Or they work, or they don't... as simple as that. I cannot stand the fact that sometimes they seemed to work, and when you expect a positive outcome, just don't.
From now on, my indicators will be:
1- Price
2- Support/Resistance horizontal lines
3- Trend Lines
4- Fibs
5- 200sMA 120sMA
I'm studying some Volume approaches now... let's see if it results in something useful.
.
Sunday, October 31, 2010
Thursday, October 28, 2010
usdcad... back to the range
Weekly
I'm going to post two weekly charts. The first one is just to remember the basics of technical analysis and the second one with recent price action.
Why everybody needs to complicate or overcomplicate things? Why would I want that? The truth is people forget pretty soon, almost everything. Think a moment about it and try to remember the news you see on tv or read on a newspaper a few weeks ago; do you remember that? Maybe for a couple of days was relevant, but then, even if is still relevant, no one remembers. I've read about this issue applied to trading and seems to be more important on stocks and commodities, even though the concept prevails.
Back to the basics. How we can define a trend? Higher highs and higher lows would be an uptrend, lower highs and lower lows would be a downtrend. Plain black and white. How to know in advance what's going to happen? NO ONE KNOWS!
Above is the weekly chart for the usdcad but in this one I've included data since 2001. This picture is just to remember what has happened with this instrument and moreover what's happening nowadays. Price has been in a downtrend for around six years, making lower highs and lower lows, but last year's high broke a previous high, making a higher high and then, in april this year, a higher low. If the march09 high is taken out, that would confirm a new uptrend in place, but if price breaks the april low and even the nov07 low, a bigger picture would suggest a continuation of a massive downtrend.
This second chart above is more close to recent price action. I am basically seeing a downtrend followed by a consolidation phase. By now price has bounced back to the range and a better option would be to stay aside from this pair till a confirmation of direction. A triangle formation is in place but a break either way could lead to a clearer picture of future price action.
Daily
Last post we spot a reversal candlestick pattern. Now we can says it was valid due price went straight up, back inside the range. A little bit late, though.
By now this chart looks awful to me. Too congested and volatile to trade. While inside a range, price could do whatever it likes. A test of the upper channel trend line is possible, and a break to the upside would suggest further movement in that direction. Within last two weeks, price has formed a few inside bars with false breakouts and then more inside bars with other false breaks, so my advice would be, stay on the fence.
Price is trading below the 120 and 200sma, but the two are almost flat, although providing resistance. Stochastics has showed a bearish crossover suggesting a possible movement to the downside.
4H
This chart is amusing to analyze. From my last post, I've failed. We had a few confluences suggesting a continuation of the downtrend and a possible retest of the previous low formed recently. I've labeled this with red as FAIL. We made that assumption based in a few confluences around that zone. Price stalled at a fib retracement, near the apex of a previous triangle formation and stochastics showed a bearish crossover.
Next bar of the chart showed a gap up on price with a bullish candle that should sign as a major warning. Price just took off to the upside, breaking previous support/resistance zones, without hesitation. Price didn't show any sign of resistance within the 1.0180/83 zone, but bounced down from the daily chart trend line just to catch some breath and continue higher.
It is curious how the first triangle formation seems to be still valid. Price found resistance in the projection of the lower line of the triangle, and by now has defined a downtrend channel. What I found weird is that this new channel has almost the exact direction of the upper line of the triangle (in blue). Also weird that the direction of the lower line of the triangle has provided some support in the last bar of the chart (in red). That might be just coincidence.
The main knowledge earned here is that higher timeframes are more reliable than shorter ones, and indicators are just worthless.
.
I'm going to post two weekly charts. The first one is just to remember the basics of technical analysis and the second one with recent price action.
Why everybody needs to complicate or overcomplicate things? Why would I want that? The truth is people forget pretty soon, almost everything. Think a moment about it and try to remember the news you see on tv or read on a newspaper a few weeks ago; do you remember that? Maybe for a couple of days was relevant, but then, even if is still relevant, no one remembers. I've read about this issue applied to trading and seems to be more important on stocks and commodities, even though the concept prevails.
Back to the basics. How we can define a trend? Higher highs and higher lows would be an uptrend, lower highs and lower lows would be a downtrend. Plain black and white. How to know in advance what's going to happen? NO ONE KNOWS!
Above is the weekly chart for the usdcad but in this one I've included data since 2001. This picture is just to remember what has happened with this instrument and moreover what's happening nowadays. Price has been in a downtrend for around six years, making lower highs and lower lows, but last year's high broke a previous high, making a higher high and then, in april this year, a higher low. If the march09 high is taken out, that would confirm a new uptrend in place, but if price breaks the april low and even the nov07 low, a bigger picture would suggest a continuation of a massive downtrend.
This second chart above is more close to recent price action. I am basically seeing a downtrend followed by a consolidation phase. By now price has bounced back to the range and a better option would be to stay aside from this pair till a confirmation of direction. A triangle formation is in place but a break either way could lead to a clearer picture of future price action.
Daily
Last post we spot a reversal candlestick pattern. Now we can says it was valid due price went straight up, back inside the range. A little bit late, though.
By now this chart looks awful to me. Too congested and volatile to trade. While inside a range, price could do whatever it likes. A test of the upper channel trend line is possible, and a break to the upside would suggest further movement in that direction. Within last two weeks, price has formed a few inside bars with false breakouts and then more inside bars with other false breaks, so my advice would be, stay on the fence.
Price is trading below the 120 and 200sma, but the two are almost flat, although providing resistance. Stochastics has showed a bearish crossover suggesting a possible movement to the downside.
4H
This chart is amusing to analyze. From my last post, I've failed. We had a few confluences suggesting a continuation of the downtrend and a possible retest of the previous low formed recently. I've labeled this with red as FAIL. We made that assumption based in a few confluences around that zone. Price stalled at a fib retracement, near the apex of a previous triangle formation and stochastics showed a bearish crossover.
Next bar of the chart showed a gap up on price with a bullish candle that should sign as a major warning. Price just took off to the upside, breaking previous support/resistance zones, without hesitation. Price didn't show any sign of resistance within the 1.0180/83 zone, but bounced down from the daily chart trend line just to catch some breath and continue higher.
It is curious how the first triangle formation seems to be still valid. Price found resistance in the projection of the lower line of the triangle, and by now has defined a downtrend channel. What I found weird is that this new channel has almost the exact direction of the upper line of the triangle (in blue). Also weird that the direction of the lower line of the triangle has provided some support in the last bar of the chart (in red). That might be just coincidence.
The main knowledge earned here is that higher timeframes are more reliable than shorter ones, and indicators are just worthless.
.
eurgbp
Weekly
In last week's bar, price reached the 0.89s with a bull candle and has made a new high at 0.8941 within the current week's bar before reversing. At the time of writing, price has taken out previous bar low, turning itself in an outside bar. Macd and Stoch are suggesting a possible move downwards. A breakout of the high or the low of the current bar would lead to a more clear scenario. If next week's bar breaks to the downside, more than likely price will continue to the downside to test previous support zones (0.86s then 0.85s). If next week's bar breaks to the upside, might suggest a possible bullish sentiment that could lead to test previous highs (0.9150/53 then 0.94s)
Daily
In the chart below we can see how price has climbed to the 0.89s with a high of 0.8941 on monday's candle. As an observation, note how price climbed even though from last post the indicators were suggesting an immediate change of direction (are you confident with indicators still?). On monday's close, with still divergence on macd and stoch in overbought zone, price just dropped. I've drawn a regression channel to analyze, which has been broken suggesting further decline in price, but price might be just in a taking-profit phase from the current uptrend thus a climb beyond the 0.89s is possible. Let price to tell the story.
