4xForecaster

Trading Pearl: How To Tell That An Asset Is Done Rising? #Forex

FX:AUDNZD   Australian Dollar/New Zealand Dollar
2519 87 15
Traders,

Being in the business of predictive analysis and forecasting, the most common question I ever get is:

- Is it done rising? Is it turning aroundyet? Is it coming back to ... ?

My inner answer is pretty simple:

"At what point in your trading plan did you build such a contingency plan that would preclude you from having to ask the question?"

In another behavioral way of asking yourself the question would be: At what exact point in the chart did you start worrying about this? If you know the answer, you just refined yourself as a trader, as you would have determined your tolerance threshold point for which such price action would be deem intolerable to you.

but that's really not what the immediate answer you'd be looking for, I should presume.

If I may, let me simply say, from one trading friend to another: This threshold of doubt and fear should NEVER be reached within any of the trader's trades. Hence, know your exit strategy before you even enter into a market position via a pre-defined Stop-Loss - As it is commonly said:

"Plan the trade, then trade the plan."


Following is a method that will provide you with the most immediate and re-assuring answer, and keep skeptical thinking from having to put you in a devastating situation of rumination and doubt:


I will use the chart inclusion features of the discussion thread so that I may use illustration - Very quick, simple way that will get you less of a chance to engage in that dreadful self-injurious thinking which often arises when doubt creeps in and ruminating thoughts keep you up at night.

Here are the tools what you will need to follow (very simple:):

1 - RSI set at (HLC)/3

and

2 - MACD kept at TradingView's default

and

3 - Coffee            

... Ready? ... Let me write it frame by frame before inputing any comment, so that it appears in its entirety following this text ...

BRB


David Alcindor
Predictive Analysis & Forecasting
Denver, Colorado - USA
David Alcindor, CMT Affiliate #227974
Alias: 4xForecaster (Twitter, LinkedIn, StockTwits)

Signal Service or Private Course - Contact: MarketPredictiveAnalysis@gmail.com
All updates on https://twitter.com/4xForecaster
Great sir.
+1 Reply
First, let's look at the bare chart:


snapshot



From the text and chart above, you already know that we will be using a Fib scale. So, set your scale using the 0.382, 0.500 and 0.618 levels, and 1.618 Fib values.

Now, let us first look at the recent impulse, which is the one causing that would have caused us angst without this simple projection rule:

Assuming that price had not yet hit our recent target, simply lay a Fib using the 1.618 end so as to cast in out into the future, expected trend. You would see that as it lays there, it will likely mark the end of the price advance. It does it so here quite well, simply be cause price has indeed reached that level and is done moving - This is already answering the question: "Is it done advancing?"


snapshot



Now, as you can tell from the chart above, that you would have been able to foretell that level at which price would have moved.

Here is a little extra - Let us figure out where a stop-loss should have gone - Simply remember that an adverse excursion (which is that unwanted event whereby price moved against our expectation) can be given a tolerable value by simply using the Fibs.

Personally, if you did now know anything else, I would turn to my 1.414.-Fib friend to help determine that value - See the BLUE arrow at the bottom:


snapshot



Now that you have that value, which may represent too large of an exposure (in which case, should you use a lower timeframe? How about a lower leverage?), you should accept that Stop-Loss before accepting the decision to enter into a trade.

At this point, we have answered for ourselves TWO important questions:

1 - "How far can it go", or as price has already advanced: "Is it done advancing?"

and

2 - "How far am I willing to let it move against me?", or better yet: "Is this much adverse excursion good for me? Do I need to reconsider the timeframe and/or leverage?


The next question just as important: "How far is it coming back to?"

For this, we will be using TWO Fib scales, one which we just used, with its 1.618, and an internal 0.618, 0.500 and 0.382, and a second with simple the same internal values - You should get this chart:


snapshot



Now, I will let you take a few seconds to look at what I have defined as "concordance", which is where the Fibonacci values of one price action (the advance on one hand), and the other price action (the anticipated retracement from a probable maximal high, here at 1.618) will bring to sight a MATCHED set of Fibonacci values. Here, we can easily see the following (RED Arrows):


snapshot


In case it is not apparent, what we are seeing is the matching, or concordance or 0.618-Fib values from two distinct and separate Fib scales, each defined over two distinct price action: One past, one anticipated.

This exercise will be THE most important consultation you will ever receive from mother nature, whenever she steps in and tells you that its harmonic waves will prefer to come into tune at these levels.


OVERALL:

Now, is this answering all of the questions you would ever ask of your self:

1 - How far can it go - ANS: Cast forward and define the outer most possible level of advance using a1.618-Fib hyper-extension

2 - How far can it move against me? - ANS: Use the 1.414-Fib level. If it's too far relative to the size or risk exposure you are willing to lose in acctual dollar amount, then use this as a perfect opportunity to let the chart telling you that this timeframe and/or leverage might be out of your league

3 - How far is it moving back to? ANS: Harmonics. Pure and simple inter-related concordance based on the Fib scale of a completed move and that of an anticipated move.

One last word on risk ...

... yeah yeah, "Do not risk more than you can afford to lose ... ? No, a simpler answer, instead:

KNOW YOUR RISK OF LOSS - Simply put, if the amount that you stand to lose at every trade represents, say 10% of your entire asset (not good!), this means that you are willing to risk 10% times ten losing trades to lose your entire asset. In contrast, if you are willing to tone it down a bit, say risk 3%, then you are telling yourself that you are willing to risk 3% times 33 losing trades before running the chance of going broke.

