Watch for this potential decline as price completes the 5-point regimen of a Wolfe Wave, naturally seeking full cycle completion at the 1-4 "Take Profit" Line - See M15 chart:
FIBONACCI & STRUCTURAL ANALYSIS:
At first glance, casting a Fibonacci matrix over the structural high-low with 0.386/0.500/0.618/0.786-Fibs as significant anchor levels might grant a few clues as to what depth of retracement (if there were to be one, as per signaled by this Wolfe Wave) could be attained.
Yet, combining with the analysis of internal highs and lows that have been inscribed during the recent upswing might reveal a few probabilities.
First, the 0.386-Fib level rests at the first significant resistance to the enduring upswing, as price reached a high of 119.453 (equaled at 119.336 at the 38.6 handle).
This 38.6 handle is significant in its forward projection, as it also lent a R/S level for the ensuing channel/consolidation oscillating about its 119.348/119.453 spine.
Second, there is the 0.618-Fib level, which has served as the lowest tolerance level in that upswing, as price closed only once below it at the first test support on 24 AUG 2015 @ 13:45. After than, it was all whipped cream over custard, as price remained buoyant relative to that Fib handle.
Last is the 0.786 level, which served a similar mechanical function as that of 0.618.
Looking forward, these three levels are to be heeded.
OVERALL:
A decline to the 1-4 Line is probable, if one had to rely on the Wolfe Wave principle. However, there are two prudent measures worth applying here:
1 - Consider a break across with closing across (BACA) below WW's 2-4 Line
or
2 - Consider a validation of the support-now-and-resistance-then (SNART) event along that same 2-4 Line, as suggest by the dashed arrow.
Best,
David Alcindor Predictive Analysis & Forecasting Durango, Colorado - USA
Ans.:
Regarding a "Breaking-Across & Closing-Across" ("BACA") event, here is an example where no BACA ever occurred as price tests and climbs along the 2-4 Line of the geometry. The point here is that the market is simply telling the trader that it is not yet interested to commit to that directional side of things.
We discussed two conservative ways to enter before, one being a BACA < 2-4 Line, and a more conservative would let price cross the 2-4 Line and give it time to validate the once-before support-turned-resistance status of the 2-4 Line (in the case of a bearish expectation), and simply enter short at that underbelly validation, if and once it occurs.
Is this making sense at all?
David
IvanLabrie
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Good points, a short on Monday with a clearer stop location is a good idea.
4xForecaster
⋅
29 SEP 2015 - Chart Update / Tech-Note:
As price reversed at the bottom target, then reached and also reversed at the top target, we are now left to wonder what should come next.
If we looked at the recent price action, we are witnessing a 5-wave advance, consistent with a bullish impulse. However, this follows at the heels of a sharp decline. Therefore, we have to consider two possibilities:
1 - This current impulse is represents a 5-wave correction - As you may already know, there is ONE and only one Elliott Wave pattern that starts with a 5-wave among all corrective patterns, and this would be a Flat. So, look for a 5-3-5 internal development to confirm that what is starting is indeed a correction. Another clue that this rally might be a correction would be an early departure to the downside and away from the rising channel.
OR
2 - This current impulse is a bullish expression of an impulse, with an interim correction. Here, I would wait for the interim correction to remain above the recent low, and to complete then link into an impulse breaking above the high carved at the 0.386-Fibonacci level.
These criteria will allow to define in general terms the probable direction of price as it continues to evolve at this smaller scale.
Best,
David Alcindor
iefan
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29 SEP 2015
USDJPY
Hi David. Geo/WW forming...I suspect a larger Geo is developing, where Point 3 has just formed and we are busy with the Point 4......
4xForecaster
⋅
Yes, very possible - Here is a problem:
1 - Geo points to temporary down
whereas,
2 - Predictive/Forecasting Model points to ultimately up
The main distinguishing feature, though, is that the Geo is better at offering a probable pathway, whereas the Model is good at pointing to where price wil go eventually while remaining mute about the interim pathway. So, definitely worth heeding.
Here is the trade I took a bit back:
David Alcindor
iefan
⋅
Great, from a technical point of view, if entering at the Green Box, does the Stop Loss go below the Price at the Red Box, or the Trend Line drawn from the Red Box?