4H
I've attached the 240 chart where we can see the narrow cluster that suggested a possible reversal between 0.8893/0.8923. Also can be seen an upward trend channel in blue with a false breakout with continuation in direction of the trend, and then the real breakout. Right now price is testing a support area consisting in previous lows. A break to the downside would suggest a possible movement further to the downside to support areas at 0.86s and then 0.85s. We might have a bounce up and develop a right shoulder for a complex head and shoulders pattern. Stochastics has had a bullish crossover and is pointing up.
Final words... The higher timeframes are better guides than shorter ones. Are indicators reliable? Price is the best indicator.
.
What am I thinking?
Hard to explain... is it possible to do this? Am I able to do this?
What's the most important thing in trading the markets? Strategy? As I've read that should be just a little aspect of a whole. Trade management is important but more important is managing risk. Mathematically it is possible to demonstrate that if you have a 40% chance over a hundred trades of winning, you still will make money in the market, only when risk is properly set to a risk/reward of 1:3.
With a 50% winning system, and a risk/reward of 1:2 also would be possible to be in positive. So... when is the turning point? with 50% chance of win or lose, and a 1:1 we might be just at breakeven point but more than likely would result in negative.
The main question here is: Do you have a system?
And the following questions derived from the first one: Do you know the winning percentage of that system? How much is your risk/reward ratio for your trades? Is the same for everyone or differs from one to another?
And as a final question: Are you waiting for the best "low risk - high probability" setups to occur or just jumping in and out of the market based of emotions?
Tough questions... tough answers required. You are the responsible for your future.
I haven't entered any trade, but I've been burning up a demo account. From my observations to the market and my own response to the market, shorter timeframes are just to volatile and with price action flashing so fast, the brain is tricked by the eyes. With higher timeframes all the setups have enough time to be placed and executed.
It's a little bit contradictory but technical analysis should work in any market and any timeframe. Technical analysis might work but emotions won't.
Plan your trade and trade your plan.
PD. Flipping a coin doesn't count as a system!
.
What's the most important thing in trading the markets? Strategy? As I've read that should be just a little aspect of a whole. Trade management is important but more important is managing risk. Mathematically it is possible to demonstrate that if you have a 40% chance over a hundred trades of winning, you still will make money in the market, only when risk is properly set to a risk/reward of 1:3.
With a 50% winning system, and a risk/reward of 1:2 also would be possible to be in positive. So... when is the turning point? with 50% chance of win or lose, and a 1:1 we might be just at breakeven point but more than likely would result in negative.
The main question here is: Do you have a system?
And the following questions derived from the first one: Do you know the winning percentage of that system? How much is your risk/reward ratio for your trades? Is the same for everyone or differs from one to another?
And as a final question: Are you waiting for the best "low risk - high probability" setups to occur or just jumping in and out of the market based of emotions?
Tough questions... tough answers required. You are the responsible for your future.
I haven't entered any trade, but I've been burning up a demo account. From my observations to the market and my own response to the market, shorter timeframes are just to volatile and with price action flashing so fast, the brain is tricked by the eyes. With higher timeframes all the setups have enough time to be placed and executed.
It's a little bit contradictory but technical analysis should work in any market and any timeframe. Technical analysis might work but emotions won't.
Plan your trade and trade your plan.
PD. Flipping a coin doesn't count as a system!
.
Sunday, October 24, 2010
Aussie update
Weekly
I have relabeled the elliot count to something more pleasant to see. Is it reliable? No, it is not.
Watching merely price action, last bar change bias in the audusd, making a lower high and a lower low so further decline could happen next. Stoch has made a bearish crossover but is still in overbought zone. Even though the doji has established a 1.0002 high, further advance can happen as discussed in previous posts. We have to consider though last bar is still bullish in nature so a break of its range would give a better understanding of future price action.
Daily
As said before in the last post, really interesting week to see the market. Critical times to learn. I'm almost sure that not just one got chopped out and eaten up by the market last week. In this chart we can see that the break of the regression channel to the down side did occur, forming a wide bearish candle, and then is when became interesting. Price bounced back defining a new support zone and consolidate for the following days. This consolidation, formed by long bars almost shaping a symmetrical triangle, is called Shark32. This is not a perfect Shark32 but close. Next week we will see which direction the market choose but with the prevalent uptrend, more than likely, a continuation would follow. The interesting thing here is that price has formed a wide range with a couple of inside bars so the best plan to follow would be wait till price gives us more clues. Price might trade inside the range for a while or break in either direction. False break outs are always a possibility. Next week also is worth to watch.
.
I have relabeled the elliot count to something more pleasant to see. Is it reliable? No, it is not.
Watching merely price action, last bar change bias in the audusd, making a lower high and a lower low so further decline could happen next. Stoch has made a bearish crossover but is still in overbought zone. Even though the doji has established a 1.0002 high, further advance can happen as discussed in previous posts. We have to consider though last bar is still bullish in nature so a break of its range would give a better understanding of future price action.
Daily
As said before in the last post, really interesting week to see the market. Critical times to learn. I'm almost sure that not just one got chopped out and eaten up by the market last week. In this chart we can see that the break of the regression channel to the down side did occur, forming a wide bearish candle, and then is when became interesting. Price bounced back defining a new support zone and consolidate for the following days. This consolidation, formed by long bars almost shaping a symmetrical triangle, is called Shark32. This is not a perfect Shark32 but close. Next week we will see which direction the market choose but with the prevalent uptrend, more than likely, a continuation would follow. The interesting thing here is that price has formed a wide range with a couple of inside bars so the best plan to follow would be wait till price gives us more clues. Price might trade inside the range for a while or break in either direction. False break outs are always a possibility. Next week also is worth to watch.
.
Cable
Weekly
With two more bars no much has change in the chart. What really catch the eye is last week behavior with a drop closing below the trend line drawn. Is it too soon to change the sentiment from bullish to bearish? I don't think that would be necessary at this point. The previous bar though closed as a doji with long wicks (could be considered as a spinning top) which made a higher high at 1.6107. This week bar took out the low, making a lower high. Is price making a reversal?
The next week close will provide a better picture of the situation. Price might be in just a correction (of the short term uptrend), so the further upward movement is still valid until the "B" low is taken out.
I've drawn a couple of lines I considered interesting. Watching the indicators (sincerely... I don't know why to bother) there is divergence on macd and the dtosc just made a bearish crossover.
Daily
Going closer, the daily and the 4H provides a better idea of price action. In this two past weeks, price retested the trendline to make a higher high within 6 months. Price formed a reverse hammer on friday 15th.
With last friday's close (22nd oct) it seems the purple trend line has been broken to the downside but price has found support at 1.5650. A close below this level would suggest further decline but price has first to beat a few support levels on the way if it is going to test the previous "B" low at 1.5297
Again, from this chart, my perspective is still bullish.
4H
Here I'm posting two 4H charts; one including all the past data from my last post of this pair, and the other with a zoom to recent price action.
Analyzing the first chart we can see Price indeed behaved as expected within elliot wave theory. Not quite exactly but at least in shape. Comparing last blog post 4H chart with the one below, price formed an impulse 5waves upward movement. Wave 4 found support at the 50% w3 retracement and the 120sma as confluence (second 4H graph). Price took off upwards taken out the w3 high and reaching the 127% fib extension from w4 and just shy from the channel projection. Wave 5 was really short lived but also developed into 5 waves. How we know last impulse movement is complete? Price has taken out w4 low.
If price completed a 5w impulse movement, a three wave corrective movement should occur (from the elliot wave perspective). If we are right now in this correction, a further decline would happen. I have labeled the "a" and "b" waves, but those would only be confirmed if price breaks the "a" low. Price might develop in a more complex correction than a simple abc or zigzag as it's called, but we always are assuming a simple one, so when Price gives us the information, we should react accordingly. Is price in a w2 of wave C?