So, one last wuestion:

Which is better? The chance to play 33 times or that of playing 10? The answer depends upon your risk tolerance, of course.

Cheers,


David Alcindor
+5 Reply
fximperija 4xForecaster
WOW, how much do I owe you for this extensive in depth explanation? :) This answers the question: Why have I deserved the #FF of wisdom?
+1 Reply
@fximperija - Nothing at all. My pleasure - David
Reply
kmk.msp 4xForecaster
david... you article have solve my many problems and help me to plan the trades. thanks a lot
Reply
fourkey2013 4xForecaster
great work. keep it up!
Reply
(sorry for erasing the comments that were made before I had the chance to post my expanded explanation of this trading strategy - I simply needed the explanation to follow immediately after the chart - Feel free to post, comment or object following my explanation - Thank you for your understanding)

- David Alcindor
+1 Reply
fximperija 4xForecaster
No need to be sorry, mate. You did explain much better than I would ever do. Cheers
+1 Reply
@fximperija - Could you please re-post that chart. I did not have the chance to look at it (I was in writing mode :-( )?

- David
Reply
fximperija 4xForecaster
Here you go, mate
snapshot
+2 Reply
Excellent trendline projections - These are the vipers in the brush that no one pays attention to. Very nice - David
Reply
NOTE: The Stop-Loss I have defined in the text can be quite wide, and as indicated, it will also help you determine whether the timeframe into consideration is too large for your risk tolerance. Another way to define a stop loss is to choose the level below where price started its advance. However, I have found this to be stacking quite a large number of stop-loss orders, which are seen and known to institutional traders, thus would offer them the chance to trigger all and everyone of them - That is what market makers do, nothing bad, nothing good - It simply is.

Feel free to share this trading pearl. It represents my views and my risk tolerance.

Cheers,


David Alcindor
+2 Reply
good job
+1 Reply
David , you are genius my friend.
+1 Reply
@360 - Not really. Simply averaging more hours looking at the same thing than the average trader, but I appreciate the compliment and will keep it for added inspiration as I return to look at the same thing - David
Reply
360 4xForecaster
And you are being modest :) Keep it up and thank you.
+1 Reply
@360 - I am very aware that the model I share is quite extra-ordinary, but I won't make and wear a T-shirt with its face on it.

I am glad that after so many years of doing the same thing over and over, I was able to use my visual faculties and discovered what was waiting to be picked up by mere mathematics and geometries.

As Yogi Berra once said:

"You can observe a lot, just by watching"

... and: "Little things are big".


Have a fantastic week-end!

David

+1 Reply
Thanks David for this post, it's very informative.
However I would like to ask if this technique can be used on smaller time frame to mach ones tolerance?
+1 Reply
Hello @Tarek - Absolutely. This is what I was implying in the writing, that any given technique that is based on proportion (i.e.: Fibs being mere percentage of pricing over time) can be submitted to the same scaling up and down as patterns would. They are after all one and the same things - David
Reply
Great info in forecasting David.Very informative,thanks.....

A smile of great success and prosperity.
+1 Reply
@PeterEkonomakis - Great Peter, I am glad this brings you so many good things. May it all remain permanent and transferable to others, less fortunate but willing to learn from you as well.

David
+1 Reply
I really appreciate what youve done for friends
+1 Reply
09 SEP 2014 - Update:

From Twitter:
-------------------
$AUDNZD reversed nicely per forecast shared in "Trading Pearl" here:

Trading Pearl: How To Tell That An Asset Is Done Rising?  #Forex


via @tradingview | $AUD $NZD $USD #forex
-------------------


Trading Pearl: How To Tell That An Asset Is Done Rising?  #Forex



Cheers,

David Alcindor
Reply
4xForecaster PRO 4xForecaster
Here is a prettier picture:

snapshot



David Alcindor
Reply
fximperija 4xForecaster
Indeed, but still in this narrow channel, waiting to break channel for a confirmation of stronger pullback.
snapshot
+1 Reply
@fximperija - Yes, it can definitely climb the channel. Two elements of instability have formed here, besides the 1.618 attainment:

1 - Steepness is short-lived. From my perspective, each angles represent a different breed of traders (i.e.: different level of aggressivity). The exact same angle and pattern occurred earlier in your chart. (the first higher high from bottom). What ensued was an unwinding of about 0.618 depth, which is the depth sought from forecast in recent post - Here is the chart:


snapshot



It may not necessarily play out that way, but these discreet redundancies is what I look for, as they tend to re-occur over and over again.

In this case, the are exact vectorial copies, whereby the height and angles are exact replicas, in addition to sharing the same directional bias.

Here is another example, where these "vectors" carried price to 0.886, in a manner that would defined the entire system as a symmetrical AB = CD pattern:

snapshot



And here is another one, with inverted slants, thus defining that system as a One2One pattern, where price was reverting back to 1.131:

snapshot



A lot of these hidden geometric patterns are worth heeding, as they represent a more "mechanical" side of the market, either through algos with preset entry/exit targets, or a market-maker intentional influence to carry price to a pre-determined and necessary valuation of the underlying asset. In any case, it is unnatural, but lends itself to geometiy-based forecasting quite readily.

