4xForecaster
Short

Potential Bearish Push To 0.83420 | $NZD $USD #forex

FX:NZDUSD   New Zealand Dollar/U.S. Dollar
1039 48 10
Traders,


FUNDAMENTAL BACKGROUND:

On a fundamental basis, NZD may have demonstrated all the bullish strength it could following its 0.88345 just about 14 days before RBNZ raised its central rate from 3.25 to 3.50%. While the Pavlovian Forex trader might have anticipated a rallying in the currency on the back of this rate increase, one has to look into the weighing of debts, compounded with the decrease returns from lower milk futures to expect that further price upside have become glowingly limited by export costs and weaker revenue potential for this export-dependent economy.

With this fundamental background, one would tend to look for further downside in price action, in terms of pattern development and predictive/forecasting model-based analyses.


PATTERNS ANALYSIS:

One pattern I look for is the Shark-to-Five-Zero (or simply: Shark and 5-0 ) patterns.

For one, Sharks, if living up to their signature extensions (i.e.: 1.131 x 0-X) whereby the terminal Point-C completes such pattern BEYOND Point-Zero (yes, very unusual geometries), then I tend to look at this as a market-driven directional indicator. First, as you may recall, Sharks are quasi-patterns, in the sense where they start at a qualitative point called ZERO, and complete at Point-C, which is very different to all other classic patterns which maintain their standard X-A-B-C-D anatomical points.

But this is an important detail, because being quasi-patterns 9i.e.: almost complete), they in fact seek completion by acting as gate-keepers to an associated pattern called Five-Zero, or simple 5-0 ("five-oh"). The 5-0 pattern thus completes at a conventional Point-D, which is classically situated at 50% of the B-C impulse leg, hence its 5 and 0 for 50.

Now, looking back at the chart, and keeping the directional meaning of a Shark extending past a historical structure low of 0.84013, one has to suspect that bears will remain in charge for MOST of the price field.

I say most, because the 5-0 will probably find expression all the way to 0.85883, thus pulling its geometric             envelop at a point that has been validated multiple times before (see the large rectangular feature which would otherwise lay hidden as an occult geometry).

While there is never any certainty about which pathway price is about to follow, here we are simply talking about a Shark-to-Five-Oh follow-through, not because it has to happen, but simply because the fundamentals are calling for further downside. Therefore, situating ourselves relative to upside potential, and being able to approximate what the upside (counter-fundamental reaction) levels can be should help the trader avoid wasting time if indeed this pair were to fall further after a time-consuming rally.

For the sake of speculating visually on the possible price action/pathways, I have drawn blue arrows to depict the most probable pathways, while grey arrows depict the less probable, and the lightest depicting the least probable. ALL of these levels are geometrically defined, except for the top-most, which has been defined by the model given the low probability scenario of a significant adverse excursion.


(...)

Analysis continues in body of discussion thread

(...)

David Alcindor

( ... cont'd ... )

PREDICTIVE/FORECASTING MODEL:

As indicated above, the bias here is a long-term bearish price development, with a possible intermediate reaction to limited levels, defined by the geometries just discussed.

The model itself defined the following most immediate quantitative target (i.e.: TG-1) at a sub-structural level (i.e.: below a potential double-bottom) to complete that probable Bullish Shark:

TG-1 - 0.83420 - 19 AUG 2014.

The model typically produces more targets than this, but the fact that only one target got churned out may lend further credence to the possibility of a rally to geometric levels just discussed. In any case, the model sees further downside, limited to this defined 0.83420 level for now.


OVERALL:

Classic patterning, occult geometry and modeling are overlaid to define a probable price action defined by the arrows in the chart (colors are most probable, greyed are less, light grey are least). One may also consider an Elliott Wave 5-wave system in the mix, expecting the last impulse (Wave-5) to meet its one internal 5-wave definition by rallying to the levels defined in the chart, namely to the pink 0.84919/0.85020 range) before completing its higher-degree count with Wave V.