Commenting the zoomed 4H chart. This is going to be a horrible week to day trade. Price has defined a 229 pips range with long bars and some inside bars. A few "important" resistance/support levels and round numbers are near or within the range so it's going to be a interesting time to watch price action next week. Will 1.5650 hold or break? Prudence...
.
With two more bars no much has change in the chart. What really catch the eye is last week behavior with a drop closing below the trend line drawn. Is it too soon to change the sentiment from bullish to bearish? I don't think that would be necessary at this point. The previous bar though closed as a doji with long wicks (could be considered as a spinning top) which made a higher high at 1.6107. This week bar took out the low, making a lower high. Is price making a reversal?
The next week close will provide a better picture of the situation. Price might be in just a correction (of the short term uptrend), so the further upward movement is still valid until the "B" low is taken out.
I've drawn a couple of lines I considered interesting. Watching the indicators (sincerely... I don't know why to bother) there is divergence on macd and the dtosc just made a bearish crossover.
Daily
Going closer, the daily and the 4H provides a better idea of price action. In this two past weeks, price retested the trendline to make a higher high within 6 months. Price formed a reverse hammer on friday 15th.
With last friday's close (22nd oct) it seems the purple trend line has been broken to the downside but price has found support at 1.5650. A close below this level would suggest further decline but price has first to beat a few support levels on the way if it is going to test the previous "B" low at 1.5297
Again, from this chart, my perspective is still bullish.
4H
Here I'm posting two 4H charts; one including all the past data from my last post of this pair, and the other with a zoom to recent price action.
Analyzing the first chart we can see Price indeed behaved as expected within elliot wave theory. Not quite exactly but at least in shape. Comparing last blog post 4H chart with the one below, price formed an impulse 5waves upward movement. Wave 4 found support at the 50% w3 retracement and the 120sma as confluence (second 4H graph). Price took off upwards taken out the w3 high and reaching the 127% fib extension from w4 and just shy from the channel projection. Wave 5 was really short lived but also developed into 5 waves. How we know last impulse movement is complete? Price has taken out w4 low.
If price completed a 5w impulse movement, a three wave corrective movement should occur (from the elliot wave perspective). If we are right now in this correction, a further decline would happen. I have labeled the "a" and "b" waves, but those would only be confirmed if price breaks the "a" low. Price might develop in a more complex correction than a simple abc or zigzag as it's called, but we always are assuming a simple one, so when Price gives us the information, we should react accordingly. Is price in a w2 of wave C?
Commenting the zoomed 4H chart. This is going to be a horrible week to day trade. Price has defined a 229 pips range with long bars and some inside bars. A few "important" resistance/support levels and round numbers are near or within the range so it's going to be a interesting time to watch price action next week. Will 1.5650 hold or break? Prudence...
.
Sunday, October 17, 2010
eurgbp
New pair to analyze
Critical position in the weekly for the eurgbp. Last week price just reached a high of 0.8840 which just hits two previous trend lines near a resistance level, as we can see in the chart below. The previous candle was a doji with large wicks (indecision bar) and the last bar in the chart looks like a spinning top. Roughly we can say the trend is down in the weekly chart due it looks like a consolidation phase after an uptrend. We are seeing though lower lows and lower highs, so technically, it is a downtrend although the 200sma and the 120sma are pointing up.
In the daily I've left some fib clusters that acted as support/resistance zones. With some extensions, projections and retracements, I defined a narrow zone between 0.8893/0.8921 where I was expecting price would reach. This area also coincides with 0.8900 as possible resistance level due it's a round number but seems that bullish momentum has lost steam. With convergence in MACD and a bearish crossover on stoch, price might reverse to test previous R/S zones and lows. We have to consider price has been in an uptrend (midterm) since august, and fight against the trend is not a good idea but we would be aligning with the major downtrend (longterm).
Some harmonic confluences are also present in the 4H chart (not posted) suggesting as possible reversal the 0.8900 but we have to wait and see what happens in the next couple of days.
.
Critical position in the weekly for the eurgbp. Last week price just reached a high of 0.8840 which just hits two previous trend lines near a resistance level, as we can see in the chart below. The previous candle was a doji with large wicks (indecision bar) and the last bar in the chart looks like a spinning top. Roughly we can say the trend is down in the weekly chart due it looks like a consolidation phase after an uptrend. We are seeing though lower lows and lower highs, so technically, it is a downtrend although the 200sma and the 120sma are pointing up.
In the daily I've left some fib clusters that acted as support/resistance zones. With some extensions, projections and retracements, I defined a narrow zone between 0.8893/0.8921 where I was expecting price would reach. This area also coincides with 0.8900 as possible resistance level due it's a round number but seems that bullish momentum has lost steam. With convergence in MACD and a bearish crossover on stoch, price might reverse to test previous R/S zones and lows. We have to consider price has been in an uptrend (midterm) since august, and fight against the trend is not a good idea but we would be aligning with the major downtrend (longterm).
Some harmonic confluences are also present in the 4H chart (not posted) suggesting as possible reversal the 0.8900 but we have to wait and see what happens in the next couple of days.
.
audusd
Weekly
Doji formed at resistance level. That doesn't mean the reversal will certainly follow; it is an indecision candle instead. Thus we should be aware that price is always right and a continuation to the upside could happen.
In the weekly chart I've plotted some elliot counts, and a possible "narrow" zone to complete a 5 wave impulse movement. E-wave theory is not as reliable as I would like it to be. Only when previous highs or lows are taken out, the movement is confirmed, so... not a good "forecasting" tool. The last leg should develop also in a 5wave impulse movement. The current count is completely speculative. With the information we have, a reversal could happen. Stochastics is overbought but hasn't yet provide a bearish crossover in this timeframe.
Daily
In the daily, price steadily climb and reach the expected target zone of 0.99926/50 and actually price indeed poke the 1.0000 round number. Friday's close had a high of 1.0002 and formed a spinning top, so... really interesting time to see what happen next week. I've updated the regression channel in the chart below. A brake to the downside of the channel would mean the start of the correction. Stochastics is deeply overbought but as the last bar in the chart, a bearish crossover is in place. There is still the MACD divergence. Eventhough, a trade against the trend would be a bold move, a smarter action would be enter long at a pullback.
Price has broken previous structure so the last major resistance to break is the 1.0000; if price closes above it, I don't see any reason for a slowdown in the uptrend or even a decline. Next week will be critical.
.
Doji formed at resistance level. That doesn't mean the reversal will certainly follow; it is an indecision candle instead. Thus we should be aware that price is always right and a continuation to the upside could happen.
In the weekly chart I've plotted some elliot counts, and a possible "narrow" zone to complete a 5 wave impulse movement. E-wave theory is not as reliable as I would like it to be. Only when previous highs or lows are taken out, the movement is confirmed, so... not a good "forecasting" tool. The last leg should develop also in a 5wave impulse movement. The current count is completely speculative. With the information we have, a reversal could happen. Stochastics is overbought but hasn't yet provide a bearish crossover in this timeframe.
Daily
In the daily, price steadily climb and reach the expected target zone of 0.99926/50 and actually price indeed poke the 1.0000 round number. Friday's close had a high of 1.0002 and formed a spinning top, so... really interesting time to see what happen next week. I've updated the regression channel in the chart below. A brake to the downside of the channel would mean the start of the correction. Stochastics is deeply overbought but as the last bar in the chart, a bearish crossover is in place. There is still the MACD divergence. Eventhough, a trade against the trend would be a bold move, a smarter action would be enter long at a pullback.
Price has broken previous structure so the last major resistance to break is the 1.0000; if price closes above it, I don't see any reason for a slowdown in the uptrend or even a decline. Next week will be critical.
