TRADE: Short @ 0.91223 - Great White Pattern; Modified Wolfe

FX:AUDUSD   Australian Dollar/U.S. Dollar
516 21 6
For the record, short triggered @ 0.91223

Background pattern:
- Great White

Reversal Pattern:
- Modified Wolfe/3-Drives

Internal Pattern:
- Bearish Shark

1 - TG-1 = 0.86946 - 07 MAR 14
2 - TG-Lo = 0.85845 - 07 MAR 14


Watch for 5-0 completion and adverse excursion > entry point.

Directional Bias:

System Direction:
Neutral (pending market reversal confirmation)

David - 05 MAR 2014 (after market close)
Beware of the iSHS on daily and positive divergence on weekly.
@KevinT - Yes. Also, incomplete 5-0 pattern begging for price to rise to 0.92201.
KevinT 4xForecaster
The short pull back may be of very short life. Judging by the horizontal move Friday. The 2 4h candle hit the same support. Monday may be either a continuation of the bull, or a large red candle break to the downside.
Overall bearish bias on very short term indeed due to 4H OS. And Fridays last up move seems to be a classical exhaust/bull trap. Just my opinion.

Too bad my knowledge about waves counting is too shallow. For that, I refer to Paweld. He seems to be one of the better wave-ist here.
KevinT KevinT
Forgot to mention. The bounce Friday was on the 200 MA. More evidence for a short term down move.
@Kevin& - The wave counting is something I have no skill whatsoever despite years of trading. However, I would recommend becoming familiar with the 3-Drives pattern, if you do not mind me offering you this link:

- http://www.fx360.com/documents/GFT-Three-Drive-Bearish.pdf

The next level of complexity in the 3-Drives has been the Wolfe Waves, and now I am looking at modified Wolfe (which by definition are more like 3-Drives, but maintain a potential 1-4 Target Line affinity to the Wolfe).

4xForecaster PRO 4xForecaster
Tech-Note/LESSON: SHARK Pattern; 5-0 Pattern


A quick explanation of the patterns defined above.

By "Internal Pattern - Bearish Shark", I am referring to the Points 3-4-5, which contain the Shark pattern. As you may already know, the Shark is an odd fellow, which I often refer to as a pseudo-pattern, because its origination point is named "Zero", as opposed to all other standard points that originate at Point-X, evolve through the A-B-C triangle, and finally complete by a counter-impulse at Point-D.

In the case of a Shark, there are several differentiating features, and its point of completion can also vary.

First, the origination point at Point-0 ("point zero") skews the entire lettering DOWN by one position, such that the subsequent defining points are:

X-A-B (triangle), all terminating at Point-C.


Now, remember that Point C is typically measured relative to 0-X, and that its position can vary widely, between 0.886 x 0X (where Point-C finds a position between zero and X, which represents a typical point of reversal as in this chart)


1.131 x 0X, where Point-C ends up outside of the 0X range. In a Bearish Shark as in this case, Point-C ends up higher position relative to Point-0, whereas in a Bullish Shark, Point-C would end up in a lower position relative to Point-0.


When defining a probable point of reversal zone, there are two things to keep in mind:

1 - You are dealing with a probability


2 - You are dealing with a zone.

Hence, the Probable Reversal Zone, or PRZ requires both tolerance and flexibility on the part of the trader, because not all patterns will complete as expected (tolerance of an unsuccessful event completion required here), and not all patterns will complete wherever expected (flexibility of a price reversal not always occurring right at an expected value is required here).

However, of all the patterns I trade, I like to hunt for Sharks, not because they are so predictable, but because they come with a reliable successful rate.


Now, beware of the expression "success rate" when referring to patterns. In my own studies, and review of other studies, that expression does NOT mean what it is supposed to. And if I may, let me impose on you a healthy definition of a success rate, by first interpreting for you what misleading sites define by success rate.

A lot of site will tell you that such and such pattern has a higher success rate than some other patterns, and when you look at the data, the success rate is based on the completion of the pattern.

Let me throw a stick in that wheel here:

A successful completion of a pattern should not have anything to do with a success rate of a pattern. Why? Because, despite how well a pattern completes, what the pattern trader waits for is entry at Point-D (in classic patterns, or at Point-C in the Shark), in order the make gain out of the market.

However, not all patterns that complete will provide the minimal 0.382-Fib retracement which is necessary as a condition of successful completion. For instance, I can tell you that THE most common pattern ever printing across markets is the Gartley pattern. Yet, studies are quite in agreement that a lower percentage of the Gartleys provide the minimal 0.382-Fib retracement from Point-D.

Now, in contrast, we also know that Bats are one of THE most successful patterns, and are only rivaled by Butterfly Patterns - and this fact has excluded the study of Shark Pattern, which may have only been introduced only after its discovery by Mr. Scott Carney (www.harmonictrading.com).


Now, understand from my perspective (having been trading since 1997), that a lone wolf mentality with singular reliance on fundamental, pattern or systems only may not be as good an approach to trading as, say a combination of at least two of these methodologies. And I say this with a bit of hypocrisy, since I must say that I have been proven wrong so many times by fundamentals, and almost as much by patterns, that I have now remained about 90-plus percent reliant on my predictive analysis and forecasting methodology.

Yet, I like to take a peak at the patterns and lend an ear to fundamental events that may impact the trade. For instance, a FED decision on rate carries multi-month trending potentials, a fact that is undeniable and must be taken into account even by the day-trader, swingtrader or position trader, all of whom will have to sail under the SAME prevailing winds.