4xForecaster
⋅
@iefan - I would stay off of the channel's lower border and use that as a forward guideline for SL placement.
As you are seeing, I am using median and median of median in the channels. These are likely the slopes offered dynamic R/S level as the price moves across the field - This is a very old technique I used to use (see some archives in my older Facebook page) ... Just taking a break from the Geo, so that I do not lose "mental sight" of other intuitive tools I have relied upon in the past:
David Alcindor
4xForecaster
⋅
ADDENDUM - Tech-Note:
As you may know, targets that carry "Lo", "Hi", or "Lox", "Hix" are less probable in terms of attainment, but represents levels of reversals if and once attained - Because they do not carry numbers in their designations, but qualitative statements suggesting a bearish-low ("Lo") or extreme-low ("Lox"), as well as a bullish-High ("Hi") or extreme-high ("Hix") qualifier, they are hence called qualitative targets, or simply "Qual-Targets". They are defined by the Predictive/Forecasting Model as levels that, if attained, will most probably be associated with not just retracement (as in 0.386, 0.500, or 0.618-Fib retracement levels), but instead associated with reversal (i.e.: falling at least 0.786 or greater, up to 1.313, 1.272, 1.313, 1.414 or 1.618 reversal orders.
In contrast, those targets that are associated with numbers are those that forecast a retracement in the order defined above (i.e.: 0.386 to 0.618, and rarely up to 0.786), and represent numbers of higher probability of attainment. For this reason, they are defined as quantitative targets, or simply "Quant-Targets".
The TG-Hi I have ascribed to the chart is a Qual-Target, hence represents a lower probability of attainment, but a higher probability of reversal if reached.
However, in these simpler trades, where the timeframe is not optimal to the Predictive/Forecasting Model (which was calibrated for the H4 level, instead), I often turn to structural analysis, looking at past levels of R/S activities, such as in the following chart, where there is also an alignment with a significant 1.618-Fib extension value:
If you look at that structure, combined with this 1.618 value, you might intuitively think that the market would also be barred from rising further than the upper border of the rising channel. Hence, it would be prudent to consider the following path, as we seek the HIGHEST probability set up, and thus forgo the extra height, which may be or may not be occurring in terms of price action ... This is where reason stops and greed grows like willing weed:
OVERALL - Always set your expectation based on the physical attributes of the market. Here, I mean that if you see a R/S level that would reasonable impose a resistance as in this case, then assume that it will, rather than willing it to go higher.
This is particularly true when a combination of technical factors come to a narrow cluster of resistance. In such a case, follow that clue and don't will it to a level that becomes delusionally impossible.
Plus, as this level is likely to offer a slight push-back, then use the medians of the channel to define a reasonable level of re-entry.
Without using my Model, and simply turning to the simplest tools (channel, Fibo and R/S levels), there is a lot any level of proficiency trader can do with simply gazing at the chart. Easy, right?
David Alcindor
AdnanKhan
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I have been following your analysis for sometime and i like the way to illustrate your structural understanding, its always a pleasure to read your posts. Do you incorporate Fundamentals to your understanding?
4xForecaster
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Hello @AdnanKhan - Thank you so very much for following and for your kind feedback.
To some extent I do, but only price-moving news such as central banks - However, I do firmly believe that technical analysis will tend to discount the news.
One source of fundamental news I posted earlier is the dairy auction out of New Zealand: Very little discount appears to be assigned to the price, so it will move quite well in the direction of the auctioned price of dairy.
"When Do I Enter?"
- Fair question.
Ans.:
Regarding a "Breaking-Across & Closing-Across" ("BACA") event, here is an example where no BACA ever occurred as price tests and climbs along the 2-4 Line of the geometry. The point here is that the market is simply telling the trader that it is not yet interested to commit to that directional side of things.
We discussed two conservative ways to enter before, one being a BACA < 2-4 Line, and a more conservative would let price cross the 2-4 Line and give it time to validate the once-before support-turned-resistance status of the 2-4 Line (in the case of a bearish expectation), and simply enter short at that underbelly validation, if and once it occurs.
Is this making sense at all?
David