.
usdcad... not yet!
Less words, more charts...
Weekly first... with the end of the week bar close, a doji was formed. This is an indecision bar that coincides with the long term trend line, so a possible reversal could take place and price could move upward inside the range again. If next week bar breaks the long term trend line and price closes outside, further decline could be expected.
The daily shows a possible reversal candlestick pattern. With friday's close we can see a morning star pattern, but an interesting thing about it is that price was rejected from the long-term trend line plotted, with the close below it. I would like to wait a couple of bars more to see a clearer picture.
Since the last 4H chart, price move against the direction expected, but in a closer look to the stochastics, price had still room to climb a bit. With the chart below, we can see that price found resistance exactly at the 0.786 retracement from the last swing. Price is still bullish but not overbought on stochastics. Making another projection with this information, the 0.9956/30 zone is still valid, unless price moves upward and takes out the previous swing high and trade beyond 1.0183/80 zone.
The 1H chart illustrates better this assumption.
.
Weekly first... with the end of the week bar close, a doji was formed. This is an indecision bar that coincides with the long term trend line, so a possible reversal could take place and price could move upward inside the range again. If next week bar breaks the long term trend line and price closes outside, further decline could be expected.
The daily shows a possible reversal candlestick pattern. With friday's close we can see a morning star pattern, but an interesting thing about it is that price was rejected from the long-term trend line plotted, with the close below it. I would like to wait a couple of bars more to see a clearer picture.
Since the last 4H chart, price move against the direction expected, but in a closer look to the stochastics, price had still room to climb a bit. With the chart below, we can see that price found resistance exactly at the 0.786 retracement from the last swing. Price is still bullish but not overbought on stochastics. Making another projection with this information, the 0.9956/30 zone is still valid, unless price moves upward and takes out the previous swing high and trade beyond 1.0183/80 zone.
The 1H chart illustrates better this assumption.
.
Thursday, October 14, 2010
usdcad... finally?
Greetings
Since my last post, a few interesting things have happened with this cross. In the weekly chart below, we can see that last week bar closed outside the mid-term trend line indeed. The current weekly chart is not closed yet but with one more day of trading, more than likely, it will close similar to what we see right now, which tells us that the longer-term trend line has been broken. An important aspect to consider here is the major support of 1.000 has been breach and price traded below it. A closed candle would be better to confirmation, but the downside is more likely to continue.
Comparing the daily chart from my last post, price defined a downtrend channel (in clear blue) and we have expected a bounce to the upside due price could find support at the lower line of the channel and also the orange trend line. This actually happened! And as a logical resistance zone, price re-bounced back to the downside. The chart below illustrate this but in the 4H chart will be clearer. From today's chart, we are sure that the trend channel is broken downwards (actually with yesterday's close this was a fact) and today's close ended as an indecision bar. I'm still bearish on this one, but this candle could give us some problems.
A few thoughts...We have to remember that behind charts, there are persons watching the same charts; these people make decisions therefore open/close positions, which at the end is what we see every single day plotted. Does this people know what are they doing? As I've read in many places... no. 95 to 97 percent are throwing away money to the market, actually to the 3-5% which do know what they are doing. Sad statistic but...
I'm trying to jump to the other side of the fence.
All of this comments due today's candle. This bar could be a major reversal for price, but I'm almost sure that was formed because of people covering short positions or even opening new long ones. Time will tell what price decides to do. Is the major psychological support of 1.000 influencing people? One major concern that I have is the stochastics. While in the weekly is bearish and not oversold yet, in the daily we are almost at the crossover; the weekly would suggest there is still room to go a bit more further in the downtrend though the daily is reversing... to soon?
As explained in the previous analysis, price almost reached the 0.9953/30 zone, shy just for 26 pips. I'm not discarding this price target and there are some other confluences that confirm this as a possible short-term price target zone.
Now in the 4H chart... I would like not to make this entries so long but if it's necessary... Well, a glance of the chart would explain the following words better. From the last short-term trade opportunity, price did bounced to the upside and found resistance in the previous support line (support became resistance) where the last setup almost repeat itself. Again, I didn't take it. I should have though. Here some other harmonic considerations with fib extensions and projections suggests the cluster around 0.9956/33, more than likely, will be reached. With the previous low relatively close (0.9930 april 21st 2010), price could be attracted to test it again and probably go through it. If price takes out this value, the next low is at 0.9056 (november 07) which could act as major support.
Tomorrow there are some news events that could cause some spikes, nevertheless, that's scalper's worry, not mine.
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Since my last post, a few interesting things have happened with this cross. In the weekly chart below, we can see that last week bar closed outside the mid-term trend line indeed. The current weekly chart is not closed yet but with one more day of trading, more than likely, it will close similar to what we see right now, which tells us that the longer-term trend line has been broken. An important aspect to consider here is the major support of 1.000 has been breach and price traded below it. A closed candle would be better to confirmation, but the downside is more likely to continue.
Comparing the daily chart from my last post, price defined a downtrend channel (in clear blue) and we have expected a bounce to the upside due price could find support at the lower line of the channel and also the orange trend line. This actually happened! And as a logical resistance zone, price re-bounced back to the downside. The chart below illustrate this but in the 4H chart will be clearer. From today's chart, we are sure that the trend channel is broken downwards (actually with yesterday's close this was a fact) and today's close ended as an indecision bar. I'm still bearish on this one, but this candle could give us some problems.
A few thoughts...We have to remember that behind charts, there are persons watching the same charts; these people make decisions therefore open/close positions, which at the end is what we see every single day plotted. Does this people know what are they doing? As I've read in many places... no. 95 to 97 percent are throwing away money to the market, actually to the 3-5% which do know what they are doing. Sad statistic but...
I'm trying to jump to the other side of the fence.
All of this comments due today's candle. This bar could be a major reversal for price, but I'm almost sure that was formed because of people covering short positions or even opening new long ones. Time will tell what price decides to do. Is the major psychological support of 1.000 influencing people? One major concern that I have is the stochastics. While in the weekly is bearish and not oversold yet, in the daily we are almost at the crossover; the weekly would suggest there is still room to go a bit more further in the downtrend though the daily is reversing... to soon?
As explained in the previous analysis, price almost reached the 0.9953/30 zone, shy just for 26 pips. I'm not discarding this price target and there are some other confluences that confirm this as a possible short-term price target zone.
Now in the 4H chart... I would like not to make this entries so long but if it's necessary... Well, a glance of the chart would explain the following words better. From the last short-term trade opportunity, price did bounced to the upside and found resistance in the previous support line (support became resistance) where the last setup almost repeat itself. Again, I didn't take it. I should have though. Here some other harmonic considerations with fib extensions and projections suggests the cluster around 0.9956/33, more than likely, will be reached. With the previous low relatively close (0.9930 april 21st 2010), price could be attracted to test it again and probably go through it. If price takes out this value, the next low is at 0.9056 (november 07) which could act as major support.
Tomorrow there are some news events that could cause some spikes, nevertheless, that's scalper's worry, not mine.
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Wednesday, October 13, 2010
The price has spoken
All the information you need is in the charts and price is the best indicator.
Ergo, charts should contain only the tools that you actually are using and not a throw up of indicators, trend lines, and so on. That could only lead to paralysis of analysis which I remember it happened to me a couple of times like two years ago, where I just got freeze and didn't knew what I was doing... my early apprentice stage...
That's why right now I'm apologizing in advance for the next chart because it seems like a clown puke all over the place. Even though, there is the information that I need to see right now.
