Today, I tweeted several signals and commentaries on this pair, looking at a smaller 4-hour timeframe, compared to this bird's eye daily view - Here is the original signal: twitter.com/4xForecaster/status/474896064055488512
The interest in the first 4-hour timeframe had to do with the development of a bearish Kiss-of-Death, which carries a high rate of success in moving in its intended direction - If you looked at the chart, you will see that so far, the 4-hour candles have held quite well and price had already moved to the downside - Here is a shot of the screen:
Turning to the daily timeframe, the interest here is to appreciate the technical environment in which this minute 4-hour event is taking place. Now, knowing with some slight degree of confidence that the KoD is likely to let price roll down, one should also appreciate the limited downside potential, which is imposed by a long-standing supportive trendline (green-dashed line of the channel).
The importance of this trendline is not that it helps define the channel, but that it has a through-and-through perseverance.
In other words, this lower channel border courses through the screen and pretty much walks through a counter-directional channel as if nothing were. In other mitigated cases, price would have formed what I have called a node or nodule, where the diamond-interception of two channel would cause price to consolidate as the market "makes up its mind" in regards to the directional outcome. Here, there is no pondering in price, so to speak, and instead, price steam rolls its way up and up.
Therefore, one has to consider the possibility of a very limited downside to the KoD, based on the resilient nature of that price stomping its way with gusto.
I will continue to insert commentaries and updated charts of this pair using either this daily - but more likely the 4-hour frames - as we follow the development of the pattern.
12 JUN 2014 - Chart Update: Market Geo - Isosceles Triangle Formation ... Price Narrows Into Geometric Constraints:
Just a quick market-geo curiosity here, as we witness a price narrowing its path into an ever tighter space, between the lower boundaries of a bullish channel and upper boundaries of a bearish channel.
There are three triple top instances in this chart where price broke above. Can you find them?
David
4xForecaster
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Well, correction: TWO instances ... The third one is underway and may or may not confirm this subtle bullish pattern:
David
4xForecaster
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09 JUN 2014 - Chart Update:
Friends,
A few days ago, we looked at the interaction of 2 timeframes (H4 and Daily), in which a KoD promised additional downside, albeit probably limited by the overarching strength of a march-through Daily timeframe, in which price kept a sustained bullish pace - This outlook remains intact, as long as the KoD does not send price to lower price levels than what is currently defined as the lower boundary of the bullish channel.
Given above technical condition, then we are possibly looking at two potential targets, namely:
1 - TG-1 = 93.793 - 09 JUN 14
and
2 - TG-Hi = 101.260.
The first represents a moderate probability target, whereas the second represents a lower probability target, albeit capable to impose a reversal against price's attempted advance, if price ever reached that level (4xQuad Prop pattern: "Great White").
PRICE ACTION ANALYSIS - THE CHANNEL DILEMMA:
At the risk of sounding a bit too esoteric, the relevance of drawing channels (either using standard S/R parallels, or pitchwork, or momental lines - in this case, we are treating the chart to a standard S/R parallel method), is that close attention to the interaction will reveal price's tendency to "prefer" one directional channel (i.e.: bearish vs. bullish), as well as its intention to shift direction (directional conversion from bullish to bearish).
This can be appreciated simply by observing any number of price behaviors, such as:
1 - Price tending to validate one channel over another, thus giving more authority of one channel to tether price within its confines;
2 - Price veering towards a channel's upper or lower level, which validating the other channel's boundaries, suggesting a potential directional conversion - In this case, you could observe this phenomenon in this particular example, where price was validating the upper boundaries of the bullish channel (left of chart), then validated BOTH channel's lower boundaries (powerful support), then price rose to new highs, but FAILED to re-validate the bullish channel's upper boundaries, when instead, it would validate the bearish channel upper boundaries, until recently when it was pushed further down to a) the lower half and further down to b) the lower boundary of the bullish channel.
The last event is a powerful price action narrative that may herald added downside.
Note also that the point where two directional channel's lower or upper boundaries meet will tend to act as a major S/R rejection level - In the example I have offered, that point is at the level of the second green candle. Unfortunately, these levels are not always definable well in advance, but instead tend to benefit from a hindsight.
PREDICTIVE/FORECASTING MODEL:
The predictive/forecasting model is looking at distinctively different data, thus shrugging off any of the above technical, price-based scenarios. I want to make sure to insert this separate technical result, because the model stands independent of price action, fundamentals or any thing involved within the chart. It only spits out probable levels of S/R within a well defined direction.
In this case, it produced the two aforementioned targets, which may be somewhat frustrating to the trader when he is presented first with some easily definable price channels and a set of explanation that he can comprehend based on observable price action, as was just shared above (under "Price Action Analysis - The Channel Dilemma).
However, this model simply points to levels, defines a direction and calls for probable reversal levels. That really what it does, with absolutely no possibility of a narrative or technical explanation. Because it has worked so well for me throughout the past years (see archived results here: "Dead-On Hit archive: bit.ly/16JMnH8"), I am obligated to share this information, because I have gained more confidence in it than in standard price-based technical analysis.
The fact that I use both, and that I have event turned to fundamental considerations, is that I try to remain as unbiased as possible. Plus, the method is not fail-proof either, so any failure becomes the beginning of a new refinement analysis.
Following is the daily timeframe of this NZDJPY pair, looking at the total view relative to these two new targets:
I would expect that these targets would fail if and once price followed the following price action:
1 - Price remains under the upper border of the bearish channel and continues to validate it in its downward course
2 - price breaks below the current level of the bullish channel THEN rallies to validate the underbelly of that bullish channel.
The combination of these two events should suffice to force me to re-analyze the chart and seek lower targets.
I hope that above explanation are detailed enough that it offers the junior traders a glimpse into the analyses, but that it does not insult the senior traders with debasing and occult jargon. I do realize that a lot of the vocabulary I assign to my charts are neologisms (e.g.: Nodules, nodes) peppered with new and unexplained proprietary patterns (Great White, Janus, Euclid, Deep Shark), and perhaps risque interpretation of price action, as in this channel interaction, but I only claim to offer a singular perspective among many others, hence I recommend that regardless of your expertise level, always stay true to planning your own trade, and then trading your own plan. What has worked for me for many years (trading since 1997), may simply be too "weird" or trust unworthy to the more conventional trader in our midst.
Thank you,
David Alcindor
Predictive Analysis & Forecasting
4xForecaster
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For your review, here is the most recent development of that Kiss-of-Death ("K0D") at the 4-hour level:
Just a quick market-geo curiosity here, as we witness a price narrowing its path into an ever tighter space, between the lower boundaries of a bullish channel and upper boundaries of a bearish channel.
There are three triple top instances in this chart where price broke above. Can you find them?
David