David Alcindor
+1 Reply
fximperija 4xForecaster
Well David, AUDNZD just hit my T1 at the TL, eager to see it moving further down to my T2 :)
snapshot
+1 Reply
fximperija fximperija
Should drop lower at least to test the breakout at 38.2 fib since it hasn't been tested after breakout.
Reply
@fximperija - Excellent. Chart looks open for more clawing:

snapshot



1.08769 was the harmonized level between the two Fibonacci scales posted last time. A more conservative 1.09468 is defined by the original forecast - See chart above.

David
Reply
What if RBNZ rate the same? Will it be the same direction down???
+1 Reply
Fundamentals = The blare of past events

vs.

Technicals = The echo of things to come.

- David
+1 Reply
alex.a 4xForecaster
Oui, monsieur
+1 Reply
It's a generalization, because i do like to know what the fundamental issues are behind a Forex pair, but I truly believe that the news release only reflect a late verbal expression of a market that has conformed to these facts, except that the facts would tend to shape the form of the market before they fill the content of a news page - David
Reply
alex.a 4xForecaster
Vous etes un poete
Reply
10 SEP 2014 - Update:

From Twitter:
------------------
$AUDNZD falls per forecast; S/T Bear target intact; M/T Bull outlook in force

snapshot


via @tradingview | $AUD $NZD #forex
-----------------


snapshot



David Alcindor
Reply
IvanLabrie PRO 4xForecaster
David, was wondering if you use the awesome oscillator at all?
Reply
10 SEP 2014 - TECH-NOTE:


GOT MILK?

(If not, then know its price, or don't even trade it)


Traders:

On a pure pattern play, here is what the $NZDUSD is susceptible to accomplish, provided that it submitted itself to the whims of Shark and its acolyte: The 5-0 Pattern. However, total outlook remains bearish:


snapshot



Note: fundamentals related to domestic slump in dairy products and paucity of demand in the immediate Asian theater make it quite difficult for the $NZD to find revenue - A rate hike becomes illusory at this point ... Decision today.

For your entertainment, here is a link to dairy farm product auctions. A very strong correlating power to $NZD: Worth your review and worth keeping under your elbow everytime price comes up. If price falls, this means less revenue through export taxation for the country, and thus more stagnant GDP. Here, on last auction, it fell by 6%. Now, open a chart on SEP 02nd, and see that price did simultaneously ... You get the idea -Truth is, price was already falling from falling auction dairy farm prices from prior events, and the trend is catching on, until valuation "normalizes" for the current conditions.

My chart calls for a respite in the fall, based on a technical recovery of 50% from recent swing low.

- https://www.globaldairytrade.info/en/product-results/


Cheers,


David Alcindor
+1 Reply
HamedAghajani PRO 4xForecaster
Reading and digesting your comments is part of my daily learning curve. I wonder how you get time to update all your posts, develop new ideas and provide such a detailed answers to most of the comments you receive, and at the same time, maintain studying new things and continue your journey. Impressive- God bless you David!
+1 Reply
4xForecaster PRO HamedAghajani
@HamedAghajani - Thank you for your kind feedback. Answer to your question is simple: The paradox of Time. I do not have a television. At the end, I have the same 24 hours as Michael Angelo and Mother theresa were ever given to learn the things they did, and apply the things they had learned.

So, I have very little to complain about and a lot of catching up to do. There is only so much time left to rest and so much more to waste in haste - David
+1 Reply
10 SEP 2014 - Update: NEWS, Re: $AUD


* * * NEW Major Banks' FX Position * * *


Considering the high correlation between $AUD and Gold, you might enjoy knowing that some major banks are quitting bearish positions on a SHORT-TERM basis


=================
Credit Suisse entered $AUDUSD Short via filling a limit order at 0.92 (Short-Term)
(Forex intel: https://www.tradingview.com/chat/#xsmm44S00HaO5wCZ )
=================

Cheers,

David Alcindor
+1 Reply
4xForecaster PRO 4xForecaster
COMMENT:

In essence, this news release suggests that major banks have decided to temporarily abandon they bearish pressure applied against the $NZD.

This should reflexively dampen any $AUDNZD surge that should have developed in favor of the $AUD. Whether this translates into a continuation of the $AUDNZD decline and follow the path of the forecast is another thing, but one that would certainly benefit from this institutional reprieve against the $NZD.

Cheers,


David Alcindor
+1 Reply
19 SEP 2014 - Update:

From Twitter:
-------------
$AUDNZD moved closer to TG-Lo; Reversal at market open? Forecast remains intact

snapshot


@tradingview | $AUD $NZD #Forex
------------


snapshot



David Alcindor
Reply
23 SEP 2014 - Note:

Daily notes, technical commentaries, lessons and pearls will be provided in the "Predictive Analysis & Forecasting" chat room. Feel free to follow these added details there (Link: https://www.tradingview.com/chat/#5eHLst6YxeVqGlaO). Only significant technical events will be posted in this present discussion thread, so as to avoid too much unnecessary technical information for the trader and chartist interested only in major technical events.

David Alcindor
Reply
24 SEP 2014 - Update;

From Predictive Analysis & Forecasting Chat Room - Link: https://www.tradingview.com/chat/#5eHLst6YxeVqGlaO
--------------------


snapshot



"A price reaction occurred from TG-Lo ... Not enough to indicate a reversal at this point.

Wait for a significant move occurs, such as an internal Wave-1 of a larger 1-2-3-4-5 IMP to the up-side.

Such a development could easily be detected early if Wave-1 is IMP (hence look for 1-2-3-4-5 IMP patternwithin a H4 chart to confirm), and Wave-2 retreats in a 3-wave COR internals (here too, use H4 to confirm).

