A quick review of another advanced pattern, which I rarely trade, but sinde itwas "caught in the net" of my predictive analysis and forecasting system, which signed (not signaled, yet) a potential directional reversal and bearish target at 82.035, I thought it was worth putting it into that same analytical plane and keep an eye on it.
The diamond, either top or bottom variant, implies exactly that there is a potential reversal at a structural level where the market is not able to carry the price any further.
Its characteristics, too, are quite obvious, given the name. What occurs in its formation is a widening, then narrowing of price action, with an steepled top which structural traders would use as a potential stop-loss, and a steepled bottom for entry.
Other traders might also use the boundaries of the diamond as early breakout indicators, but one is never too sure whether that breakout is in fact reliable, considering that the diamond remains capable to form outer boundaries. Hence, only the structural top at the apex, and bottom at the base remain the most reliable of a probable start of a trend renewal.
I hope this makes sense to you. If not, Google that thing at your leisure.
OVERALL: At the moment, the trend is UP; this trader's directional bias is neutral to bearish; the predictive analysis and forecasting system is neutral to bearish, pending a bearish market reversal sign, followed by a bearish market reversal confirmation - I like being prudent, so layered confirmations are a good thing, like hamburger with BLT plus bacon, fried eggs and peanut butter at Denver's Jimmy Cricket's.
PS: If you liked the analysis, feel free to give it a "Thumb Up" and pass of a friendly referral to friends interested in occult market mathematics and hidden geometries. 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: - Remember to remain dubious about every and any thing I say. All comments are subjective perceptions based on unshared, proprietary and common knowledge of fundamental analysis, classic technical analysis, basic and advanced pattern trading, as well as personal research in occult market geometries, predictive analysis and quant-based forecasting, some or none of which is being shared in my trading profiles, so do your due diligence and review the disclaimer below. - 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
Comments
4xForecaster
⋅
Diamond Turns Coal
I wanted to wait a little and see what the price action would look like, as it pierced through the EAGLE range - something that typically heralds a continuation, rather than a counter-trend (reversal entry opportunity), had the EAGLE imposed its expected resistance effect.
I just posted a AUDUSD chart which implies a strengthening of the USD, and thus a decline in AUD, although the pacific countries have remained quite resilient lately, based mainly on market expectation that China might be able to handle its current real estate and financial bubble. This is reasonable to expect, considering that at first, China had taken the initial decision to let bad companies go through the organic cycle of business life. However, the market is still anticipating some overaction from the retail/public side, such as bank runs and other withdrawal of necessary assets as more bond failures, declining real estate data and other panic triggering news comes through the wire. It will be an interesting year, for sure.
My directional bias is currently favoring a AUDNZD short, as well as a NZDUSD long, eyeing 0.88090 as a lofty target. More on this trade profile as I set up my entry after reviewing the system.
I will produce a new chart on NZDUSD to define my entry, stop-loss and target.
Cheers,
David Alcindor
BBFX
⋅
Fascinating Doc....as usual. I never came across a Diamond formation before, except in football of course!! I have been watching this pair for while......Looking for a target of 0.8015 eventually...!!
4xForecaster
⋅
Hi, @BBFX - The diamond is one frustrating pattern for the static-line pattern trader. What I mean here is that most pattern trade off of a horizontally-priced line (i.e.: a static line whose value is unchanged across its length). This is different from a dynamic-level pattern trader, where the line is slanted, hence over time, every price action will have a new price target requirement.
For instance, in the case of a Bat, the pattern trader simply has to define a PRZ (typically at 0.886 x XA measured against another Fib x AB and for good measure, yet another Fib x BC. In this case, then the trader awaits price to fall in the trap. This is tantamount to shooting an elephant with a hand grenade.
In the case of a dynamic-level pattern trading approach, as say in the case of a 1-4 Line in the WW pattern, or here a diamond whose outer shell changes at the whim of the market, one can never be too sure. The psychology of the line definition hardens in the trader's mind, as it seems definite until price violates it over and over, and frustrates the trader to give up. But that line has no real existence except in the delusional parody of the trader's projection (mine included), so best is to let price flow as it may.
This is what I am intending to explain here, by deliberately defining an outer boundary which is likely to be defined over and over again, until it either annul the possibility of a diamond (as price breaks above the diamond's apex), or confirms the diamond pattern as price breaks below its nadir.
No other time before these structural event should a trader enter into a full trade. Partial entry with delusion may be rewarding the fool (and this is how half-fooled I like to be, as long as my predictive analysis and forecasting add a favorable - albeit unconfirmed - probability).
