4xForecaster

More Wolfe Lessons; Potential Short Trade Analysis | $AUD $NZD

FX:AUDNZD   Australian Dollar/New Zealand Dollar
314 4 2
Friends,

Yesterday, we posted a preliminary bearish statement, calling the trader's attention to a possible downtrend. I made it clear that the bearish statement was lacking an early bearish market reversal, and to this day, that signal has not been emitted. Yet - Here is the prior analysis and the option for you to replay the price action:
Early Reversal; Prelimin. Bearish Target | $AUD $NZD #RBA #Forex
.


ANALYSIS HOLDS AT RANGE:

In that analysis, we defined a few structural points, namely the 1.07488-1.07353 resistance range, as well as a cautiously early target as "TG-1 = 1.05260 - 06 MAR 14", drawn against the plotted points of a Bullish Bat. The "Bat vs. my predictive analysis" point here was to emphasize how price is not always the best indicator to define a trend, since the proprietary system applied herein is price-independent.


PREDICTIVE ANALYSIS CAN TRUMP PRICE:

In fact, we just proved yesterday and today a similar point, when our targets for the EURUSD             were defined above the multi-year resistance trendline, and yet both target got hit consecutively, one candle at a time. See where the THIRD target rests here:
Update: Bullish Forecast Reinforced | $EUR $USD $UDX #Forex
.

While we await an early bearish reversal signal followed by a bearish market reversal confirmation, I thought it might be worth a Friday's while to look at a next level of complexity regarding eh Wolfe Waves Patterns.


WOLFE WAVES PATTERN:

As you may recall from prior explanation, the Wolfe Waves pattern ("WW") represents a rather advanced, complex market geometry, in which trend, counter-trend and trendline all work together to exact an area of reversal and a target. Now, add to that mix "trendline transposition", and you'd become atuned to the next level of WW complexity.

Here, I am referring to the use of the 2-4 Line, which if cut and paste, and placed at the tip end of Point-3, projects parallel to its original 2-4 Line, but away from the 1-3-5 Line.


DEFINING 3-5' & 3-5'' LINES:

In fact, the transposed 2-4 Line now becomes the 3-5-prime (written as 3-5' Line), and "physically acts as a discreet but efficient overhead resistance IN CASE price was to BACA (i.e.: Break Above, Close Above") point-5.

The example in the chart is LIVE and supportive of this technical reality, as 5' has dutifully acted as the point of reversal, as it should - There is also a 5-second, or 5" point, which is none other than that same 1-4 Line transposed and originating not from Point-3, but from Point-1, effectively becoming the 1-5'' Line.


3-5' ADVANTAGES:

While it seems that these various lines allow the trader to chase after price, remember that these lines are very reliable as a FIRST advantage. In fact, I find 5' more reliable than Point-5, as price often tends t favor that loftier level of reversal.

As a SECOND advantage, Point-5, 5' and 5'' allow the trader to set stop-losses quite tightly, thus affording larger rewards to risk ratios.


OVERALL:
(additional text below chart)
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Disclaimer: Forecasts, analyses and directional opinions generated herein are for educational purposes only and are not trading recommendations. We trust that you will do your own due diligence first, then seek professional advice from a licensed professional, then enter the market at your own perils - David Alcindor - TradingView.com Alias: 4xForecaster
David Alcindor, CMT Affiliate #227974
Alias: 4xForecaster (Twitter, LinkedIn, StockTwits)

Signal Service or Private Course - Contact: admin@KADAInstitute.com
All updates on https://twitter.com/4xForecaster
OVERALL (cont'd):

Remember here that we are using a price field in which a direction has been extrapolated based on a potential pattern development, against a system (my predictive analysis and forecasting, upon which I rely 100% for all my trading plans), which has remained mute, in terms of pronouncing a direction.

In contrast, the initial pattern defined yesterday (06 MAR 2014) as TG-1 = 1.05260 - 06 MAR 14 remains based on a proprietary pattern ("Great White"), which is only secondary to my system. In other words, the system provides the trading plan, and the mindset remains the same here: "Plan The Trade, Then Trade The Plan". So, once a signal confirms a bearish direction in support of our expectation, then I will make sure to let you know.

One last word on psychology of trading: There are, was and always will be TWO persons within you. Each making daily decisions on thousands of events throughout the day. however, it is often the conscious decisions where the battle occurs (remember multiple question quizzes, or recent trading decisions where the answer revealed itself in the way you had first thought, and then corrected towards the wrong way?). The point here is that experience, repeated over and over again will give you the edge. Not the edge over other traders, but the edge against the OTHER trader within you.