If we remember, price was near a possible movement... and it seems to me that the time arrive. Analyzing the daily chart, we had a false breakout to the upside and two consecutive bearish days before reach the short-term trend line, but yesterday's bar just passed through it. With a breakout to the downside, which was more favorable as I posted before, price is now testing its previous support trend line that now became resistance. Also we have the major downtrend line (blue channel) holding price action. A bearish crossover in the stoch may suggest that the upside should be limited and also it leave the overbought zone which suggest that the previous high should last for several days.
In the 4H chart price has just acted as expected, finding resistance within the cluster between 1.3457/81 which contains a few fib retracements, extensions, projections and also a former minor swing high. With the trend line breached, a retest would be expected and just did. Analyzing the chart below, price now "should" take out its last minor swing low at 1.3265 before we are more "confident" about this analysis. If price takes that low, as a first possible target I've plotted a cluster in the chart that just hits right the 1.3200 for a short-term trade but this position would work better in the longer time frame as we had analyzed it.
More confluence of events are present in this chart; we have a slight divergence on the stoch and to me, it seems that a top head and shoulders is forming. And now some issues to stay aware of, before taking any trade. Price is always right. Offer/Demand is that simple! We are taking the stake that the euro is going to sink, therefore, do we have a reason for that? I'm not a fundamental analyst but from the technical point of view, more than likely, is going to happen. We have still a little room for stochastic to go higher (momentum!) so a bearish crossover would be a better signal to trigger.
What if everything goes wrong and my analysis is rubbish... well, that's why stops are for. If a climb in price takes out the previous high, more than likely a further advance will be made.
What is the market trying to tell us? My ideal set-up would have been an entry @1.3400 with a stop at 1.3500 and a first target at 1.3200. That gives us a 1:2 ratio. Considering the larger timeframe, the risk/reward would be a lot more than that.
No, I haven't enter the trade. Let's see how develops or if there's another short opportunity. My head is screaming: get short! get short! But price is now at 1.3377. I just have to recover my confident which I lost somewhere in the ashes from my burned account.
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Ergo, charts should contain only the tools that you actually are using and not a throw up of indicators, trend lines, and so on. That could only lead to paralysis of analysis which I remember it happened to me a couple of times like two years ago, where I just got freeze and didn't knew what I was doing... my early apprentice stage...
That's why right now I'm apologizing in advance for the next chart because it seems like a clown puke all over the place. Even though, there is the information that I need to see right now.
If we remember, price was near a possible movement... and it seems to me that the time arrive. Analyzing the daily chart, we had a false breakout to the upside and two consecutive bearish days before reach the short-term trend line, but yesterday's bar just passed through it. With a breakout to the downside, which was more favorable as I posted before, price is now testing its previous support trend line that now became resistance. Also we have the major downtrend line (blue channel) holding price action. A bearish crossover in the stoch may suggest that the upside should be limited and also it leave the overbought zone which suggest that the previous high should last for several days.
In the 4H chart price has just acted as expected, finding resistance within the cluster between 1.3457/81 which contains a few fib retracements, extensions, projections and also a former minor swing high. With the trend line breached, a retest would be expected and just did. Analyzing the chart below, price now "should" take out its last minor swing low at 1.3265 before we are more "confident" about this analysis. If price takes that low, as a first possible target I've plotted a cluster in the chart that just hits right the 1.3200 for a short-term trade but this position would work better in the longer time frame as we had analyzed it.
More confluence of events are present in this chart; we have a slight divergence on the stoch and to me, it seems that a top head and shoulders is forming. And now some issues to stay aware of, before taking any trade. Price is always right. Offer/Demand is that simple! We are taking the stake that the euro is going to sink, therefore, do we have a reason for that? I'm not a fundamental analyst but from the technical point of view, more than likely, is going to happen. We have still a little room for stochastic to go higher (momentum!) so a bearish crossover would be a better signal to trigger.
What if everything goes wrong and my analysis is rubbish... well, that's why stops are for. If a climb in price takes out the previous high, more than likely a further advance will be made.
What is the market trying to tell us? My ideal set-up would have been an entry @1.3400 with a stop at 1.3500 and a first target at 1.3200. That gives us a 1:2 ratio. Considering the larger timeframe, the risk/reward would be a lot more than that.
No, I haven't enter the trade. Let's see how develops or if there's another short opportunity. My head is screaming: get short! get short! But price is now at 1.3377. I just have to recover my confident which I lost somewhere in the ashes from my burned account.
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Tuesday, October 12, 2010
euraud follow up
For the record, I haven't enter the trade. From yesterday's 4H chart, stochastics still had room to go lower so I decided to wait and stay aside. Are the conditions for this trade invalid? No they are not. Actually by now we would have a better opportunity trade with a better risk/reward ratio. A few things concern me about the set-up tough.
Analyzing the 4H chart above, the lower line of the channel have been compromised with price trading below it. Although we still have convergence on MACD and price haven't trade below the wave 1 high, price still have a little room to go lower if we just analyze this chart. There is the bearish stream in the stochastics with a crossover to the downside. Nevertheless, the previous setup haven't been stopped out yet.
Here I remember the Alternation Rule for elliot wave theory, which states that if we have a simple wave 2 correction, we can expect a complex wave 4 correction; and vice-versa. In the 4H chart, we do had an abc simple correction wave 2, and by now, wave 4 is in a complex correction due its various overlapped swings.
I've attached the 60M chart for a closer look of the market which would give us more clues.
In the 1H, there are some aspects to consider. The previous set-up would have been triggered at 1.4110 where price move in our favor for a few hours where lost steam and found resistance at 1.4170, which coincides with a bearish crossover on stochastics. With stochastics in the overbought zone, an upward movement would be limited and that's exactly how price reacted making a new low at 1.4047. That's not a big issue though, because that gave us more harmonic confirmations that price has reached an important support zone. Making some extensions and projections from the lasts few swings, price "shouldn't" go below the 1.4053/1.4029 zone; which coincides with the 4H chart support zone and also is above the wave 1 high.
In a closer analysis to the market, I study the 15M chart and from the last swing high (1.4177 high), price has develop a 5 waves downward movement which had to conclude at 1.4045 and just it did a few pips shy. Let's see if price found its bottom. This value lies just in between the support zone of 1.4053/29
This analysis would provide another opportunity to enter the market at a better price with a better risk/reward ratio with an entry around 1.4094. Still! I could be death wrong and price could sink further.
It seems to me I'm making an endless analysis loop and I should stop, and not go deeper and deeper, but I'm just amaze how market develops.
.
Analyzing the 4H chart above, the lower line of the channel have been compromised with price trading below it. Although we still have convergence on MACD and price haven't trade below the wave 1 high, price still have a little room to go lower if we just analyze this chart. There is the bearish stream in the stochastics with a crossover to the downside. Nevertheless, the previous setup haven't been stopped out yet.
Here I remember the Alternation Rule for elliot wave theory, which states that if we have a simple wave 2 correction, we can expect a complex wave 4 correction; and vice-versa. In the 4H chart, we do had an abc simple correction wave 2, and by now, wave 4 is in a complex correction due its various overlapped swings.
I've attached the 60M chart for a closer look of the market which would give us more clues.
In the 1H, there are some aspects to consider. The previous set-up would have been triggered at 1.4110 where price move in our favor for a few hours where lost steam and found resistance at 1.4170, which coincides with a bearish crossover on stochastics. With stochastics in the overbought zone, an upward movement would be limited and that's exactly how price reacted making a new low at 1.4047. That's not a big issue though, because that gave us more harmonic confirmations that price has reached an important support zone. Making some extensions and projections from the lasts few swings, price "shouldn't" go below the 1.4053/1.4029 zone; which coincides with the 4H chart support zone and also is above the wave 1 high.