This seems like a lot of complicated instrumentation to merely detail the sailing of a blip across this electronic ocean, but taken on their own, each patterns, geometries, model and wave count have a good chance to validate their progress, given their predictable natures.

Again, long-term trend is bearish rain, with a chance of limited bullish sunshine, as defined above.

Cheers,


David Alcindor
Predictive Analysis & Forecasting

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Twitter: @4xForecaster
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Reply
19 AUG 2014 - TECH-NOTE:

For those Elliott Wave enthusiasts, you might possibly define a BEARISH target on your own by simply translating Wave-I length to equate that of Wave-V and see that it almost perfectly aligns with the model's own defined TG-1 - 0.83420, as per the PINK lines in the following chart:


snapshot



David Alcindor
Reply
Sam0101 4xForecaster
hi david, so u suggest that it will at least down to 0.834 after then only bullish
+1 Reply
Hello @GohSam - The model limits the current downside to 0.8340, while the geometric background (i.e.: classic patterns and occult geos) are calling for an interim, i.e.: limited rally to al least 50% levels defined in the analysis.

David
+2 Reply
19 AUG 2014 - Addendum: Looking back at prior analysis:

Following is a perfect target hit from which price rolled unrelentingly:

snapshot



Following is the series of analyses that led to above target completion:

-
RBA Says Down, RBNA Says Up? | $NZD $USD $AUD #RBNZ #RBA


-
RBA Says Down, RBNZ Says Up? | $NZD $USD $AUD #RBNZ #RBA


-
Targets Hit ... New Bullish Target | $NZD $USD #RBNZ #FED #forex


-
All Targets Hit - Potential Reversal Pending | $NZD #RBNZ #forex


Target-Hi was never attained following the last analysis - As indicated before, quantitative targets (i.e.: TG-1, TG-2, ... TG-n) have a historical tendency to be hit and impose a limited counter-trend reaction (as in the current NZDUSD analysis, where TG-1 is expected to send price back up to a limited 50% reaction).

In contrast, quantitative targets (i.e.: TG-Hi and TG-Lo) have a historical tendency to NOT being reached, but IF and once they do, they tend to act as reversal levels.

I hope that this compilation of prior charts and analyses shed some light on this methodology.

Thank you for your reading thus far and your kind referrals.

Cheers,


David Alcindor
Denver, Colorado - USA
+1 Reply
thanks for analysis
+1 Reply
Thanks for your thorough analysis.
+1 Reply
20 AUG 2014 - Update:

From Twitter:
------------------------
$NZDUSD moves per alt. towards forecast (grey arrow) @ 0.83420:

snapshot


via @tradingview | $NZD $USD #forex
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$NZDUSD - H4:
snapshot



Here is a bird's eye-view:


$NZDUSD - DAILY:
snapshot



The price pathway defined in the DAILY chart is based on classic pattern analysis, reacting as Bullish Shark @0.83420 into a 5-0 completion @0.85883.


Cheers,


David Alcindor
Reply
4xForecaster PRO 4xForecaster
$NZDUSD - DAILY: Detailing the S/R levels:


snapshot



David
Reply
JamesTeller66 4xForecaster
Thanks for your analysis David. I was wondering if Target 1 0.8588 is a high probability target like 0.8342?
+1 Reply
4xForecaster PRO JamesTeller66
Hello @JamesTeller66 - Greyed-out targets are old targets that have been hit, but remain in the field, as they now play as R/S or pivot levels.

The 0.85883 targets emanates from the H4 chart, which approximates an older target. When calculated together, the new TG-1 @ 0.85883 and the older TG-1 = 0.89950, should reinforce the probability of this level holding against added advances - H4 highlights this 0.85883, which results from a PATTERN and not from the model:

snapshot


Pattern is Shark completion into 5-0.

David
Reply
nikokoev 4xForecaster
Nice David ! I already have buy limit order @ 0.835 and this scenario really pass to me.
+1 Reply
Hi David !

