27 July USDCAD harmonic pattern analysis- emerging Gartley?


A bullish Gartley harmonic pattern is about to complete on USDCAD. The following 27 July USDCAD harmonic pattern analysis looks at the expected price reversal zone.

Harmonic patterns take Fibonacci ratios from specific points to form a probable price reversal zone (PRZ). The pattern could precede a minor or major correction or even a change of trend. Thus, USDCAD is about to complete a Gartley harmonic pattern as the chart below shows. The Elliott wave forecast also has something similar at the PRZ shown below.

USDCAD Gartley pattern analysis. what’s the PRZ?

Charting and harmonic tool from TRADINGVIEW

PATTERN FEATURES

The first leg XA ran from 1.2860 to 1.3380. Leg AB corrects XA at 61.2% (just about 61.8% required for a Gartley). BC corrects AB at 69.8% which works well for Gartley (Gartley takes anywhere from 38.2% to 88.6%). The last leg is often a confluence of XA correction at 78.6% and BC extension at anywhere between 113% to 161.8%. To complete this pattern, the last leg, CD should continue to 1.2968 (78.6% correction of XA). At 1.2968 as well, the extension of BC is 143.4% (which is about 144% and falls between 113% to 161.8% required). So we can have a perfect Gartley at 1.2968. I personally like having a price zone for the reversal. Exactly at 141.4%, BC extension ends at 1.2966. 1.2966 is pretty close to 1.2968, therefore we have our price reversal zone at 1.2966-1.2968. In summary, a Gartley pattern could complete at 1.2966-1.2968 price zone.

How to trade this setup

There are different ways to trade Gartley pattern depending on the users preference. The following looks at a few methods.

Method 1: Buy 1.2968 with stop loss at 40 Pips below the reversal zone. Target can range from 1:1 to 1:5.

Method 2: Waiting for the pattern to complete and buy at about 20-30 pips above 1.2968 with stop loss at 10-20 pips below 1.2966. Target can range from 1:1 to 1:5.

Method 3: Waiting for the pattern to complete and wait for a reversal signal. The reversal signal can be from any other technical methods.

INVALIDITY: This setup will be invalid if price breaks below the reversal zone significantly with one full bar or two.

Do you have other views in contrast to the ones listed or you want to compliment them further? let’s know by your comment below.

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