• Dollar Weakness Scheduled To End Tomorrow Morning
• A Tribute To Our Grandfather Gartley

The dollar was unexpectedly weak yesterday causing EUR/USD to hold the 4-hour uptrend support at 1.1980. We were looking for a failure of this trend support to short into a retracement back towards the trendline, but the failure never came. Instead EUR/USD traded higher in a directional (without retracements), lack-luster fashion that finds EUR/USD a big figure better than yesterday at 1.2090. Yet again, we uncover another powerful Gartley pattern which provides a price and time where we might find EUR/USD resistance ending this slow trudge higher. It's amazing how many Gartley we have found and successfully traded this week. They are very common in range-bound markets that go nowhere in a hurry, much this these markets.

The combination of the three Fib levels find price resistance from 1.2130 to 1.2150 and time resistance at 8:00 AM Friday morning. If you look below the Gartley chart, you will see that the AB leg traveled 55 hourly bars. The number 55 is significant in and of itself as it's the 10th number in the Fibonacci sequence -- 1, 2, 3, 5, 8, 13, 21, 34, 55, 89. If you project from the beginning of leg CD 55 hourly bars into the future you arrive at a 8:00 AM target tomorrow morning. Is Marty McFly from Back to the Future writing this report? 
 

So the plan is to leave resting offers at 1.2140 and 50 with 75+ stop to hopefully be done in London tonight. Initial take profit level is the .618 Ret of leg CD at 1.2025. Once that limit is dealt, trail the stop to breakeven to hopefully catch a EUR/USD breakdown into the beginning of the new month.

I have received a lot of emails regarding the Gartley pattern, which we have so heavily covered this week. I will post the breakdown of a Gartley pattern again in case you missed it earlier this week. Essentially, it is pattern introduced by H.M.Gartley in 1935, which uncovers a Fibonacci relationship between four separate price legs that is designed to take advantage of the blind-trend following crowd in a directionless, range-bound market. Take for example the left side bullish Gartley below. The market masses watched the explosive up move of leg X-A grabbing none of the upside price action. Frustrated, they are bound and determined to grab the next move up if and when it appears. After low B is in place the masses begin to pile in the market long looking for continuation ,and revenge, somewhere between point B and C. Shortly after the late-comers are fully long, the market suddenly reverses and begins to head south towards the stop locations of those same revenge longs. Well as soon as the market has cleared the stops of those weak longs at point D, price will usually reverse and begin a powerful uptrend far exceeding previous high A, and again without the frustrated masses onboard. Has this ever happened to you? I don't even want to count the times it has happened to me which is why exactly I am so thankful to have met our wonder Grandfather Gartley.

I will be out tomorrow at the Forex Expo in Ft. Lauderdale. Stop by if you are in the area to say hello.

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

Disclaimer
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.