I do respect a lot what you've done and give for free on TV. You're very helpful for everyone here and your analysis help me a lot to understand pair moves. But It could help to confront opposite views as a way get better forecasts on Forex market. I have a bearish view on NZDUSD-kiwi pair. As you can see on my chart below I don't really use your pattern strategies but some basic analysis of trend supports/resistances and oscillators indications inside four classical timeframes : 1M,1W,1D,4H-240. In this way, I can, like a mariner, "feel" the wind and control my sail.
Feel free to comment my chart.

snapshot


Comments on the chart :

Last edition : 21/08/14
==============Bearish View on NZDUSD=====================
------------------------------------1M Downtrend Reversal ?----------------------------------------------
RSI Strong rejection to break 60-level
Neutral RSI starts to downtrend
Positive MACD close to give a breakdown signal
------------------------------------1W : Down-trending confirmed ---------------------------------------
RSI-triangular pattern Breakdown
Negative RSI strong downtrend
Positive MACD close to give a downtrend signal
------------------------------------1D Down-trending 2nd wave ------------------------------------------
Small bullish divergence on MACD & RSI rejected.
Bearish GAP
Oversold RSI consolidated
Negative MACD downtrend consolidated. MACD breakdown signal needs confirmation
------------------------------------4H Small up-correction ? -----------------------------------------------
0.618 fib-level broken
Oversold RSI downtrend consolidation
Negative MACD downtrend.



Best Regards,
Serge
+1 Reply
@SergeBonaparte - This is great. I really like having the opportunity to look into someone else's system or methodology.

In this particular case, an algorithm was written to interpret RSI and MACD in a systematic way. As a student of RSI myself (this has been my main focus of research since I started using and dissecting it since 1997), I look into these system with great curiosity and commensurate reservation. For the sake of simplicity, let's assume that the system herein is true.

First, I notice that the scale here is 6 times the one I use in my model (H4 x 6 = Daily).

Second, looking at Daily-RSI behavior, I also notice that every time it dipped twice below its 30-line, the rejection that ensued in RSI was accompanied by a significant retreat in bears (conversely, a significant rallying with significant impulse).

Measuring these reactive impulses, the moves have ALL exceeded 50% of the retracement of the preview move (See the ">50%" marks in the chart, which I have laid down in correlation with the red arrows, marking a significant incursion of RSI into the sub-30 area).

Now, I am not too well versed with the use of MACD, so I have not used it in this particular analysis, but I will look at it and see whether a different set of conditions have occurred that should contradict what is seen as occurring between sub-30 RSI and price.

For now, here is the quick-glance RSI analysis:

snapshot



In any case, I agree with you that in the long-term, NZDUSD is bearish. In fact, the introduction of my analysis does start by a bearish commentary, where I state that "one has to look into the weighing of debts, compounded with the decrease returns from lower milk futures to expect that further price upside have become glowingly limited by export costs and weaker revenue potential for this export-dependent economy."

I also posted a DAILY chart which highlights a future TG-1 only after it has done rallying to the forecast level described in that DAILY chart:

snapshot



OVERALL, there is plenty of room for your system to gain validation on all its timeframe. In fact, there seems to even be a smart indicator therein making mention of a potential correction ("4H Small up-correction ?"). What it defines as a "Small" remains to be defined by that program, but I would assume that anything reversing up to half a recent impulse might be called "small".

In any case, I very much enjoy this input. What I have attempted to do with all charts is not so much prove the model wrong, but rub it against the coarse grain of real market environment, where things are stomped, torn and worn in a way that removes the gloss and leaves exposed the remainder of what makes it stand together. So far, the model seems very good (over the few years, that is, although it had to be tweaked over and over again, each time removing extraneous parts and adding only few bits).

However, I get really absorbed and interested in any occasion where it stands to be wronged, as each times it does, it comes out a little bit improved. So, let's see whether the analysis of $NZDUSD generated by the model withstands this test, and whether the RSI observation made about its sub-30 condition could also offer the trader any additional signal to trade up to 50% of any retracement, each time RSI returns above its 30-line - Wouldn't be a nice and simple signal specific to this Forex pair?