If Wave-1 and Wave-2's internals are confirmed and price rallies back towards Point-1, then consider a break above Point-1 a plausible entry point into a Wave-3 impulsive move.

If none of the above occurs, then doubt price's intention to rally yet.Instead, it might seek lower support than TG-Lo - Note how RSI is NOT convincingly validated its supportive trendline yet.

David Alcindor"
-------------------

David Alcindor
Reply
25 SEP 2014 - UPDATE:


snapshot



Price rallied from TG-LO = 1.09468 - 30 AUG 2014 QUALITATIVE TARGET LEVEL.

Expecting an interim unwinding of price, as it nears prior TG-1 = 1.12272 = 30 AUG 2014.

A break above prior structural high would open ceiling to pre-defined loftier targets.

David Alcindor

+1 Reply
kmk.msp 4xForecaster
yes i am long from 1.0960.
+1 Reply
kmk.msp kmk.msp
in 4hr chart price has rejected from 100 sma @ 1.1100. how much there is importance of moving average
+1 Reply
@kmk.msp - I do not use MAs as much as I used to, as I have little use for them at this point. However, they are the lines that many retail and institutional traders follow, so they tend to create the action in price based on the reaction to them in traders - This is what many refer to as self-fulfilling prophecy, as it happens on the basis that it is expected and acted upon - David
+2 Reply
kmk.msp 4xForecaster
thanks
Reply
kmk.msp 4xForecaster
AUDNZD
+1 Reply
@kmk.msp - Not sure what you are posting here: Whether a question or an affirmation of price target, may be - I could not find any comment or statement with this isolated chart posting.

Let me know whether you are asking for something specific here.

David
Reply
kmk.msp 4xForecaster
@David. This was just my idea that it may form WW pattern. And whenever i analyse any pair, i shared with you for suggestion/advice that am I right or wrong.
+1 Reply
07 OCT 2014 - Update:

From the "Predictive Analysis & Forecasting" chat room - Link to room: https://www.tradingview.com/chat/#5eHLst6YxeVqGlaO
---------------------
$AUDNZD:

Price has reversed per forecast and tests a potential cup-and-handle pattern as it nears a triple top.

Somehow, I remain bothered by RSI validation failure.

Also, notice how the recent rally into a double-top formation was conducted by a ZZ.

Can you see the potential REGULAR FLAT forming at the moment - Operative word here is "potential".

So, here is a potential play to keep in mind (see the pink arrows in DAILY chart).

I will use the momental lines as a potential guideline to define a momental channel (see dashed purple parallels).

David Alcindor
----------------------


snapshot



David Alcindor
+1 Reply
16 OCT 2014 - Update:

$AUDNZD continue to move in the forecast direction (pink arrows). Current move resembles Elliott Wave's Flat. Momental line is still expected to provide support. Following is the review of price action down to present circumstance:


$AUDNZD - Initial analysis:
snapshot



$AUDNZD - 24 SEP 2014:
snapshot



$AUDNZD - 07 OCT 2014:
snapshot



$AUDNZD - 16 OCT 2014:
snapshot



OVERALL:

Original predictive analysis and forecast remain unchanged. Targets are intact and in force.


David Alcindor
+2 Reply
HamedAghajani PRO 4xForecaster
Thank you for the update, Mon'Amie.
+1 Reply
18 OCT 2014 - Update:

From Twitter:
----------
$AUDNZD emits mixed signals for the week ahead: S/T bearish vs. L/T bullish:

snapshot


via @tradingview | $AUD $NZD #Forex
----------


snapshot



David Alcindor
+1 Reply
21 OCT 2014 - Update:

From Twitter:
----------
$AUDNZD nears reversal after completing forecast retracement; Bullish targets still intact

snapshot


@tradingview $AUD $NZD
----------


snapshot



David Alcindor
+2 Reply
24 OCT 2014 - Update:

From Twitter:
----------
$AUDNZD moves per forecast; Targets intact; Break >1.12808 would offer strongest bullish signal:

snapshot


@tradingview |
----------


snapshot



David Alcindor
+1 Reply
HamedAghajani PRO 4xForecaster
Thanks for the continuous update. I was lucky this time that my half position order got filled. Looking for opportunities to add the second half.
+1 Reply
4xForecaster PRO HamedAghajani
Hello @HamedAghajani - There are two values I wrote in the chart:

1 - 1.10873

and

2 - 1.12808.

They each represented semi-conservative clues for action.


$AUDNZD - 07 OCT 2014:
snapshot



$AUDNZD - 21 OCT 2014:
snapshot



$AUDNZD - 24 OCT 2014:
snapshot



Good for you to consider partial entries. It makes for less of a loss if price turned, and more of a gain if price plays out per plan.

David Alcindor
+1 Reply
alex.a 4xForecaster
David, really no more forex intel?
+1 Reply
@alex.a - I have not heard back from the data provider whether I can disseminate their information. So, for now I have to keep it under lid - David
Reply
alex.a 4xForecaster
Twitter underlid, too? or only tradingview website? Is it possible for you to send that through private message?
+1 Reply
alex.a alex.a
or is it possible for you to send that through twitter?
+1 Reply
Hello @alex.a - Unfortunately, it won't be possible. I will be able to provide some information about institutional biases in general terms, but I did find out that I will not be able to release any particular trade from any particular major bank in the future - David
Reply
Sorry @alex.a - I would need to clear things up, so that there is no doubt from the company that I may do so, regardless of the manner in which the information is conveyed - David
Reply
kmk.msp 4xForecaster
what about this pair because it has tried 4 times and rejected at 1.13
+1 Reply
Hello @kmp.msp - I am waiting for a target-hit in the $AUDUSD, as per its chart:

$AUDUSD
snapshot


As you can see, it is literally a hair-thin close to hitting that bearish target.

