Weekly Market Update 01/02/2012 – Harmonic Patterns
This weeks video update is looking at 4 pairs, AUDUSD, AUDJPY, NZDJPY and the GBPNZD that are showing nice harmonic patterns, Elliott Wave formations with associated Fibonacci percentages.
The AUDUSD and AUDJPY have formed bear gartleys, which are classic harmonic patterns. The AUDUSD bear gartley is currently challenging the X point of the gartley and is being confined within the upper trend line of a rising channel. It is also diverging on the daily RSI.
The AUDJPY has also demonstrated completion of a bear gartley 8 pips below the 88.6% PRZ and is now retesting this important Fibonacci perectage resistance area with RSI divergence, again on the daily.
Other harmonic patterns include the NZDJPY has formed bear bat. The NZDJPY bear bat is finding resistance at the 94.1% Fibonacci retrace of XA, with associated RSI divergence on the daily chart.
Again in our run of harmonic patterns GBPNZD has compelted a bull bat as it may have begun its countertrend reversal 13 pips above the 88.6% retrace of XA on daily RSI divergence. The harmonic bat patterns offer very good risk/reward, with low risk and high potential for larger reward. The bear gartley has a less favourable risk/reward but is a high probability win pattern.
Harmonic patterns work well when used in an Elliott Wave context, the GBPNZD may have completed wave 3, coinciding with the completion of the bull bat pattern in close proximity to the 88.6% retrace of XA. Elliott Wave counts for the AUDUSD and the AUDJPY bear gartleys are less clear. Elliott Wave count for the NZDJPY bear bat strongly suggests the high probability of a wave 3 completion coinciding with previous significant structure (X of bear bat) on daily RSI divergence.
Harmonic patterns with key associated Fibonacci percentages are clearly seen in this video
USDJPY BEAR GARTLEY
So far the fibs are looking good on this pair, lets see if it can complete a CD leg to form a classic bear gartley.