Cheers,


David Alcindor
Reply
Sam0101 4xForecaster
the correction starts to be effective now?
+1 Reply
@GohSam - Not quite. However, it hit the area that I would use to "front" a long counter-trend position, if you consider spread + 3-5 pips - David
Reply
Sam0101 4xForecaster
Sorry i don't understand ' front" .... can further explain?
+1 Reply
@GohSam - No problem ... See below.

Let me know if I need to clarify a bit.

David
Reply
Target almost hit.....
+1 Reply
@GohSam - As indicated above, it all depends on how your rule of engagement (ROE) is defined.

Personally, I look at my broker's spread, add that value to the target closer to where price is advancing, and add 3-5 pips.

For instance:

1 - The target being 0.83420
2 - The spread being about 2.5 pips
3 - A additional frontage of, say 3-5 pips

= I would therefore define a Limit Order as follows:

Target + spread + front
= 0.83420 + 2.5 + 3 to 0.83420 + 2.5 + 5
= 0.83475 to 0.83495

Is this making sense?

David
+2 Reply
4xForecaster PRO 4xForecaster
Basically, using this fronting measurement, the Limit Order would have been hit dead-on, as follows:

snapshot


In that L/O illustration, i have used the results of the calculation developed above, wherein the top and bottom ranges are:

Target + spread + front
= 0.83420 + 2.5 + 3 to 0.83420 + 2.5 + 5
= 0.83475 to 0.83495

Hoping this clarify things a bit more.

David
+1 Reply
4xForecaster PRO 4xForecaster
@GohSam - I have to add a caveat here, which is that I would NOT necessarily enter in full-position at this point IF you are considering a counter-trend, for the following reasons, which are the reasons I use in my own quality assurance and risk management:

1 - Price is expected to engage into a counter-trend, which means that the price action is expected to be limited in time and range
2 - Price has to be very close or have crossed my target. In this case, I use my fronting calculations to assure that this condition has been met, which it has, as demonstrated by above calculations
3 - I review the M15 and Daily timeframes to ensure that no other geometric or other such technical features would not dominate over my plan
4 - Any counter-trend trade should be a smaller portion (here, I would tend to do half) of a full position taken in the main trend
5 - Plan the trade and only trade the plan

Just thought I had to add these cautionary words.

Thank you.

David
+1 Reply
Sam0101 4xForecaster
Thanks man. i appreciate that.
+1 Reply
24 AUG 2014 - Update: Target Hit

From Twitter:
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$NZDUSD - TG-1 just got hit; Background pattern is Shark (complete) and 5-0 (pending at 0.85883).

snapshot


via @tradingview
-------------------


snapshot



Cheers,

David Alcindor
Reply
Sam0101 4xForecaster
is this still valid?
+1 Reply
Hello @GohSam - Yes, very much ... Until the model's signal tells me otherwise.

snapshot


David
Reply
Sam0101 4xForecaster
it seems bearish now down to 0.831
+1 Reply
Hello @GohSam - It's still in a tolerable range (depending on what timeframe your trading is based upon, though).

The recent low has caused a reboud, and the ending pattern is very reminiscent of an ending diagonal, with a signature under-throw.

David
Reply
QUICK NOTE: Revealing the occult market geometries I use in my trading plan:

I have just finished writing an explanation of the methodology I use in my trading. Sort of a game theory application in which I define the application of Fibonacci projections for risk management to my trading. Very simple and approachable.

Here is the link:

https://www.tradingview.com/chat/#5eHLst6YxeVqGlaO

Hope this shed more light on how I do things - Caveat here is that what I am revealing leaves out details of the predictive/forecasting mode. However, you will see how irrelevant it becomes once you concentrate on the geometric information revealed to your mind's eyes, using the Hennessy system as an overlay.

Hope you enjoy it. Feel free to contact me with any question, or share if you find the information valuable - Credit given to the author is courteous and always appreciated.

David Alcindor
Reply
4xForecaster PRO 4xForecaster
Here is a visual example of my methodology - A very approachable and user-friendly composite of a simple A-B-C wave count relative to trendline breaks, counted forward towards a predefine Fib level from a larger timeframe - Easy enough?