If and once this nominal target gets hit, I expect that it would work as per its definition, which would be to market a point of reversal, carrying $AUDNZD with it, as forecast.

In the mean time, I would also look at the $XAUUSD and inversely at the $DUST charts I have posted in the past, to look for a lock-in-step correlation in price action.

David Alcindor
+1 Reply
kmk.msp 4xForecaster
thanks david
+1 Reply
kmk.msp 4xForecaster
hi david, any new uptade on audnzd?
KMK.MSP
Reply
18 NOV 2014 - Update:


From Twitter:
----------
If $AUDNZD stays > 1.09098, a (+) Div. RSI would occur. A break > 1.10075 would keep (+) outlook:

chart
snapshot


$AUD $NZD
----------


snapshot



David Alcindor
+1 Reply
kmk.msp 4xForecaster
Thanks for your prompt reply David. Best Regards.
KMK.MSP
+1 Reply
kmk.msp 4xForecaster
Hi David.
How one can know values as 1.09098 and 1.10075. From where these values has come. It will be knowledgeable for me.
KMK.MSP
+1 Reply
Hello @kmk.msp - In the chart I posted overnight, there are three values I decided to concentrate on, namely:

1 - the highest at 1.12808

2 - The lowest at 1.09098

and

3 - A middle one at 1.10075.


What you are looking for here is to systematically cordon off the recent price action in terms of a historical set (i.e.: several days) as well as a single set (i.e.: a single bar).

So, looking at the price action from a highs and lows, let's see if we can make sense of how to approach what would be a structural analysis of the chart - Consider the chart below:


snapshot



What you are looking for are the levels at which price is likely to find support or resistance. For this exercise, you need to concentrate on keeping it simple. What you are looking for is:

1 - Recency: The closer in time a price action has occurred, the more likely it is to influence the next move
2 - Reiteration: The more a level is repeated, the stronger it will act as a future support/resistance ("S/R") level as it is revisited in the near future

That's it.

Now, simply follow the chart from its lowest-low ("LL"), which is represented by its BLACK star. Although there could very well be a lower level achieved in the past, here the LL refers to the price action that is represents within the visual frame. In contrast, the all-time-low ("ATL") would be a lower value that was ever achieved in the history of the underlying issue, here the $AUDNZD Forex pair.

Now that you have anchored your sight at the LL, simply follow the price and note the levels where price achieves a new high relative to a prior high. Although not marked here, this new height is the one immediately above the black star ... See also that price retraces about 88.6% of this small swing (see first chart below) , answering the EAGLE condition I wrote about yesterday (i.e.: great entry point for a long position).


snapshot



What you want to do here is keep in mind the recent higher-high just achieved, and see whether price reacts relative to it. You will see that it does in TWO distinct, albeit discreet but VERY important ways:

1 - First, as price approaches this recent higher high, if fails to surpass it, and instead retraces from the GREEN star. You might perhaps have noticed that this retracement is not a 88.6% as was in the chart above, but instead a closer value to about 61.8% or 50.0% (here, you have to make sure to use the SAME reference point, which is the low at the BLACK star) - See next chart:


snapshot



2 - Once price prints this 0.786-Fib level, it then rallies on up and higher. This higher value finally surpass the higher high and carves a newer higher-high at the BLUE star. Here too, a retracement occurs, but the most important feature is that it reaches a LOWER value relative to the recent retracement that had occurred from the BLUE star - See following chart:


snapshot



The relative lower low achieved is important because it defines this low point as the SECOND higher low achieved - The first one is represents as the 0.886-Fib level from the LL, whereas this is occurs at the NEXT Fib value within the Fib matrix, as 0.786.

Now, if you look at the following chart will all of its stars for reference, you will see that the price action at the BLUE star achieved more action than any other prior swings:

1 - It achieved a higher high, followed by...

2 - a lower low.

It is THIS very DISCREET price action that you are looking for, because it will help define several of the future conditions.

For now, you will see that the BLUE star has defined a level that offers a relative floor for price to bound off of. This floor is measured by the difference between the prior GREEN and current BLUE stars. Remember that the GREEN star represents that level of activity that was rejected, thus defining a STRONG resistance ... It now represents a STRONG support.

In turn, the BLUE level represents a softer level where the market was allowed to penetrate to carve a higher high. It now represents a level where price will return and facilitate "negotiations" so to speak, which in terms of geometry will be represented by "consolidations", or a cluster of tightly wound-up bars of lesser height and closer open/close levels to one another - See where the RED #1 and #2 are, and you can see how well the price action submits itself to this GREEN-to-BLUE geometric range of consolidation, whose support is offered by the GREEN price level along which RED-1 and RED-2 line up obediently.


snapshot



The higher levels, defined by BLACK-1, 2, 3 define a solid bearish entrenchment as well, by the mere fact that this line up also defines a TRIPLE-TOP. If you wonder how this ever came about, simple interrogate your Fib matrix at its 1.618 extension level, and you will see that all three BLACK stars are lining up quite well at that level as well - See next chart.

snapshot



Now, the last value I had defined was the INTRA-DAY value that marks the HIGH of the bar. Since the market open NEAR that high and reversed quite immediately, and kept its residency at the low of that same DAILY bar, then I assumed that it would take a same but opposite market force to NOT ONLY return to the OPEN level near that high, but a dedicated BULLISH force to push it ABOVE the high of that bar.