In a closer analysis to the market, I study the 15M chart and from the last swing high (1.4177 high), price has develop a 5 waves downward movement which had to conclude at 1.4045 and just it did a few pips shy. Let's see if price found its bottom. This value lies just in between the support zone of 1.4053/29
This analysis would provide another opportunity to enter the market at a better price with a better risk/reward ratio with an entry around 1.4094. Still! I could be death wrong and price could sink further.
It seems to me I'm making an endless analysis loop and I should stop, and not go deeper and deeper, but I'm just amaze how market develops.
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Monday, October 11, 2010
euraud analysis
As the eurchf, the euraud is in a critical moment. The pair has been trading in a downtrend for a couple of years and has reached a lower low within the previous eight years of the data I have. The weekly shows the strong downtrend nevertheless since May this year price has presenting a lot of volatility which may suggest a possible change of direction. I've drawn a downtrend channel which has been broken to the upside. It is difficult to ignore the strong trend with the 120 and 200 sma pointing down too. A move to the upside would be limited but stochastics is showing a possible movement upward in price with a slight convergence and a bullish crossover.
In the daily basically we can see the behavior of price since early May... a parabolic up movement followed by a sharp decline to test almost its previous low, when price bounced back to the upside. Using this tops I've drawn a trend line which is still valid as resistance. A few aspects for analysis from this chart: the july 13rd low @1.4331 provide a strong support zone but when broken, it acts as resistance as we can see in the chart below. Almost all august price struggle with this value when finally decided and broke down not without a retest the last day of the month. A new low was made (@1.3658 sep13 low) and price bounced to the upside to retest the 1.43s. In this upward movement, price defined a short term trend which I represent with a line. By today's bar, this trend line is breaking to the down side which would provide us a trade possibility to go short. Also stochastics has make a bearish reversal from the overbought zone. With a stop loss no further that the previous swing high, probably price would test its previous low so a possible target should be around this zone. Price might form a double bottom but if this low is broken, more than likely price will dive further. A break out bar would give some confirmation to this analysis. This trade is way to far to take by myself due my account size and the risk to be taken. A break to the upside could happen and a confirmation of a new trend would be if price take out its previous high.
In the 4H chart I found something really interesting for a short term trade. We are aware that the trend is down, either the weekly and the daily. But a long opportunity is glowing. Should I have to take the trade? Don't Trade against the trend is something that my head is screaming. Let's review and learn in the way...
The short-term trend in the daily is up while the longer-term trend is down. From its bottom, price has been developing an uptrend impulse 5 wave movement, or at least is what I'm seeing and by now its wave four is almost complete. A few confluence of events suggest that a wave 5 more than likely will be form:
-We have a 50% retracement holding, a previous resistance/support zone,
- 120 and 200 sma near and pointing up,
- convergence in MACD,
- stochastics almost at oversold zone,
- trend lines confluences with a possible price target zone which coincides with a previous strong resistance/support number.
- Fib extensions and projections also coincides with this zone as possible first target. A fib retracement from the higher timeframe is also around this zone.
Are all the odds in our favor? I could be death wrong but looks like a good trade opportunity. What would invalidate this setup? If price continues its decline and trades below the wave 1 high.
The plan would be placing an entry order to go long around 1.4110 (price is at 1.4086 right now), why? because we would like a further confirmation that price is trading in our direction. If we trigger at the market, price could continue its decline and stop us, while if price declines and triggers our order in its comeback, would be better.
Stop orders should be below the previous swing low from the entry. A wider stop could be below wave 1 high where as we know, if price trades below, would invalidate the elliot wave count.
Entry:1.4110
Stop: 1.3980
target1: 1.4440
risk: 130
reward: 330
risk/reward: 1:2.5
Will it work?
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In the daily basically we can see the behavior of price since early May... a parabolic up movement followed by a sharp decline to test almost its previous low, when price bounced back to the upside. Using this tops I've drawn a trend line which is still valid as resistance. A few aspects for analysis from this chart: the july 13rd low @1.4331 provide a strong support zone but when broken, it acts as resistance as we can see in the chart below. Almost all august price struggle with this value when finally decided and broke down not without a retest the last day of the month. A new low was made (@1.3658 sep13 low) and price bounced to the upside to retest the 1.43s. In this upward movement, price defined a short term trend which I represent with a line. By today's bar, this trend line is breaking to the down side which would provide us a trade possibility to go short. Also stochastics has make a bearish reversal from the overbought zone. With a stop loss no further that the previous swing high, probably price would test its previous low so a possible target should be around this zone. Price might form a double bottom but if this low is broken, more than likely price will dive further. A break out bar would give some confirmation to this analysis. This trade is way to far to take by myself due my account size and the risk to be taken. A break to the upside could happen and a confirmation of a new trend would be if price take out its previous high.
In the 4H chart I found something really interesting for a short term trade. We are aware that the trend is down, either the weekly and the daily. But a long opportunity is glowing. Should I have to take the trade? Don't Trade against the trend is something that my head is screaming. Let's review and learn in the way...
The short-term trend in the daily is up while the longer-term trend is down. From its bottom, price has been developing an uptrend impulse 5 wave movement, or at least is what I'm seeing and by now its wave four is almost complete. A few confluence of events suggest that a wave 5 more than likely will be form:
-We have a 50% retracement holding, a previous resistance/support zone,
- 120 and 200 sma near and pointing up,
- convergence in MACD,
- stochastics almost at oversold zone,
- trend lines confluences with a possible price target zone which coincides with a previous strong resistance/support number.
- Fib extensions and projections also coincides with this zone as possible first target. A fib retracement from the higher timeframe is also around this zone.
Are all the odds in our favor? I could be death wrong but looks like a good trade opportunity. What would invalidate this setup? If price continues its decline and trades below the wave 1 high.
The plan would be placing an entry order to go long around 1.4110 (price is at 1.4086 right now), why? because we would like a further confirmation that price is trading in our direction. If we trigger at the market, price could continue its decline and stop us, while if price declines and triggers our order in its comeback, would be better.
Stop orders should be below the previous swing low from the entry. A wider stop could be below wave 1 high where as we know, if price trades below, would invalidate the elliot wave count.
Entry:1.4110
Stop: 1.3980
target1: 1.4440
risk: 130
reward: 330
risk/reward: 1:2.5
Will it work?
.
Sunday, October 10, 2010
gbpusd recount
A more clearly scenario for the cable with the close of the last bar in the weekly. Price broke the trend line to the upside and price traded beyond the previous high (1.5998 aug 8th) reaching a new high at 1.6018 in october 7th. I've changed the previous elliot wave count, regarding the current events. Due the previous high was taken out, I'm assuming that we are currently in a wave C of an abc upward correction where price could reach the 1.6380/1.6480 zone, but should not trade beyond the previous high at 1.7042 (5 aug 2009 high). That would invalidate this count.
With price around 1.5960 right now, analyzing the indicators we see that dtosc still has some room to the upside but we are seeing divergence on MACD. As always, we should wait and see what price wants to tell us. Price should test some resistances zones in the up movement first though. The 120sma is still there and we haven't beat the 1.6000 completely so a breakout of this level would suggest a better opportunity.
If we see the daily, basically is the same sentiment than the weekly chart. For me the upside if more favorable right now. Price has been trending up since september and the previous trend line that was broken, is now acting as support. With this chart there is something that just time will tell. If we see the indicators at the bottom of the chart, they are contradicting each other so... what the hell? There is divergence on MACD and the stochastic is in a bullish stream, as I call it, but in overbought zone. Definitely we have to wait and see how price reacts. Price can make a reversal and retest the previous trend line which became support and at the same time we could see a decline in stochastics and a possible opportunity to go long. I've drawn a small timeframe trend line where price is squeezing through. A break to the downside could happen but a break out bar above the 1.6000 would be a confirmation to the bullish sentiment.