EXAMPLE OF DAVID ALCINDOR'S HYBRID USE OF BASIC GEOMETRY, HENNESSY COUNT AND FIBONACCI LEVELS:
snapshot




Let me know if I need to clarify. Feel free to pass along if you like it. Here too, credit to author is the cool thing to do - Much appreciated.

David Alcindor
Reply
27 AUG 2014 - Update:

From Twitter:
----------------------
$NZDUSD moves out of consolidation band towards forecast targets:

snapshot


via @tradingview | #forex $NZD $USD
---------------------


snapshot



Traders,

$NZD continues to move on the back of a technical prerogative, despite bearish fundamental data and an explicit disinterest in raising its RBNZ central rate.

The recent consolidation occurred via a geometric tight band whose core was defined by the prior target. Now that price has risen above the top of that geometry, eyes should turn to 0.84292, as a significant structural level heralding price intention to make good on completing a potential 5-0 pattern, following this recent completion of a Shark.

Cheers,


David Alcindor
Reply
Sam0101 4xForecaster
Do u think when it reaches 0.84 and reverse right at there?
+1 Reply
Hello @GohSam - A rejection at 0.84115 for instance would be quite possible as well, considering the meaning of this level from a historical perspective.

However, I also trust in the market's need to seek relief after such a sustained impulse, and the model has already pin-pointed a R/S level that would have gone undefined until price validated it when it turned at TG-1 = 0.83420.

While this is a quantitative target and may thus have little reversal power, it stands a good chance to act as a new and future R/S level, and thus push price back to definable Fib levels.

Also, the pattern trader here would expect to see a significant reaction to the upside as a Bullish Shark completed and would typically string into a 5-0 for a completion of the standard zero-X-A-B-C-D point definition of patterns.

Overall, there is a good chance that what we are witnessing is a long, arduous ascent to limited levels, as defined in the chart.

David
Reply
27 AUG 2014 - Update:

From Twitter:
------------------------
$NZDUSD remains buoyant; Cautiously bullish relative to 5-0 development:

snapshot


via @tradingview | $NZD $USD #RBNZ #forex
------------------------


snapshot



David Alcindor
Reply
Sam0101 4xForecaster
Do you still think eventually kiwi can make it above 0.84 ?
+1 Reply
Hello, @GohSam - At this point, price is acting in the pattern that would be indicative of a possible change to the upside. There is no indication of bearish strengthening, although it can always change quite rapidly. Best is to look for levels where change would occur contrary to expectation. If it were to decline, I would look for 0.886 as a last tolerable level of risk given a bullish expectation. A break above 0.84145 would suggest a pending face-off with bears, whereas a break above 0.84292 would suggest a significant win over bears.

David
Reply
Sam0101 4xForecaster
Hi, the kiwi had failed in retest 0.84. Is it finally going to down below 0.83?
+1 Reply
Hello @GohSam - The chart from which I observe price development are H4 timeframes. From the time it carved a new low and hit my target in that process, it went on to rally significantly, in a manner that is quite wide for this pair.

From your frequent inquiries, I am thinking that you might perhaps be looking at it from a smaller timeframe. However, at this point, the retracement that has occurred since it rallied from the lowest-low level remains at only one third of that total move. In other words, this pair sits at about 66% of its rally since the a historical bottom was reached.


If you look at the way this price expands, it is limited by an average range of expansion over a given number of days, which an average true range indicator could tell you. In other words, there is nothing abnormal with this price action that should conclude anything bad or bearish. In fact, even if price was to decline at or lower than the recent bottom, it really depend on how you perceive it in relation to your trading plan.

The way I look at it, there are two universes. One where price moves on its own independent of how I feel, and another where I have a plan to trade, and only trade the plan when the independent conditions of the other universe happen to satisfy those of my trading plan.

In this way, there is nothing bad or bearish, and nothing good or bullish, until the conditions are met to make it one or the other, and in which case, I act on the trade accordingly.