So, i wait for it to happen, if it decides to do so. And if so, then this STRUCTURAL ANALYSIS of price action will possibly indicate its underlying directional intention.

Hope this makes sense. Here is where we are as of this writing:


snapshot



David Alcindor
+1 Reply
18 NOV 2014 - TECH-NOTE/LESSON:


-- STRUCTURAL ANALYSIS OF THE DAILY CHART:


(This is a repost so that it may stand alone for clarity)


=========================================================
Hello @kmk.msp - In the chart I posted overnight, there are three values I decided to concentrate on, namely:

1 - the highest at 1.12808

2 - The lowest at 1.09098

and

3 - A middle one at 1.10075.


What you are looking for here is to systematically cordon off the recent price action in terms of a historical set (i.e.: several days) as well as a single set (i.e.: a single bar).

So, looking at the price action from a highs and lows, let's see if we can make sense of how to approach what would be a structural analysis of the chart - Consider the chart below:


snapshot



What you are looking for are the levels at which price is likely to find support or resistance. For this exercise, you need to concentrate on keeping it simple. What you are looking for is:

1 - Recency: The closer in time a price action has occurred, the more likely it is to influence the next move
2 - Reiteration: The more a level is repeated, the stronger it will act as a future support/resistance ("S/R") level as it is revisited in the near future

That's it.

Now, simply follow the chart from its lowest-low ("LL"), which is represented by its BLACK star. Although there could very well be a lower level achieved in the past, here the LL refers to the price action that is represents within the visual frame. In contrast, the all-time-low ("ATL") would be a lower value that was ever achieved in the history of the underlying issue, here the $AUDNZD Forex pair.

Now that you have anchored your sight at the LL, simply follow the price and note the levels where price achieves a new high relative to a prior high. Although not marked here, this new height is the one immediately above the black star ... See also that price retraces about 88.6% of this small swing (see first chart below) , answering the EAGLE condition I wrote about yesterday (i.e.: great entry point for a long position).


snapshot



What you want to do here is keep in mind the recent higher-high just achieved, and see whether price reacts relative to it. You will see that it does in TWO distinct, albeit discreet but VERY important ways:

1 - First, as price approaches this recent higher high, if fails to surpass it, and instead retraces from the GREEN star. You might perhaps have noticed that this retracement is not a 88.6% as was in the chart above, but instead a closer value to about 61.8% or 50.0% (here, you have to make sure to use the SAME reference point, which is the low at the BLACK star) - See next chart:


snapshot



2 - Once price prints this 0.786-Fib level, it then rallies on up and higher. This higher value finally surpass the higher high and carves a newer higher-high at the BLUE star. Here too, a retracement occurs, but the most important feature is that it reaches a LOWER value relative to the recent retracement that had occurred from the BLUE star - See following chart:


snapshot



The relative lower low achieved is important because it defines this low point as the SECOND higher low achieved - The first one is represents as the 0.886-Fib level from the LL, whereas this is occurs at the NEXT Fib value within the Fib matrix, as 0.786.

Now, if you look at the following chart will all of its stars for reference, you will see that the price action at the BLUE star achieved more action than any other prior swings:

1 - It achieved a higher high, followed by...

2 - a lower low.

It is THIS very DISCREET price action that you are looking for, because it will help define several of the future conditions.

For now, you will see that the BLUE star has defined a level that offers a relative floor for price to bound off of. This floor is measured by the difference between the prior GREEN and current BLUE stars. Remember that the GREEN star represents that level of activity that was rejected, thus defining a STRONG resistance ... It now represents a STRONG support.

In turn, the BLUE level represents a softer level where the market was allowed to penetrate to carve a higher high. It now represents a level where price will return and facilitate "negotiations" so to speak, which in terms of geometry will be represented by "consolidations", or a cluster of tightly wound-up bars of lesser height and closer open/close levels to one another - See where the RED #1 and #2 are, and you can see how well the price action submits itself to this GREEN-to-BLUE geometric range of consolidation, whose support is offered by the GREEN price level along which RED-1 and RED-2 line up obediently.


snapshot



The higher levels, defined by BLACK-1, 2, 3 define a solid bearish entrenchment as well, by the mere fact that this line up also defines a TRIPLE-TOP. If you wonder how this ever came about, simple interrogate your Fib matrix at its 1.618 extension level, and you will see that all three BLACK stars are lining up quite well at that level as well - See next chart.

snapshot



Now, the last value I had defined was the INTRA-DAY value that marks the HIGH of the bar. Since the market open NEAR that high and reversed quite immediately, and kept its residency at the low of that same DAILY bar, then I assumed that it would take a same but opposite market force to NOT ONLY return to the OPEN level near that high, but a dedicated BULLISH force to push it ABOVE the high of that bar.

So, i wait for it to happen, if it decides to do so. And if so, then this STRUCTURAL ANALYSIS of price action will possibly indicate its underlying directional intention.

