Potential reversal has emerged - albeit quite speculative - on the back of an expanding triangle near-completion at Point-5, as well as a prop-pattern potential ("Great White").
TECH-NOTE: The Case For A Higher Point-5:
1 - Note that such triangles can often post an overlap of Point-5 across its 1-3 line, so further rallying is not excluded.
2 - Point-5 might point higher on the basis of an incomplete a-b-c wave pattern
I would seek reversal confirmation signals based on your own methodology first and foremost. However, I thought it worse posting. Predictive Model remains at this point, hence the "speculative" qualifier on this one.
If and once the predictive model comes into alignment with above speculative plan, then I release a series of target with better definitions - Again: IF and ONCE.
- Pattern play is
- Predictive Model is
- NET consideration is NEUTRAL
= Favors downturn, pending confirmation
Predictive Analysis & Forecasting
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"$AUDJPY reversed at 95.857 as forecast; Bears continue to dominante: via http://www.tradingview.com | $AUD $JPY #forex"
Price fell to projected support at the 2-4 Line after it reversed at the defined 95.857 overhead resistance. This suggests that any rallying from the 2-4 Line is likely to meet fierce bear resistance at that same prior resistance @ 95.857 level, whereas a break of support at the 2-4 Line will require a break-below/close-below event completion.
As indicated before, this broadening triangle has all the features of a top-reversal geometry, despite lacking a final a-b-c wave feature, which is something I would have liked to see complete. While this completion did not occur, a reversal at Point-5 did materialize, and a final commitment of bears to further downside would validate the entire reversal nature of this rare geometry.
At this point, the ultimate-low target, defined as "TG-Lo = 93.352 - 01 JUL 2014" remains in force and intact.
"$AUDJPY broke support; opened floor to 93.352 forecast: via http://www.tradingview.com | $AUD $JPY #RBA #BOJ #forex "
Now that the support has yielded to bears (waited for a break-below/close-below event), the floor is opening up to downside targets. There are several intermediary targets between now (Price is at 94.974 on this early July 10th 2014 morning on the Pacific coast of Oregon state ... Still on a road trip) and the TG-Lo = 93.352. However, the gist here is that the tide has turned and the bears are on.
As indicated before, the underlying pattern reversed at the expected Point-5 level. In fact, I expected a 50% retracement, but it fell a bit deeper, near the 0.618% level ... So far so good, right?
Well, as a defensive trader, I often like to look at the exposure, especially since we continue to witness the development of a rare and reliable broadening triangle.
As indicated in earlier comments, this geometry is seen across other disciplines, such as in Elliott Wave's atypical Diagonal Triangle (atypical in the sense where the typical triangle would see its 1-3-5 Line and 2-4 Line converge) where the "Over-Throw" at Point-5 gives it its distinctive signature (missing herein). A similar geometry was discovered by Bill Wolfe, named Wolfe Waves, which simply takes on the same 1-2-3-4-5 patterned waves as in Elliott Waves. A slight distinction here is that the EW definition looks at additional anatomical features, such as the internal a-b-c points which link the 1-2-3-4-5 points.
Another important distinction crediting the Wolfe Waves pattern's ("WW") astute precision is the definition of Point 5 as either "Point-5" when in alignment with the 1-3-5 Line, or as "Point-5-Prime" or simply 5' when the overthrow which is defined in the EW occurs in the Wolfe Waves pattern. The astute precision here relates to the observation that Point-5' would typically be defined by the transposition of the 2-4 Line from Point-3 in the case of converging 1-3-5 and 2-4 Lines. However, in the case of diverging lines, WW are not as useful.
Nonetheless, the relations between EW and WW observations are worth keeping in combination.
Now that I defined both pattern, I really want to mention a single, perhaps insignificant yet bothering issue: The fact that the a-b-c internal waves of the broadening triangle as defined by EW has not yet occurred. Yesterday, I looked for pretexts that it might have occurred in smaller timeframes (I looked at the M15 level), but a EW purist would certainly seek this geometrical manifestation.
Hence, I have decided to play devil's advocate and supposed a scenario in which this a-b-c internal wave structure remains pending at the moment. In such scenario, one has to be cognizant of the fact that the a-b-c pattern is not a pure symmetrical a-b-c (i.e: as defined by Scott Carney's symmetrical AB = CD pattern), but instead, the terminal point at c might also be an extension typically at the 1.618 level, as defined in that chart.
I also turned the predictive model against the chart, looking at what overhead target should be considered. Here too, the 1.618 level lined up at the 97.218, but a shorter reversal potential was also defined at a more proximal level, yielding the following potential reversal range:
Range-High = 97.218
Range-Low = 96.978.
While the chart remains bearish, I thought it worth keeping my mind open against any bullish potential. In the mean time, keep that third mind's eye open.
"$AUDJPY defined its Point-5 at broadening triangle; predictive model remains bullish; Beware! via @tradingview"
CHART #1: AUDJPY-H4: Price action so far ...
