In continuation to the analysis started on February 15th (see it here: https://www.tradingview.com/v/dCviDOt3/), we are now receiving a market reversal confirmation signal in the direction of the targets, which we had defined last week, namely:
1 - TG-1 = 1.38632 - 15 FEB 2014
2 - TG-High - 1.38997 - 15 FEB 2014
While a directional market reversal confirmation signal is what we rely upon to determine a position (i.e.: "Plan the trade, then trade the plan"), we still like to evaluate the technical landscape to draw contingency scenarios, in case the plan petered out. In our experience, one of the most common reason traders lose money is to first plan a trade based on specific conditions, but once the conditions change, the trader creates new reasons or develops a looser tolerance to remain in a trade with no conditions related to the first plan. In other words, if the initial conditions that defined your plan of trade vanish, so then should your trading position: Get out when you can!
Here, we have a new outlook acquired based on a set of conditions that are proprietary to us, and that we like to reframe in a technical context that make sense to other traders. Following are technical reasoning that bring us to take a position:
1 - Price has validated and remained along its momental line - in fact, it did not even reversed to a tolerable support which we had defined back in February 15th as a 1.36282-to-1.36196 range.
2 - Price broke though its overhead resistance momental line, suggesting that price has moved in a way that is mindful of the support which it validated, by mindless of the resistance, which it negated.
3 - A structure near 1.37350 was breached, and the market closed at that level following a shallow decline. While market can potentially open at a lower level, this landmark offers a relative point of reference to test the intent of price to continue in its course. If price closes Monday's market above that level, then we would consider this ever more (we look at Sunday/Monday as old positions being sold and new positions being bought, the net aggregate expression provides a relative price position that is either or ).
A market reversal confirmation signal got emitted. Combined with above technical reasoning, we believe that price is likely to run towards our targets, as defined in the chart on February 15th. A break below the "pink zone" should concern bulls. I would look at discreet price action relative to the bullish/bearish momental lines as a way to preempt any reversal - This typically occurs when price invalidates one line and validates a line, in which case, a reversal could be underway (a bearish-to-bullish scenario did just that in the current price rallying event, if you looked closely at the channel interplay).
PS: Here are similar use of interactive channels, as follows:
1 - EURCAD:
2 - SPX:
3 - DJIA:
4 - COMP:
5 - NAS100:
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