Hope this makes sense. Here is where we are as of this writing:


snapshot



David Alcindor
====================================================


Thank you,

David
+1 Reply
kmk.msp 4xForecaster
Sir David,
You have explain the things very nicely which has answered my question very well and it was worth reading. Huge info and technicalities you have explained. Really nice and extremely helpfull. Thanks a lot Sir. Hope to gain knowledge from you in future also.
Regards.
kmk.msp
+1 Reply
iefan PRO 4xForecaster
Hi David

A quick question. Price is moving down again to retest the 1.09098 level. What would be a sensible entry at this point, going long at 1.09098 or waiting for price to break and stay above 1.10075 before going long? Thank you very much

Kind regards

iefan
+1 Reply
Hello @iefan - First: I am not licensed to offer entry/exit recommendations. My opinions are my own. What I do offer is an alternate view of the market, asking the experienced trader to strain and bend their mind a little.

Here, as in many other analysis where I would simply look at structure and not use the predictive/forecasting model, I would remove time out of the equation. This allows to simply concentrate on geometric price action.

For instance, in this particular chart, you will see that price remains in the instance of drawing a geometric reiteration of the same angle, same height move.

Hence, the market is defining for you what would be a safe entry, a safe stop-loss, and even a safe target - See chart below illustrating the angled move:


snapshot



For most novice trader, time matters most, when it should not. Instead, once you become reliant on a trading plan and get the reward of sticking to that plan, you will see that repetitions will occur in the market a lot more often than you think - This means that the same price action will cause you to trigger the same plan, and the trade will produce a consistently same outcome.

Here, let's look at what that plan could be. First, let's define the parameters that are already in place:

1 - Structure-top = 1.12808

2 - Structure-bottom = 1.09098

and

3 - A bullish trigger at 1.10075 defined by yesterday's DAILY bar, right after the 3 geometric iterations completed.


So, in this simplest for, the geometry remains a range-bound price action with an upper and lower limit just defined by the top and bottom structure.

The conservative trader would possibly enter at the OPEN of NEXT bar AFTER a bar had CROSSED AND CLOSED on either side of these levels. Here, this would be a conservative approach on the basis of entry definition. On the basis of risk management (exposure based on risk of ruin), it will have to be reviewed by each trader based on their own risk tolerance, of course.

A semi-aggressive entry would look for a partial positioning at the opposite end of the expected entry. So, if you believed that price would break out to the upside, then a 1/3 way down, or 1/2 down would be a relatively semi-conservative. But here too, no one can or should truly be allowed to define what is conservative or not for you. Only you can defined these levels of tolerance.

An aggressive entry would be to enter at the same condition as defined in the conservative, but here in relation to yesterday's DAILY bar, with the intention to enter long.

In any case, these are some of many possibilities, using structure levels and not minding time, which may or may not represent an element in some other trader's risk profile. After all, one has to get paid on time, and the hands of the market have to deliver the pips based on this element.

David
+1 Reply
iefan PRO 4xForecaster
Thank you very much David. This type of information is so very useful. Thank you for your detailed and comprehensive response. With much gratitude. iefan
Reply
4xForecaster PRO 4xForecaster
... cont'd ...

Looking at the chart from a DAILY to a H4 level, you will see that the geometric iterations are also repeated at the indicator level. To me, this automation suggests a "mechanical" or deliberate control of price, rather than an organic, random event. Therefore, someone else in control of this price has also set a parameter that not only defines the whole event into a cordoned off geometry (upper and lower limits), but also defined trigger levels for entry by the very same nature of the geometric construct. It works much like a door. It's a piece of wall that was carved out to rotate, but even closed, it still points to the only place on the wall where things can come in or out - Okay, weird analogy, but the point is that the "line in the sand" has been physically defined for you.


snapshot



Whether this chart goes up or down based on the geometry is neither a matter of time or direction. It simply a matter of whether the door opens to the upside or the downside.


David Alcindor
Reply
18 NOV 2014 - INSTIT./FUND./TECH-NOTE & Update:


FUNDAMENTAL NEWS:

- Dairy Global Price data: - 3.1%

> Forex implication: Bearish Pressure onto $NZD


MAJOR INSTITUTIONAL FX POSITIONS:

- L/T: none
-- Long = n/a
-- Short = n/a

- M/T: 2 Banks
-- Long = none
-- Short = 2

- S/T: 2 Banks
-- Long = 1
-- Short = 1



TECH-NOTE:

From Twitter:
-----------
$NZDUSD winds along WW's 1-4 Line; Nears significant resistance at 0.79926:

snapshot


via @tradingview | $NZD $USD #forex
-----------


$NZDUSD - H4 Chart:
snapshot



David Alcindor
+1 Reply
4xForecaster PRO 4xForecaster
Global Dairy Trade Pricing Info - Source:


https://www.globaldairytrade.info/en/product-results/


David Alcindor
+2 Reply
Just simply....thank you for so much work!
Reply
kmk.msp Fib.The.Gentleman
Sir David,
You have explain the things very nicely which has answered my question very well and it was worth reading. Huge info and technicalities you have explained. Really nice and extremely helpfull. Thanks a lot Sir. Hope to gain knowledge from you in future also.
Regards.
kmk.msp
Reply
20 NOV 2014 - FUNDAMENTAL UPDATE:



* * * Major Bank FX Positions in $AUDUSD * * *

L/T: none

M/T:
- Short: 2
- Long: 0

S/T:
- Short:1
- Long: 0


* * * * * * Major Bank FX Positions in $NZDUSD * * *

L/T: none

M/T:
- Short: 2
- Long: 0

S/T:
- Short: 2
- Long: 0


David Alcindor
+1 Reply
4xForecaster PRO 4xForecaster
ADDENDUM:

* * * Major Bank FX Positions in $AUDNZD * * *

L/T:
- Short: 0
- Long: 0

M/T:
- Short: 0
- Long: 0

S/T:
- Short: 0
- Long: 1


David Alcindor
+1 Reply
22 NOV 2014 - Update: A 360 ANALYSIS SYNOPSIS: Banking FX Positions, Technicals and Algo Biases:


Traders,

As indicated in recent analyses, $AUDNZD is favored to rally.

