So, it takes a declaration of war to turn the populace's back to and cause it to rally quite forcefully. At this point, our prop strat system has posted an early reversal signal, pending confirmation of market reversal to the topside.
Nonetheless, we decided to take a step back and make use of our momental lines. To be clear, while the momental lines may have the appearance of parallels to channel lines, they are drawn using dynamic points defined throughout the chart from price action, and extended on either side of the core defining line to present these channels.
The difference between channel and momental lines is that channels tend to have a limited life, representing a shorter price footprint with upper/lower borders, which once broken, will invalidate the life of the channel left behind.
In contrast, momental lines represent a persistent footprint of the price action and each line can be reliably cut/pasted and maintain a relevance to price's position. We use these lines to further confirm our predictive analysis and forecasting, which are defined independent and outside of the price field - weird? yes, but this geometry/mathematics redundancy works to solidify layers of proofs in defining our targets. Yet, remember that nothing is full-proof.
In the current analysis, we have received an early reversal signal which we were able to contrast against price action based on analyses and follow-up technical comments we have offered in the course of the price decline. By redrawing the whole chart, we decided to "clear the mind" and see whether anything would change. Turns out that nothing much has in terms of overhead resistance.
Now that significant overhead resistance have fallen and in light of our reversal signal, we would like to bring your attention to the 776.98/734.28 range, as well as a momental line whose channel projection suggests a partial break out - As of this writing, price has in fact been pushed back, demanding a significant stronger force to overcome it. So, as price consolidate, this strengthening might be preparing, and in which case, one should expect a "BACA" (i.e.: "Break Above, Close Above") that level to consider a market commitment to the topside, as far as price action goes.
From our system, we hope to receive a market reversal confirmation sooner than what price action can provide. A premature low probability target has been defined based on a layered Great White Pattern. Again, signal confirmation is key here.
Market has turned around; directional bias veered from to neutral until confirmation.
TradingView.com Moderator, Alias: 4xForecaster
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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
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Next, repeat this with another point within that same impulse and mark that point as well.
Finally, connect the two points with a single line, which you will use as your module to translate (i.e.: cut/paste) its parallels above and below it.
Now, repeat that same method with a counter-impulse leg, meaning that if that first leg was bullish, then define another momental line using a bearish impulse, and finally extrapolate its parallels above and below it.
What you end up with is a visual matrix of criss-crossing momental lines, as well as a remarkable ability to pace price, anticipate a trend and confirm a reversal.
This is done simply by looking at the validation of the line. If price courses along the bullish line, the trend is up, until it hits its head against a down-coursing line and validates that one, in which case, the trend may be reversing. Once price abandons the bullish course and further validates the bearish lines, then you have a confirmation of a new trend.
By extrapolating the M15 chart to a H1, H4, Daily, these lines remain dominant, unlike short-lived channels.
I hope this makes sense. I understand that by revealing my methodology, you might not necessarily be able to discern these lines. The rule is to avoid the "peak-to-peak" trap, since more often than not, one peak belongs to a bearish momental line, and the other might belong to that some breed of momental line, or simply to its counter-directional breed.
Instead, look into the bulk of price action, and not at the fringes, which is typically used for channel. One way to discern these cryptic geometries is to look for candle bodies/candle wicks interface, and see how a line is able to course through all of these as if separating all bodies on one side of the world, and all wicks on the other.
In the example above, the line revealed itself quite easily, since it appeared as the median of its momental channel. In contrast, had I used the peak-to-peak fringe line, I would have arrived at something quite different and less revealing in terms of what I need to extract from rice action (i.e.: direction, trend, reversals, support and resistance, which is revealed by the momental line interactions, but not so easily if at all with lines defining standard channels).
Here are a few examples of the use of momental lines:
1 - BTCUSD - Here, the top line is a standard trendline, which if used from the fringe to the price action would NOT line up with the lines defined within the price action. This is because the price action lines are dynamic lines that move with price as its footprint, whereas the outer line is a peak-to-peak line that could have been used to bracket the entire price action and define a standard channel, but would have missed other subtleties I need to define my trading plan:
2 - EURUSD - Here, take a look at the bottom right frame (Weekly), and see what is happening within the wedge. You will easily see that a median is coursing the entire length of that wedge. Although I have not used it for such a large timeframe, it is in fact a momental line, which can be used in smaller timeframe. Here, I suggest that you use the "Make It Mine" option and cut/paste that line and see how well other price levels submit to it:
3 - EURUSD -
4 - NGAS - Sometimes, both standard channels and momental lines are indiscernible, being one and the same, as in this case, where I estimated the peak of that Natural Gas chart.
5 - EURCAD - In this one, I was explaining another concept involving the crossing of momental channel tops and bottoms, which offer precise interception point that often correspond to major price reversal. Although they end up looking line standard price channels, you will see in the instance of the bullish (green lines) momental channel that the extreme peaks and bottoms are not linked, but that instead, the core element of the price action was used to define a momental line and its extrapolation into its momental channel:
Hope this triggers your own curiosity into cryptic market geometries.
However, structurally, I see where you might be coming from, as the 600-609 range offers a physical support from a former resistance conversion.
The current strength favors further upside action, and the high probability targets for now remain at 751, 793 and 830. However, the market is now marching an uphill battle both quantitatively against:
1) Former buyers that have been spooked by the dark abysms of the recent decline and are typically selling at their former entry positions as price rises back to these levels
2) A thick creamy layer of skeptics waiting to sell short into the rising tides, perceiving out of their own interpretation that each advance in price represents an opportunity to get short.
Both of these will weigh heavily on the bull pulling itself out of the recent depths. In fact, a temporary bear level (hint: around 755.42) could have a significant impact on price such that it would press it back down.
In such a dueling scenario, the trader would then be left to rely upon his own technical or intuitive devices to determine whether such potential rally represents a misleading gleamer of bullish hope, or a true but tedious horde of zombie-bulls hoisting themselves out of the thick blood-coagulated mud.
In any case, you will do well to remember that our time horizon might be much larger than the one you are using in your trades, and that a wide sweeping price action can excurse adversely deep against some or all of your positions within your own timeframe of reference without even negating our own timeframe, which would be true if say we referenced the analysis off of the H4 and you traded off of a M15, yet using our forecasts as references.
One more thing - While we have provided quite a lot of these analyses for BTCUSD, GBTGBP, LTCUSD and LTCBTC across several exchanges (Bitcoin, BTC-e and MtGox, we have not and do not intend to trade this electronic currency. So, the advantage that we have over other traders, is that of discounting any emotional interference - even though our system really takes all the guess, fears and hesitations out of it. But it also allows us to remain free and frank about what we release in terms of analyses and forecasting, which should assure the traders that we are not a pump and dump station - We simply analyze, forecast and chart for the love of it and passion for the market.
Hope this covered your question and more.