Trading is about making incremental gains. It's not being right or wrong. But simply to remain with the market. I hope you get there.


Cheers,


David Alcindor
TradingView.com Moderator, Alias: 4xForecaster
Predictive Analysis & Market Forecasting


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Reply
08 MAR 2014 - Tech-Note:
- Commitment of Traders & Resulting Net Speculative Positions

Traders,

According to the following CFTC's COT data for the week of March 03rd, the directional biases have moved as follows:

$EUR = +
$JPY = +
$GBP = +
$CHF = +
$CAD = -
$AUD = -
$NZD = +

Implied $USD = -

Hence, based on the CFTC's data, the net speculative positions held by non-commercial players is net BEARISH, based on a bearish preponderance in AUD positions and bullish preponderance in NZD position, with a net NEGATIVE value in the expression of this pair's relative strength.

David Alcindor
Reply
FUNDAMENTAL DATA SUGGEST RATE CHANGES BEARISH TO AUD AND BULLISH TO NZD
... Read On:


RBA PERCEIVES ITS EXCHANGE RATE AS "HIGH BY HISTORICAL STANDARDS":

1 - 03 Mar 2014: RBA calls its exchange rate historically "high": "The decline in the exchange rate seen to date will assist in achieving balanced growth in the economy, though the exchange rate remains high by historical standards,"
- Source: http://www.efxnews.com/story/23141/rba-keeps-rate-unchanged-reverts-exchange-rate-jawboning

2 - 06 MAR 22014: The RBA says regarding best exchange rate level: "I don't think the extent of our knowledge about what's correct is that good, but I did think ($0.95) was rather too high. I thought $0.85 would be closer to the mark than $0.95" (as of this week-end, rate sits at $0.90668)


RBNZ Rate Position: "Imminent Increase"

1 - 11 DEC 2013: Reserve Bank of New Zealand Governor Graeme Wheeler kept the official cash rated at 2.5% on Thursday, but said it is not necessary to keep it there much longer. "It is becoming unnecessary to maintain the current degree of monetary stimulus", regarding consideration of a rate increase.
- Source: http://www.efxnews.com/story/22044/rbnz-keeps-ocr-25-can-hike-needed-meet-price-aim

2 - 29 JAN 2014: "While headline inflation has been moderate, inflationary pressures are expected to increase over the next two years," Wheeler said. "In this environment, there is a need to return interest rates to more-normal levels. The Bank expects to start this adjustment soon."
- Source: http://www.efxnews.com/story/22657/rbnz-keeps-ocr-25-signals-hike-imminent-inflation



INFLATION RATE - NEAR HIGHS IN AUSTRALIA; NEW ZEALAND HAS ROOM TO GROW:

Another fundamental piece left out of my supportive commentary relates to the inflation rate affecting both sovereign economies. Indeed, while both central banks have a mandate to keep their respective inflation rate within the same 1-3% range, RBA is under greater pressure to decrease it compared to RBNZ's.

1 - Australia's inflation rate is currently at 2.7 (0.3 percentage points from max)

versus

2 - New Zealand's inflation rate, at 1.6, (a wide 1.4 percentage point from the max)



OVERALL:

I hope that above comments and supportive references offer you a fair explication of the rationale upon which I based the BULLISH outlook of the NZDUSD (here: https://www.tradingview.com/e/cvaM8gr8/#), and that it helps you see why BEARISH the predictive analysis and forecasting done on the AUDNZD (here: https://www.tradingview.com/e/5OKs9iez/#) may also use that fundamental information as added reasoning for that wide timeframe perspective and directional bias.

Again, I appreciate the most challenging criticism and educational comments, for as long as they sensibly undermine and refute my own analysis, as I would have greater pleasure to be proven wrong and taught something useful than given applause on formed opinions that remain unchallenged, for there is nothing worse than a dead mind dulled in stagnant still waters.

Cheers,

David Alcindor, MOD
Reply
12 MAR 2014 - Trade Update:

Added short position @ 1.06397 on structure-limited price rebound.

TP @ 1.04826

Reversal/Long limit orders @ 1.04480/1.04343 range

Long target = 1.21148 (position-type trade)

Cheers,


David Alcindor
Reply
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