I've attached the 4H as well, now with a bit more information. Even though it's horrible how price has been behaving lately (due the trendline breakout discussed in the daily and weekly charts), we can see clearly the main swings. From the A high, we have had a three wave correction downwards towards the point B, then as explained in the weekly chart, my opinion is that price currently is in a wave C which, as expected, should develop in a 5 wave impulsive upward movement. By now, we have a confirmation that the correction abc is complete due wave 1 has taken out the "b" high. Price right now is in its wave 3 or conforming the wave 4.
One observation that I consider important; At point B we can see a complex head and shoulders bottom. Patterns are not my main analysis but I'm starting to value them as a tool.
Two possible scenarios that I'm considering: either price moves forward in the wave 3 trading beyond the 1.6000 and retraces to form wave 4 finding support at the 1.6000 then continues its wave five to the 1.6380/1.6480 zone.
The other scenario would be a retrace right now to form wave 4, and then go for the 1.6380/1.6480 in an extended wave 5. I'm really bullish in this, BUT, I can be death wrong. The important thing here is the technical analysis and money management. We are trying to have the odds in our favor to make a trade with a High probability outcome. And one more thing... Always, always and always you should trade with stops loss orders.
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With price around 1.5960 right now, analyzing the indicators we see that dtosc still has some room to the upside but we are seeing divergence on MACD. As always, we should wait and see what price wants to tell us. Price should test some resistances zones in the up movement first though. The 120sma is still there and we haven't beat the 1.6000 completely so a breakout of this level would suggest a better opportunity.
If we see the daily, basically is the same sentiment than the weekly chart. For me the upside if more favorable right now. Price has been trending up since september and the previous trend line that was broken, is now acting as support. With this chart there is something that just time will tell. If we see the indicators at the bottom of the chart, they are contradicting each other so... what the hell? There is divergence on MACD and the stochastic is in a bullish stream, as I call it, but in overbought zone. Definitely we have to wait and see how price reacts. Price can make a reversal and retest the previous trend line which became support and at the same time we could see a decline in stochastics and a possible opportunity to go long. I've drawn a small timeframe trend line where price is squeezing through. A break to the downside could happen but a break out bar above the 1.6000 would be a confirmation to the bullish sentiment.
I've attached the 4H as well, now with a bit more information. Even though it's horrible how price has been behaving lately (due the trendline breakout discussed in the daily and weekly charts), we can see clearly the main swings. From the A high, we have had a three wave correction downwards towards the point B, then as explained in the weekly chart, my opinion is that price currently is in a wave C which, as expected, should develop in a 5 wave impulsive upward movement. By now, we have a confirmation that the correction abc is complete due wave 1 has taken out the "b" high. Price right now is in its wave 3 or conforming the wave 4.
One observation that I consider important; At point B we can see a complex head and shoulders bottom. Patterns are not my main analysis but I'm starting to value them as a tool.
Two possible scenarios that I'm considering: either price moves forward in the wave 3 trading beyond the 1.6000 and retraces to form wave 4 finding support at the 1.6000 then continues its wave five to the 1.6380/1.6480 zone.
The other scenario would be a retrace right now to form wave 4, and then go for the 1.6380/1.6480 in an extended wave 5. I'm really bullish in this, BUT, I can be death wrong. The important thing here is the technical analysis and money management. We are trying to have the odds in our favor to make a trade with a High probability outcome. And one more thing... Always, always and always you should trade with stops loss orders.
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Thursday, October 7, 2010
Aussie
Reviewing my previous post, that missed entry will be remembered. I should not commit previous mistakes and this blog is going to help me with this. By now the aussie is far away in the sky and I don't see a strong reason for a reversal. Right now is just testing its previous high, which is the 2008 high at 0.9849, which coincide to be the high of all times, or at least within twenty years of data that I have.
That high has been broken in today's trading bar, reaching 0.9917. That tells me basically two things... price will go higher but has some resistances to overcome first. Second, a retracement is more than likely to occur soon. If price makes a breakout of its previous high, the next obvious resistance would be the 1.000 which is relatively close to price action. The retracement should occur eventually and a possible retest of its previous resistance zone, transformed now in support, around 0.9400 (0.9380/0.9420). A trade could be trigger here with a first target at 1.000 and a second target just as far as price wants to go through a trailing stop. Right now stochastics is overbought and the possible retracement could follow.
The daily presents more data to analyze. The trend is clearly up so why I would like to trade against it? A correct move would be wait for a retracement and go long with the flow. Today's bar is not closed yet but is showing a reversal candle. I've drawn an upward trend channel which has broken to the upside; I also have drawn a regression channel which is still valid. A break to the downside would mean the start of the retracement and a possible test of the lower line of the channel which coincides with a previous resistance zone. We can see there tuesday's candle with a long lower shadow, which seemed to me by that day, a possible break but resulted in a false break out. Price is really close to my extensions between 0.9926/50 where I was expecting to see the retracement, but because the regression channel is holding, that zone might be reached. Because 1.000 is really close, I would not be surprised if price spikes that high before the decline. Stochastics is overbought and there's divergence on MACD.
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That high has been broken in today's trading bar, reaching 0.9917. That tells me basically two things... price will go higher but has some resistances to overcome first. Second, a retracement is more than likely to occur soon. If price makes a breakout of its previous high, the next obvious resistance would be the 1.000 which is relatively close to price action. The retracement should occur eventually and a possible retest of its previous resistance zone, transformed now in support, around 0.9400 (0.9380/0.9420). A trade could be trigger here with a first target at 1.000 and a second target just as far as price wants to go through a trailing stop. Right now stochastics is overbought and the possible retracement could follow.
The daily presents more data to analyze. The trend is clearly up so why I would like to trade against it? A correct move would be wait for a retracement and go long with the flow. Today's bar is not closed yet but is showing a reversal candle. I've drawn an upward trend channel which has broken to the upside; I also have drawn a regression channel which is still valid. A break to the downside would mean the start of the retracement and a possible test of the lower line of the channel which coincides with a previous resistance zone. We can see there tuesday's candle with a long lower shadow, which seemed to me by that day, a possible break but resulted in a false break out. Price is really close to my extensions between 0.9926/50 where I was expecting to see the retracement, but because the regression channel is holding, that zone might be reached. Because 1.000 is really close, I would not be surprised if price spikes that high before the decline. Stochastics is overbought and there's divergence on MACD.
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Another pair...
This time I'm posting the eurchf, which seems to be presenting a trade opportunity. Analyzing the weekly chart we can see price in a downtrend since october 2007. Lately this downtrend have had more volatility showing a steep decline in price since may this year reaching its low @1.2765 in september 8th. Usually when people says "that can't go lower... (or higher)" usually it goes. We have seen this with gold, when the 1k mark was broke, just sky is the limit, with prices as high as 1360 per ounce.
Even though price has bounced from that low. Points to consider: convergence on MACD and by now a clear crossover on stoch. In the daily below I've drawn several lines that I consider important. First to consider is the downtrend channel where price has been bouncing. Right now the pair is trading in a critical zone due is testing the upper line of the channel, so a breakout could mean a further advance in price and a possible test of previous highs. Because today's candle is not closed yet, we cannot say if there is a false break out or a real one. I've drawn a support line which is still valid and a break of this one could mean a retracement in price to test the previous low and even break it to found a historical new one. Time will tell...
Going deeper, in the four hour chart, the trend is up. Right now there is a short term trade opportunity. As usual, price is always right. It seems that an ascending triangle is forming and tomorrow or within three trading days will be broken. As obvious as might sound, we have two possible scenarios... a break to the upside would break the long term trend, which it's possible but really difficult to do. The triangle is ascendant so more than likely that "should" happen, but...