I will assume that you have such a plan, and if this is the case, then I would not worry about the relative position of price relative to where it was and needs to be. It simply is doing its aleatory gyrations, whose patterns should be deciphered in a way that fashions a plan. If not, then it would be too maddening to look at it and worry about its whereabouts.

So far, price is where it wants to be, while my trade stands on its own. Both happen to be on the same side of the plan. So, no worry.

David
+1 Reply
Sam0101 4xForecaster
Thanks David. Im looking closely on this pair. Anything please update us with your analysis and thoughts. Thank you
+1 Reply
kmk.msp Sam0101
david is a great person
+1 Reply
Much appreciated @kmk.msp - David
Reply
kmk.msp 4xForecaster
could you please analyze and predict about AUDNZD pair on short term and medium term basis
+1 Reply
Hello @ kmk.msp,

Here you go - Feel free to share with due credit and refer friends and colleagues if you think they might be interested in my analyses:

-
$AUD/$NZD S/T, M/T, L/T Forecast | #forex #RBA #RBNZ

$AUD/$NZD S/T, M/T, L/T Forecast | #forex #RBA #RBNZ



David Alcindor
Reply
kmk.msp 4xForecaster
@david... thanKS a lot dear.
+1 Reply
Sam0101 4xForecaster
hey david, Kiwi seems bearish.
+1 Reply
Hello @GohSam - I just posted an update on this chart - Let me know whether this helps - David
Reply
kmk.msp 4xForecaster
@david... could you please analyze and predict about AUDNZD pair on short term and medium term basis
+1 Reply
02 SEP 2014 - Update:

Friends,

A watched chart does not boil - At least, that what's come to mind with this $NZDUSD. However, a lot of retrospection in our own experience tell us the whole story, and sometimes, it all comes together as a lesson for "next time". This is really what's behind all of my trading plans. I look for the worse case scenarios, then sift through the most probable one.

In this case, this early week of trading may have revealed some clues, if we remain dead-set that a reversal is afoot here. What I am highlighting in the chart is such a retrospective projection, as if I stood in the future and looked back at what the market could develop in terms of reversal pattern that would appear so evident once I stood at that moment in the future.



snapshot




ASSUMPTION:

Here, the assumption is that the model I use for R/S level determination is sound and reliable (a much bigger assumption for anyone else to make, since they have no access or insight into this model), and that the model works in this particular environment. If true, then the TG-1, which is a quantitative target, will act more as a R/S level than a reversal level.

At this point, price has developed symmetrically around that target, and I remain biased that a significant correction might occur in this area, in the order described in the chart. However, for this to occur, a geometry has to prepare this market to do so, leaving only a few choices to consider.


WAVE COUNT RATIONALE:

One in particular comes to sight, based in the lower lows carved out over the past several candles. As a 5-wave move provided the first low, notice also that a correction occurred with a 3-wave pattern, as it should, but that a SECOND 3-Wave pattern occurred in the direction of the market. Although more could come out of this zig-zag to complete an overdue 5-Wave downward as expected, a failure to do so should alert us that instead, a pattern has taken over the 5-to-3 wave cycle, and instead is about to fashion a pattern of its own in preparation for a rally.

Such pattern that would be ideal from a "looking into the future's past" stand-point would be a Diagonal Triangle, with its 3-Wave alternative construction that would link all of its A-B-C-D-E points before a rally would occur.



OVERALL:

I have set a threshold (I would refer to it as a tolerance level, defined by my own risk management, hence it might differ among traders) at 0.82762, defining a outer most target that would come into alignment as the descending scaffolding of a reversal pattern unfolds. Let's see what this week brings us.

If you are still in this trade, be sure to use your own defined level of risk based on a similar "tolerance" line that you have defined for yourself before you even entered this or any other trade. This is how it's done anyway: Never enter a room from which you can't escape. Or, in better miliraty terms: Engage a situation only once you control the outcome.

In trading, I would advise: Control your losses, your gains and the alternate geometric scenarios that emanate from merely being part of this large mathematical universe.

Cheers,


David Alcindor

+4 Reply
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