Other similar dynamic-line trading is employed in the stop-loss definition of an entry at Point-5, when instead an adcerse excursion occurs and price moves against an entry at Point-5 to seek an outer reversal definition at Point-5'. In which case, the 1-5' Line, which is a slanted translation of the 2-4 Line at Point-3, can be used for that purpose. but here too, price can still "slide" along while using it as a back-stop, until it meets a reversal level, but still along that 1-5' line - something I always get excited about (nerd).
Thank you for following. Feel free to send lost souls, suck dried by the bloody muds of technical analysis warfare. What I have here is a small infirmary underneath the fogs of institutional cannons and ruthless knuckle-brass face to face trench warfare, which Forex can be to the more junior onlooking traders.
Cheers and smell the pips!
David Alcindor
4xForecaster
⋅
25 MAR 2014 - Add't Chart Update: Now that price broke out of current boundaries, is the diamond broken?
... Simple answer: Not necessarily.
As you may recall, the patient trader will play out of extreme structures, such as those we discussed yesterday, namely the apex (steepled top) of the diamond at 88.310 and its nadir at 86.268.
Right now, all we have is a price that is carving out outer boundaries.
What we also have is an understanding that price elasticity has certain limitations, ones that I have defined as "EAGLE", for Extremely AGgressive Level of Entry. See it defined in the chart:
If indeed price reversed at the EAGLE range, then a diamond anatomy would remain intact, while receiving added indication from the EAGLE strategy that a reversal might occur in that range - Remember though to always do your own due diligence, and to not get into a trade the second price hits that range. You need further confirmations, which should be part of your own trading armament.
For now, all is well and remains unchanged, despite the emotional prompts which crossed boundaries might trigger. However, these are my subjective boundaries, within a wide and flexible price field. As defined above, even an adverse excursion to the EAGLE range would still keep the diamond into.
Again: Thank you for your support and friendly referrals!
Until next update ... Cheers!
David Alcindor
Predictive Analysis and Forecasting
If interested to receive my TradingView forecast instantly through Twitter:
Simply follow me: @4xForecaster.
4xForecaster
⋅
Hello friends,
A quick update of the geometry. As indicated before, the riskier trader might be interested in setting stop-loss or order entries right outside the geometric boundaries of the diamond, but the problem with this approach is that there isn't any certainty whether the current boundary will remain.
For instance, see the magnified diamond-top where I had to push out and up the right upper boundary to further accommodate price action. Had I had a stop-loss right at the edge of that diamond top, I would have probably been stopped out - See chart:
So, for the time being, there is only accommodative waiting as the rule of the game. Once a breakout occur - the predictive system tells me neutral-to-bearish, so a downside is my expectation - then the diamond will be sealed, and the trade in effect (although, to be honest, i already have had a short position based on my system premature and unconfirmed parameters, something I do not recommend to do, unless you have a margin carved out for loss, or a constitution that depends on pain and self-flagellation.
Thank you for your support and friendly referrals!
Cheers,
David Alcindor
Predictive Analysis and Forecasting
If interested to receive my TradingView forecast instantly through Twitter:
Simply follow me: @4xForecaster.
Here is a recent forecast: tradingview.com/v/52ONNlC8/
4xForecaster
⋅
Here is a magnified view of the diamon-top formation:
I wanted to wait a little and see what the price action would look like, as it pierced through the EAGLE range - something that typically heralds a continuation, rather than a counter-trend (reversal entry opportunity), had the EAGLE imposed its expected resistance effect.
So, this answered the question mark on the chart.
Looking forward, I am looking at:
1 - AUDNZD
2 - AUDJPY
3 - NZDJPY
I just posted a AUDUSD chart which implies a strengthening of the USD, and thus a decline in AUD, although the pacific countries have remained quite resilient lately, based mainly on market expectation that China might be able to handle its current real estate and financial bubble. This is reasonable to expect, considering that at first, China had taken the initial decision to let bad companies go through the organic cycle of business life. However, the market is still anticipating some overaction from the retail/public side, such as bank runs and other withdrawal of necessary assets as more bond failures, declining real estate data and other panic triggering news comes through the wire. It will be an interesting year, for sure.
My directional bias is currently favoring a AUDNZD short, as well as a NZDUSD long, eyeing 0.88090 as a lofty target. More on this trade profile as I set up my entry after reviewing the system.
I will produce a new chart on NZDUSD to define my entry, stop-loss and target.
Cheers,
David Alcindor