Price has formed not quite perfect but a double top, and stochastics is almost overbought. The eurchf is trading around a resistance zone which coincides with a previous not-so-representative high and we have also a .382 retracement from the last swing in the daily chart at 1.3481. A break to the downside could be more probable but we have to wait and see what Price wants to do. Again, and again, and again, price is the best indicator. Tomorrow there is the US NFP and this could cause a lot of volatility and noise, so... better stay in the fence...
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Even though price has bounced from that low. Points to consider: convergence on MACD and by now a clear crossover on stoch. In the daily below I've drawn several lines that I consider important. First to consider is the downtrend channel where price has been bouncing. Right now the pair is trading in a critical zone due is testing the upper line of the channel, so a breakout could mean a further advance in price and a possible test of previous highs. Because today's candle is not closed yet, we cannot say if there is a false break out or a real one. I've drawn a support line which is still valid and a break of this one could mean a retracement in price to test the previous low and even break it to found a historical new one. Time will tell...
Going deeper, in the four hour chart, the trend is up. Right now there is a short term trade opportunity. As usual, price is always right. It seems that an ascending triangle is forming and tomorrow or within three trading days will be broken. As obvious as might sound, we have two possible scenarios... a break to the upside would break the long term trend, which it's possible but really difficult to do. The triangle is ascendant so more than likely that "should" happen, but...
Price has formed not quite perfect but a double top, and stochastics is almost overbought. The eurchf is trading around a resistance zone which coincides with a previous not-so-representative high and we have also a .382 retracement from the last swing in the daily chart at 1.3481. A break to the downside could be more probable but we have to wait and see what Price wants to do. Again, and again, and again, price is the best indicator. Tomorrow there is the US NFP and this could cause a lot of volatility and noise, so... better stay in the fence...
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Wednesday, October 6, 2010
A really hard time for the loonie...
Finally seems like the usdcad is resuming its downtrend. Analyzing the weekly, price has been in a consolidation phase for quite a lot. Actually it's like one year since price had bounced around the 1.05s, without any clear signal of continuation or reversal, ranging between 1.03s and 1.07s.
Since april this year, price started to form a symmetrical triangle and it was matter of time for price to break either way, and it seems that decided to resume its down trend, at least for now, and should test previous lows.
In the weekly chart we can see the current bar completely outside the triangle, but we should wait to its close to see and decide. Could be a FalseBreakOut, though. Also we are reaching a strong support zone considering the trend line drawn on orange from november 2007 to april 2010. I'm still bearish on this one because price broke the 1.0300 level which was a previous strong resistance/support, so more than likely the loonie could trend again to the downside. The 200sma is pointing down and we don't want to trade against the trend. If we are in a false break out, price should test previous lows and bounce back to takeout previous highs to confirm that a new uptrend is in place.
In the daily we can see in a closer look the symmetrical triangle and how it was broken to the downside. I've also drawn which seems to be a new downtrend channel in clear blue. Although price broke the triangle, today found support at the lower line of the channel and also in the orange trend line as well. Again I'm a little confuse about what could happen. In the daily the trend is down but there are a few levels to break before continuation. If there is no break to the downside, price could go to test the upper line of the channel, but if the break do occur to the down side, there is a narrow zone with some confluence of numbers that could attract price. There are some fib extensions and projections that coincide with the previous low, in the range of 0.9956 to 0.9930. The price to reach this zone also have to break the big round number of 1.0000 which tends to be a major psychological support.
Going even closer to the market, in the 4H chart, another symmetrical triangle formed and was broken as well, providing a nice short term trade opportunity (which I didn't take). The break of the triangle trend line, then a retest providing a safe place for an order. With a possible first target within the zone 1.0059 and 1.0078 which are the range of several confluence of fib numbers. Because this trade is after the facts, it hasn't much validity now, although could leave the precedent when another opportunity appears in the future, and it will.
By now price shows convergence in MACD which might suggest a possible reversal. Time will tell...
.
Since april this year, price started to form a symmetrical triangle and it was matter of time for price to break either way, and it seems that decided to resume its down trend, at least for now, and should test previous lows.
In the weekly chart we can see the current bar completely outside the triangle, but we should wait to its close to see and decide. Could be a FalseBreakOut, though. Also we are reaching a strong support zone considering the trend line drawn on orange from november 2007 to april 2010. I'm still bearish on this one because price broke the 1.0300 level which was a previous strong resistance/support, so more than likely the loonie could trend again to the downside. The 200sma is pointing down and we don't want to trade against the trend. If we are in a false break out, price should test previous lows and bounce back to takeout previous highs to confirm that a new uptrend is in place.
In the daily we can see in a closer look the symmetrical triangle and how it was broken to the downside. I've also drawn which seems to be a new downtrend channel in clear blue. Although price broke the triangle, today found support at the lower line of the channel and also in the orange trend line as well. Again I'm a little confuse about what could happen. In the daily the trend is down but there are a few levels to break before continuation. If there is no break to the downside, price could go to test the upper line of the channel, but if the break do occur to the down side, there is a narrow zone with some confluence of numbers that could attract price. There are some fib extensions and projections that coincide with the previous low, in the range of 0.9956 to 0.9930. The price to reach this zone also have to break the big round number of 1.0000 which tends to be a major psychological support.
Going even closer to the market, in the 4H chart, another symmetrical triangle formed and was broken as well, providing a nice short term trade opportunity (which I didn't take). The break of the triangle trend line, then a retest providing a safe place for an order. With a possible first target within the zone 1.0059 and 1.0078 which are the range of several confluence of fib numbers. Because this trade is after the facts, it hasn't much validity now, although could leave the precedent when another opportunity appears in the future, and it will.
By now price shows convergence in MACD which might suggest a possible reversal. Time will tell...
.
Meanwhile...
I'm going to post my others analysis, that way this blog will have more activity. In each post there is a label option, so each pair or cross will be labeled. This allows me to study the progress of each currency analysis in a sequential order.
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One more week...
The close of the current week might provide me a better outlook of what could happen next. Analyzing the weekly, last week's bar had closed as a doji with long wicks, which basically tells me that there is a lot of indecision. This doji could represent a reversal signal but more confluences are needed.
The current week's bar is still forming so I shouldn't consider it yet but is showing a possible break out to the upside. There is a catch, though. Still in downtrend. Price is relatively close to the 120sma which has presented some trouble for price acting as support/resistance in the past; also we have to consider the round number and previous top @1.6000. Maybe the daily could provide us more clues.
Comparing the daily chart from my last post, price was rejected from the resistance line but one day later bounced back to the upside and by now, definitely price has broke the resistance line. I've drawn a regression channel which I expected price could broke to the downside and finally resume its downtrend, giving some credit to the elliot wave count. Because price broke and then bounced back to this channel, I think that the upside should be more probable. Right now price is trading inside the regression channel. If price brakes to the upside and trades beyond 1.60s, two conclusions... or I'm making a wrong assessment about elliot theory which means I should revise my wave counts, or this concept should be forgotten.
I've also attached a 4H chart. Since last week price has been trading in an upward channel. If continues bouncing inside this channel, price might brake the 1.6000 and continue forward, but, a break to the downside could happen and price should test previous lows. We can see from this chart how price has struggle around this 1.57/1.59 zone
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The current week's bar is still forming so I shouldn't consider it yet but is showing a possible break out to the upside. There is a catch, though. Still in downtrend. Price is relatively close to the 120sma which has presented some trouble for price acting as support/resistance in the past; also we have to consider the round number and previous top @1.6000. Maybe the daily could provide us more clues.
I've also attached a 4H chart. Since last week price has been trading in an upward channel. If continues bouncing inside this channel, price might brake the 1.6000 and continue forward, but, a break to the downside could happen and price should test previous lows. We can see from this chart how price has struggle around this 1.57/1.59 zone
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