This directional bias rests on several influences, each carrying their own weight of evidence, be it institutional (major banks assuming FX positions as primary move behind the expected rally), technical (structural, geometric and Fibonacci analyses) or algorithmic (predictive/forecasting analysis based on set of favorable mathematical conditions).

For a quick review, following is a synopsis of these influences:

-----------------------------------------
1 - INSTITUTIONAL ANALYSIS:


-- a: Major Banks FX Positions in $AUDUSD: 3 SHORT positions
L/T = 0
M/T = 2 shorts
S/T = 1 short
> Banks expect a BEARISH trend to carry on several hundred pips


-- b: Major Banks FX Positions in $NZDUSD:
L/T = 0
M/T = 2 shorts
S/T = 1 short
> Banks expect a BEARISH trend to carry on several hundred pips


-- c: Major Banks FX Positions in $AUDNZD:
L/T = 0
M/T = 0
S/T = 1 Long
> One major bank expects a rallying in the relative strength between $AUD and $NZD. The rational is purely based on sovereign fundamentals, where respective CB is expected to raise rates in Q1-2015 for $AUD, but remain unchanged until late Q2-2015 for $NZD.


-----------------------------------------
2 - TECHNICALS ANALYSIS :


First, let's take a look at the TWO charts posted recently:

$AUDNZD - H4:
snapshot


In this 4-hour chart, I wanted to highlight the iteration of the three paralleled bearish swings. You will note that this move has occurred in a controlled geometry defined by the zero and 100 values of the Fibonacci matrix on either end of the span. This is important to keep in sight, because the first bullish swing that defined these parameters are to be used to define a potential breakout out of these parameters. So, in effect, over this entire price action span, nothing has really occurred, except the time consumptive event of a to-and-fro range-bound internal repetition.

This internal repetition itself has its own internal structure which reveal little clues as to the potential side of the eventual break-out. The arrows were added to emphasize the automaticity of the overall construct, but the directional influence at work remains in the hands of the larger institutional-level timeframe, represented in the DAILY chart.

$AUDNZD-Daily:
snapshot


In this DAILY chart, I have highlighted the step-by-step methodology that should help the trader define relevant structures. In a recent analysis, I tried to define this same method with stars, colors and what not, but I realized that after re-reading that portion of the response to that trader, it may have come across as a bit too complicated. So, I thought a bit more about it (it is quite difficult to explain complicated concepts that comes easy in the mind, but need a written explanation -So, let me try once more here:

Simple Structural Analysis Methodology:
1 - First, assuming that the price is rising (which is is evidently), define the higher-highs FIRST (I have used "HH" in the chart). Then, simply connect them to visually assure that the slop is indeed rising
2 - Next, do the same with the higher lows ("HL in the chart). The trick here is to define the higher-lows relative to the most recent HH. So, from each HH, follow price as it retraces to a new low. If that low is higher relative to a prior HL, then mark this point.

PSYCHOLOGICAL NOTE: At this point, you could join each HH and HL, or even every other HH and HL and see that a vectorial geometry emerges, one that offers a NET move UP, and ignores all of the "noises" that have developed in the interim. This is an important PEARL, because what the junior trader might be less in tune with is how easily triggerable his/her brain functions relative to a moving target (here, we are referring to price). Point is that our most innate reaction to price is to react as a cat would relative to a moving mouse - The analogy might be cute or naive, but this is exactly what is happening: If you draw a line that joins every over other HH to HL, you would clearly see that price is doing nothing else by climbing up and up. But by the mere action of following a faster ascillation (i.e.: true price action), there is a whole lot more chance to get confuse, and even raise doubt when for instance a HL falls below an insignificant recent low - See the following illustration for instance, where HL fall below a relative low, but still remain above the prior HL ... Would you have been kept assured that price was still moving up and up, or would you have started to doubt yourself?

$AUDNZD - Daily Chart:
snapshot

Note; In the chart above, price is moving down to certain depth, in a way that could cast doubt and perhaps efface any bullish conviction in the junior trader. However, the important detail here is to remain aware that the relative low that is reach (highlighted by the YELLOW arrow), is not influential. Instead, it is the relative position of the developing (emphasize this "developing") HL relative to a prior HL that matters ... And absolutely NOTHING else.

3 - The rule in structural analysis that should be applied to forecast a probable trend reversal is simple:

"A breach of the most recent HL will signal a risk of reversal of the current bullish trend"



-----------------------------------------
3 - ALGORITHM ANALYSIS:

From an algorithmic standpoint, the predictive/forecasting model remains BULLISH, and the price pathway which it had defined (originally in the POINK arrows) remain in force, and the BULLISH targets remain intact.

snapshot


Cheers,


David Alcindor
Predictive Analysis & Forecasting
Denver, Colorado - USA

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Twitter: @4xForecaster
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