I recommend novice and junior pattern traders to look at the total available literature online - Yes, you will need to dig that up so that my referencing of a site does not come as a selection bias against your scientific approach here, if you must have one. Googleh, yahoo and Bing represent as good a start as search engines, as they will rate authoritative and relevant sites on the matter under search.

Then, look into the data that some computer nerds have generated (typically deep about 5-10 search engine result pages, or "SERPs", for each key word results).

Then, see whether you can either visualize, or better chart, the data result comparing one pattern against another, and now that the Cypher is out (discovered by a great trader in a mastermind group of traders I belonged to), and enough data exists on the Shark as well, it would be worth your while discovering on your own what pattern has the best success rate.

Hope this all helps and stirs much curiosity and frustration, which are the lubricating oils and mechanical arms that will elevate you from a good trader today to a better one tomorrow, as it should.


David Alcindor
KevinT 4xForecaster
Projecting the bearish 3 drive on your AUDUSD chart, 4 should be higher then 2. Making an upward channel. In this case. This rule is violated.
@KevinT - Yes, true. As indicated before: The "modified" qualifier was implying that the 3-Drives pattern has the potential to act as a modified Wolfe, by virtue of the 1-4 Line. Any other geometric feature would indeed negate the WW pattern.
4xForecaster PRO 4xForecaster
@KevinT - To be sure here, I am not implying that the 3-Drives or the Wolfe Waves requirements are met here, but that the price action has the potential to validate either one. The dominant pattern here remains a megaphone, but the megaphone tends to borrow from a 3-wave count as in 3-Waves pattern - albeit 4 at a lower point than 2 - and its completion causing price to reverse from Point-5 towards Line 1-4 projection, as in the Wolve Waves.

The lines I drew overlap these three patterns mentioned above, seeking a potential price reversal to the 1-4 (potential, not established) Target Line.

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



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 above, the net speculative positions in AUDUSD held by non-commercial players is BEARISH, despite a net BEARISH implied USD. This suggests that AUD is under greater bearish pressure than the implied bearish data weighing on USD.


David Alcindor, MOD
alex.a 4xForecaster
Fundamental support you, sir ~


Bad Chinese Data ~ during the weekend, you got the helping wind, David ~
@alex.a - That data was already discounted in the analysis based on some prior fundamental data regarding deterioration of real estate, financial and commodities market in China. What came through this week-end is just a ripple of what China already knows of itself ... "Bad getting badder", and more coming up.

Considering how tied AUD and NZD are to the Chinese market by way of exports, and a recent internal revenue in NZD, then it goes without saying that AUD is expected to fall faster than NZD.


AUDUSD = Bearish (confirmed by CFTC's COT past week data


AUDNZD = BEARISH (also confirmed by same market data, where AUD is being sold and NZD is being bought).

But yes, this link you have kindly provided is definitely confirming that the nails were indeed well pushed into the coffin already.

alex.a 4xForecaster
I think Chinese is recovering faster than anyone expected. Or nothing but the aftermath of Rally season, it has to be cautioned but 2014 is somehow recovering years one region after another. So, relatively speaking the two sides of pairs goes up and down, which means to me, in the range. US, EU, CN. In the range 2014. big peak or big bottom less likely ~ So, monthly analysis is perhaps not as useful as it used to be??? I don't know. but range for higher probability.
... Read On:


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


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)


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


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.


David Alcindor, MOD
alex.a 4xForecaster
Amazing, like having two eyes, one for fundamental and the other for technical. It cannot be more perfect, sir!
Thanks for all the instructive comment.
11 MAR 2014 - End Of Day Analysis/Review:


As of the introduction of this short position, the analysis and forecast offered in the original chart (here: https://www.tradingview.com/v/WvTURpzo/) offered a series of support within a broad bearish background.

The first support, estimated at 0.90099 did see a price reaction, albeit very shallow, suggestive of the bearish pull that continued to weigh on it.

In the updated chart inserted here, we are now drawing a cautionary range ("E.A.G.L.E.", for Extremely Aggressive Level of Entry) where a relief rally holds a high probability of occurrence.

If and once the EAGLE range and the structure low (i.e.: lower-low) yield, then can we expect to visit the 2-4 Line, where another reactive rally would also be expected.


For the time being, I recommend that the trader exerts extreme caution and good money management. The dominant directional bias remains BEARISH on the conditions of structures, support/resistance defined above.


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

PS: If you liked the analysis, feel free to give it a "Thumb Up" and share with friends and colleagues interested in the market. All targets generated are defined by non-price means, and confirmed by either proprietary patterns (Euclid, Janus, Great White, Deep Shark), or other well known patterns. However, we concentrate mainly on Shark, 5-0 and occasional Bats, to complement our predictive analysis and forecasting - Cheers, David Alcindor.

Get signals, analyses and forecasts on Twitter
Alias: @4xForecaster

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

alex.a 4xForecaster
So, you play golf, sir ~ LoL Copper helped greatly but unemployment data will be a killer decider.
No, no golf playing at all.
alex.a 4xForecaster
EAGLE? ^_^ If unemployment comes out bad tomorrow night, then it will reach the bottom trendline to be No. 6
27 MAR 2014:

New $AUDUSD predictive analysis and forecasting coming up.

This one AUDUSD was broadcast earlier today using the Twitter channel.

Get my TradingView forecast free by following me on Twitter using my alias:


David Alcindor, MOD
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