#CME's $ESZ2014 eyes internal 1.414-Fib and 1-3-5 Line confluence:
via @tradingview | $USD $JPY #nikkei #forex
Worth following as it correlates positively well with $USDJPY
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Re-post of a comment that includes this Forex pair:
Hello @kmk.msp - Yes, I posted this a few days ago in here I believe. Point-5 usually needs to touch its 1-3 Line, but a 5-prime or 5-second do not have to occur. The pattern most often completes a 5-prime (I woulD estimated empirically about 60% of the time. Again: Empirically speaking), whereas the 5-second would occur up to/less than 10% of the time, empirically speaking).
Look for weakness in the $USD index ($USDollar) which is the US currency measured against a basket of major currencies. A decline in this $USDollar index will suggest a Forex-wide strengthening of currencies expressed against the $USD.
Instead of the $USDollar index, one could also look at other important pairs where reversal set up could be occurring. Here are a few of them I had posted recently:
$USDJPY - 4-Hour Chart: Here, the $Yen's weakness pushed the $USD to its target @ 188.83. A reversal is very plausible:
$USDJPY - Daily Chart: In this wider chart, a target was defined near 116.xx, falling short of a 5-second point validation:
$USDollar - Weekly Chart: Here, the Index rallied, but surpassed a 11218 target, underlining the strength of the $USDollar, which is most likely animated via the $Yen weakness:
It is widely believed that fundamental problems in Europe and EM will force major and secondary markets to devalue their currencies (something I wrote about several months ago in support of the $USD strengthening), which will reflexively prop the $USD up, since most of these markets are expressed in Dollar pairs.
However, I also believe on a pure technical basis that a relief will need to occur on the Dollar side, in the form of a significant correction (i.e.; a "relief rally" in the counter-currencies).
If this were to occur, it could support the WW completion towards the $AUDUSD's 1-4 Take-Profit Line, as well as prop the $BTCUSD as is widely expected at the moment, and lead to a significant devaluation of the $&P-500, as is expressed in its CME's $ES, since it too reached a significant landmark:
$ES - 4-Hour Chart: ES reached a significant 1.618-Fib extension level at 1074.00:
(I will cut/paste this reply in the threads where the Forex pairs are)
Now that the technical target was hit, I would look whether any significant retracement from the target level is about to occur.
Here, a retracement would need to satisfy a minimum retracement in the order of a 0.382-Fib. However, this would be quite unreasonable to expect by simply waiting around. Therefore, it might behove the trader to look for more proximal clues, such as recent structural levels, as well as completed geometry, in order to seriously consider the possibility of a counter-trend development to the downside.
Following are three distinct levels worth considering, depending on the risk tolerance among traders, namely:
1 - 2025.25 - Problem: Risk of bullish resumption threatens a bearish position
2 - 2014.50 - Favorable: Point-3 offers a safe trigger in most triangular patterns
3 - 1962.25 - Problem: Risk of an interim retracement to the upside would be time consuming
As always, the best approach in this and any other case can only be gauged by the trader on his/her own, understanding his/her set of rules, risk management trading style. However, as a matter of opinion and experience and as indicated above, Point-3 often offers the directional "line in the sand", as long as price breaks across AND closes across - This means to not simply wait for a cross-over, but also for a new bar to open and deliberately engage in the desired direction, here bearish.
$ES - H4 Chart;
To be clear, Point-5 has been kept faded so as to emphasize that there is no definite assurance that price is done rising. While price decidedly hit the 1-3-5 Line right at the 1.414-Fib level, there is yet no dedicated direction ever since this event occurred.
Pattern trader may expect by the mere 1-2-3-4-5 pattern completion that price would reverse from Point-5, but there is yet no indication that this is occurring. Also, Fibonacci traders may expect that price would possibly reverse at 1.414 (which it is known to do in some instances), but here too, there is yet no such counter-directional move.
Instead, price has remained subdued to the 1.414-Fib level and 2025.25 range. This range is what I have defined earlier as offering a possible indication of a trend continuation (were price surpassing 2054.25 defined by the 1.414-Fib extension, or a possible reversal based on the transgression of the 2025.25 level, although I would instead prefer to see a commitment to lower levels: 2014.50.
I am not sure whether any of this can be assigned any probability value. I would say that basic geometric patterns, such as the expanding triangle, has a consistent effect upon price, at three different levels: 1) Price can near but not touch Point-5; 2) Price could hit Point-5 right at its 1-3-5 Line residence; or 3) above Point-5, which is what Elliott Wave would define here as a "Over-throw", a signature of its triangles.
Overall, I would wait for price action relative to the defined levels. If a position is already vested, then only your risk tolerance can define how much adverse excursion your account can tolerate - Something I am not licensed to give advise.
I hope this helps a bit.