projections and to the next level advanced Fibonacci patterns.

The Gartley pattern is the first of 4 advanced Fib patterns that I will be introducing to you to over the next three months. The Gartley pattern was introduced by H.M. Gartley in his book Profits in the Stock Market, published in 1935. The Gartley takes into account 4 price legs and finds 5 specified Fibonacci relationships between all 4 legs. The bullish and bearish Gartley patterns are constructed as such:

The most fundamental and vital components in the Gartley are the two legs shown on the EUR/USD chart below. Leg X-A is the primary leg that begins the pattern. The retracement in leg X-A should end between retracements 61.8% and 78.6%. The second is the measured move AB=CD, or 1.0 Fib projection, that ends very near to the X-A retracement. You are looking for symmetry in terms of both time and price for measure move AB-CD. If leg AB took 15 bars to travel 109 pips, expect leg CD to travel the approximately the same way, which again finds retracement resistance from Leg XA. It might seem confusing at first, but if you study the pattern and search the charts long enough, I promise they will immediately leap out of the chart at you.

There is a beautiful bearish Gartley forming on the 90 min EUR/USD chart that finds resistance at 1.2100-10. I am a little cautious to play this pre-Fed because the 14 bar measured moved projects the 109 point move to end at 7:30 pm EST tonight, or pre-Asia. If we find price hovering at this level tonight, let's look to be short EUR/USD with stops above 1.2125, targeting 1.2020 on the initial piece.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.