How did we know that EURUSD would go to 1.40 ? – Part 2

Following up from the last article on the same subject, we have now confirmed the uptrend based on the break and retest of the resistance at the top of the cup. Now, the challenge is to know when this uptrend would take a significant pause. For this, we use a branch of technical analysis that is called harmonic patterns.

The harmonic patterns constitute a field of analysis which covers a set of patterns (just like candlestick patterns) which lead to specific results. There are many patterns in this like the gartley, butterfly etc. but the one which i normally use is a very simple and basic one called the AB=CD pattern. This is a very simple pattern which can be used both for bullish and bearish times.

For a bullish AB=CD pattern, we have a rising prices, a downtrend which ends at the 50% or the 61.8% or the 78.2% and then he uptrend resumes again, breaks the previous high and keeps going up till the size of this new up-leg becomes equal to the size of the previous uptrend. This is called the bullish AB=CD pattern.

In our case, i have attached the EURUSD daily chart with the ABCD pattern written in it. Point A is at around 1.1870, point B is at around 1.3325. This makes it a total of about 1450 pips. Point C is at around 1.26 and so when the price succesfully breaks the previous high (the top of the cup), your expected target should be 1.26 + 1450 pips = 1.4050 (give or take 50 pips). And, thats where we ended up !! This is a very good place for a nice retracement to take place and hence a good target for our longs.

In my next article, i would discuss my analysis on the future direction of EURUSD and GBPUSD over the coming weeks.

Do follow me on twitter (http://twitter.com/ns_karthik ) where i post some of my trades in real time.

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  • when did i analyse EURCAD ?

  • canuck, can u pls quote an example…i went thru the charts and could not find anyone which fitted the pattern that i told, had a break and retrace and didnt do as pointed out…it would be nice if you make points with solid examples…when u say that my analysis is my arbitrary (even after sharing an example), i am not sure what to say about something in which u dont even quote a proper example..

  • Omotoso_olutayo

    Any review on EURCAD? IT SEEMS THE TREND IS AGAINS UR ANALYSIS.

  • Canuck15

    Fair enough….except all the times it does NOT act like this. That’s the thing about after the fact analysis. You can ALWAYS find some pattern to match what it does. However, for ever one pattern that does match there are probably 10 that do not. Giving you a probability of 10% on any particular pattern. Some may have higher probability than others but that is besides the point.

    I haven’t bothered to check but I am willing to bet I can find at least 2 or 3 pairs right now that have the same set up for this pattern but did not end up as the pattern predicted they would.

  • I think you look very intelligent 🙂

  • lol…u think i look stupid on twitter pic ?

  • Davidasmith8

    Get rid of that Picture you have on twitter. It doesn’t do you justice. You a lot smarter than you look. Thank you for the insight of the EURUSD daily chart with the ABCD pattern.

  • Rudolf

    Thank you for the reply, I will look you up on Twitter.

  • i shall discuss that in my next article….also, if u had followed me on twitter, i would have mentioned all this b4 it happened….i chose to write the article only now to explain the thought process as i cannot explain it over twitter…

  • Rudolf

    and so it did, but that was on Friday, whereto next, that is the question…