Look for a breach of the 2-4 Line (even beyond defined geometry) for a potential short signaling. Bears are starting to weigh on the $USDZAR pair, while #USDollar is also shoeing signs of fatigue across other pairs (in addition, look for internal weakening in $SPX and $USDJPY correlate).
Background geometry is the with its 1-4 Target Line lurking beneath, whereas a structure at a narrow 11.389/11.360 is likely to offer a solid floor if and once above scenarios plays out.
Predictive Analysis & Forecasting
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(initiated speculative ATHENA in ATHENA Room)
Price continues to move in forecast direction. ATHENA outline remains highly speculative:
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Price just touched the 5' position, I have entered short with a stop at the FE 1.414 of the Point 4 to Point 5' Leg ( plus spread, plus 5 pips ) and a TP at a level corresponding to Point 4. I've attempted to use the suggestions and lessons from some of your other posts. Am I close to having a sensible and reasonable trading plan here for this pair and TF? Thank you as always. iefan
The fact that both the 3-5' validation and the 1.618-FE lines were hit at the same convergent point will likely impose significant stop on any further rally. To be sure, I also decided to look at a near target above that level and got the following in the chart:
Overall, bears are likely to take over and aim for 12.32 as the highest probability target and most immediate probability. It took us mid-July to now to rise from that same level, and I would expect that a momentum (slope over time) would offer a similar dynamic resolution.
What I'd consider doing in this case is to repeat the same 1.618-FE extension using the structures that were defined by last rally (i.e.: The higher-high and higher-low in the Fib matrix, and casting upwards its 1.618). You will see that this level is already attained.
So now, only a spread and 3-5 pips should be the only safety measures used to define your SL.
Here, a simple note to highlight the consistency of the Geo's Off-Set Rule - The level from which price is expected to decline, we are looking at a 5'' departure point, which is simply the geometric convergence of price highest adverse excursion as it validates the 2-4 Line originating off of Point-1. This is the RAREST of the Geo's adverse excursion, whereby Point-5 finds itself at an "outside-place", or ex-topia ("ectopia"). This ectopic placement of Point-5 at 5' or 5'' will define a VERY important probability event, in the case of a retracement. This is what the Geo's Off-Set Rule establishes, which is simply that from a 5' position, price will reverse to reach the price level of Point-4 as the HIGHEST probability event, whereas the departure from Point'' would seek a geometric adjustment, whereby price would aim for the price level of Point-3.
It happens that 5' attainment is the most frequent event, followed by Point-5 (which aims for the 1-4 Line, as per the Wolfe Wave Rule), whereas Point5'' is the rarest of them all.
If you need to refer to a more recent completion of this entire Geo cycle (i.e.: Points 1 to 5 are connected, and then a target is validated based on the Geo's Off-Set Rule), then simply look at the greyed-in Geo to the left of the current (BLUE) Geo, where a cycle completion did occurred specifically based on this Geo's Off-Set Rule.
Looking back at the chart, we were pushed up at Point-5, then Point-5', and finally Point-5'' - This offers a perfect example of the adverse excursion which a trader might incur when trading with the Geo. The important point here is to develop your st of rules regarding engagement and disengagement from a trade, using specific rules relative to a trendline, a price level or what ever you have decided that fits your risk management profile best.
This live example also illustrate quite well the three levels of possible attainment in terms of adverse excursion, so long as price is indeed declining from here - In which case, the Geo's Off-Set Rule should prevail over any other measured targets in terms of probability ranking:
As price continues to fall from its 5'' position, we also continue to expect the Geo's Off-Set Rule to apply, thus looking at Price-3 attainment as the highest-probability event:
Note also that, passing the chart through the Predictive/Forecasting Model, the following targets are as follow:
1 - TG-1 = 12.94603 - 16 SEP 2015
2 - TG-Lo = 12.68373 - 16 SEP 2015
3 - TG-Lox = 12.51395 - 16 SEP 2015
Looking at a lower target, this KoD can sometimes point to its destination. Using the nadir to recent top, the reverse 1.618-Fib extension falls snugly in line with the Predictive/Forecasting Model's targets ... Quite a convenience and reassurance, if you asked me.
Here is what the chart looks like with the Fib matrix.
1 - The 1.618 defines Model's targets, as just mentioned
2 - The 50% Line of the Fib matrix is likely to be the TRIGGER for a down move - I would consult Elliott Wave's Rule of Alternations and appreciate what this level is likely to define, as I believe that the expected descent to that level will be a more complex price action. If you look at it from an Elliott Wave perspective, the rally from the termination level of wave-4 (squared-in numbers) to wave-5 is too straight an terminal impulse. For this reason, I would expect greater complexity in the price action that is about to occur.
This leaves to wonder whether the speculated wave-5 would terminate where I posted it. I expect that either a truncation occurs (i.e.: a failure of the market to bring bulls higher than the termination of wave-3, or if it had to rally any further, I would look for a 1.414 extension using the recent height.
Again, great eye for the Kod!
Too good to be true, but here it is.
Watch out for this 50% Line. It poses a significant hurdle technical hurdle against bears, acting as a temporizing support to bulls as they weave a more complex correction. I would look for TWO conditions:
1 - A bearish impulse ...
... followed by:
2 - a correction to the upside, and then and only then enter at the break of the 4th wave of that C's correction.
There waves are yet to occur, but are sine qua non to any decline.
This trade has wandered off up to the WL I defined last night (this is the last tolerable level defined by the Predictive/Forecasting Model calling for reversal or demanding a higher timeframe of analysis). As price just hit that level at the tip-top of the bar, it then reversed. If price remains under that level and does not attempt to mount on offensive in the form of a bullish impulse, then there is a high probability that we were able to define a tip-top reversal and see price decline for this WL level.
However, if price defines a bullish impulse and BACA > WL, then we would have to consider this analysis null and void, and carry our attention to a higher timeframe.