As indicated yesterday, the broadening triangle constitutes of two diverging lines: 1) the 1-3-5 Line and2) the 2-4 Line. Each of these points are linked by a discreet internal a-b-c patterned geometry that articulated the entire area into a known yet rare geometrical formation.
However, the ISSUE here is the fact that Point-5 may or may not be the final definition of the entire pattern, based on the cognizant observation that it lacks the a-b-c waves. Now, one may look into the 4-hour pattern and decided that perhaps, a higher-granular analysis of the linkage between Points 4 and 5 reveals a glimpse of an internal Elliott Wave completion, which would then be ground to support the assumption that the 4-5 connection is indeed complete - Here is a look at the "blown-up" connection between Points 4 and 5 ... See a Elliott Wave pattern completion (points not enumerated)?
CHART #2: AUDJPY-M15: A Higher-Granular Look At Points 4 & 5 ...
The answer is in the details: There is indeed a EW completion patterned into the linkage. However, I have more faith in the 4-hour timeframe than in the 15-min timeframe, therefore, I am willing to wait and see, such that a break of the recent low @ 95.857 (see Chart #1 above).
OVERALL: As indicated herein and before, remain suspicious about incomplete pattern when your expectation remains open for such completion. If in doubt, look at any internal technical manifestation that would affirm or infirm your watchful waiting stance. In this case, I do see a EW pattern completion at the M15 level, but by experience and personal choice, I let the higher timeframe have the last say. This is based on the assumption that the higher the timeframe, the higher the capitalized group, hence the larger the institutional force behind the moves. Retail traders, taken together as a trading force cannot and will never compare to the institutional traders that move exorbitantly large blocks of orders. Thing is, this is often accomplished on the back of immature traders (i.e.: traders not yet in control of their dominant ids, succumbing to easy and predictable behavioral tricks from institutional traders) who tend to respond too easily to lower-timeframe (false) signals, as the dominant institutional traders sell to junior traders tricked into buying, or buy from same traders tricked into selling.
Predictive Analysis & Forecasting
any weight, more or less bearish, than this impulsive looking blast off ?
when you have the time, nothing else to do, bored completely, and you're
at the bottom of your to do lists -----
Perhaps you could take a look at this:
and share your comments/criticism
insight into the positive / negative divergence ???
Thanks for your thoughts !!!!
(be straight forward I can take it !)
I can see that you have done a great job on the research side and, depending on your targets, 50-60 pips fluctuations are within realistic expectations.
From Elliott Wave prospective, a descending Minuette cycle has already materialized (which itself suggests lower proceedings), and even if the inflection point at 101.70 is breached, the likelihood of channeling lower is still rational on a swing-count bases.
Harmonics are great in identifying Potential Reversal Areas, with emphasis on potential; and much more yielding around long term highs and lows. In mid-range, you can have the Fibs line-up to the pip, and still will expire without even surpassing "C".
It is fair to say that USD - JPY relationship is quite depressed and will be better to side of it.
There is better opportunities brewing elsewhere (NOK, SEK, CHF, PLN....)
remember last Christmas season, when markets were so tin, technicals topped fundamentals and party was over-closing the year at all time highs ?
right now the markets are so tin, technicals top fundamentals and party seems to be over (at the new much higher, all time highs).
Turbulence is inevitable yet, the longer desultory lasts, the more risk premium it builds.
Nothing else but pure eagerness towards the glorious past of com$'s.
2.Cycles, Shapes and Forms:
As drawn, expanding wedge is a corrective formation (currently labelled as if it was ending diagonal),and unless price moves towards(through) 94.50 |1 invalidation|, in a 5-wave fashion,
upside continuation is considerably more probable.
Yes, agreed on your first point.
Second point is very arguable. Most institutional references and teachings would refer to the broadening triangle (also called a "broadening top") as a reversal pattern.
In my view, this pattern depends on the breakdown of price following its signature 1-3-5 point definition, which is also seen in Elliott Wave's diagonal triangle, as well as in Wolfe Waves patterns.
Following are a few references of broadening triangles/top, described as reversal patterns (Source: Google search: "broadening + triangle + technical + analysis):
1 - http://en.wikipedia.org/wiki/Broadening_top
2 - http://www.investopedia.com/terms/b/broadeningformation.asp
3 - Google image collection of "Broadening Triangles: bit.ly/1qgWZsH
This being said, there is really no other way but probability play here. This geometric pattern is defined by investopedia as a RARE pattern offering a swing trade opportunity, rather than a trend-following opp.
It will be interesting to see this price unfold. And again, as indicated in the analysis, Point-5 appears UNfinished, whereby a a-b-c wave is emerging and should therefore see point-c of this 3-wave internal pattern as a higher end-point relative to the 1-3 line. This would effectively fulfill TWO potential patterns:
1 - A Wolfe Waves pattern at 5-prime
2 - A "Throw-Over" signature typical of a modified Elliott Wave's triangle (modified in the sense that a diagonal triangle typically would typically have converging 1-3-5 and 2-4 lines, but in this broadening case, a throw-over remains a trademark of that reversal geometric pattern in EW's armamentarium.
Again, it'll be interesting to see the outcome for sure.