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GBPUSD: Pending for potential inverted head & shoulder pattern

On Week 34, GBPUSD did a break below the support zone highlighted in blue on Tuesday, 24^th August but in the same week on Thursday, 26^th August price still gush back up.

Even though on Friday, 27^th August, price did a pullback, but what’s interesting here is that, it still gets supported at the support zone. This gives us an idea that price is still supported at the moment as the breakdown didn’t stay for long, meaning the bear wasn’t that strong enough to drive prices down further.

Instead, Week 34 was just a doji week where doji represent indecision of the market.

However, base on the chart pattern, we can spot some “potential inverted head & shoulder pattern” forming where it will only be confirm unless the neckline is broken.

Do look out for any trigger in the lower timeframe and if the potential inverted head & shoulder pattern is true, you may also just want to take note of the resistance level created in Week 34 before price can goes even higher.

One last thing to note is that, there is also a Fibonacci Retracement and Fibonacci Extension confluence at around 1.5680 levels where it also confluence with horizontal resistances in the H4 chart. If you want to know how Fibonacci can be used to predict future prices, do join us in the Free Forex Educational Seminar.

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

This week analysis, I have zoomed out into the very big picture to search for key supports and resistances. I must say it has given me a few surprises and interesting results.

<<AUDUSD MN: Identifying S&R with confluences>>

On this monthly chart, I have plotted various S&R with supports in blue, resistance in red and highlighted confluences.

<<AUDUSD W1: Possible channel and trend line>>

Zooming in the H4, I have labelled possible trend lines and a channel.

<<AUDUSD H4: Failed H&S and Upcoming week forecasted expectations>>

The coming week seems to be pretty rough from my point of view since there was a failure on the H&S. There are a couple of possible scenarios that I have portrayed. First is the possible critical zone which is made up of the shoulder and the week high. Second is how this zone is respected in terms of whether it is going to be a support or resistance. Lastly, what and happens after that depicted by the Red and Blue arrows I have drawn with the sub-movements.

Samuel’s 2 cents: I more biased to go long, due to the channel and the failed H&S. Binni Ong, TerraSeeds Chief Trainer has taught Tflow® students how to trade on a failed head and shoulder. In fact, before this failed head and shoulder happened, she has already told the class attending Tflow® real time hands on to EXPECT FOR SURE A FAILURE.  She taught student this failed head and shoulder is a Dead Cat Bounce.  To get a glimpse of her vast experiences in Forex trading, do join us for the Free Forex Educational Session conducted by her. During this session, she will share with you on some mistakes and misconceptions that traders have and how to correct it!

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

From my previous posting two weeks ago, I mentioned about two types of trades: Impatience and the patience traders. USDCAD has hit the level I mentioned and moved about 400 pips up and thus breaking out of the triangle formation. So if you are a patience trader you have gotten yourself a neat 400 pips!

Last week, which is week 34, USDCAD has tried to move up of 1.0665 zone (which is also May & June High), thrice before plunging down. Can we assume that this is a temporary halt before a continuation of its upward movement or has it decide to dive nose down?

Going to Week 35, the green zone which is the potential support zone would be an area to look out for the bulls to join in. This is also a prior support turn resistance zone.

However, the bears might have the strength to push price down further to the 1.0350 (pink line) another strong support zone.

Should price decide to try and test week 34 high (blue line) again but failed to close above, then we could look forward to go short, with a reversal pattern in a lower timeframe.

Tflow® students, please look out for Tflow® pattern and trigger. You might just set yourself another 400 pips!

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

Week 34 EURJPY Review: New Low for 2010… With Regret?

The weakness of our beloved EURJPY was evident for all to see in early Week 34. Its fall on Monday and Tuesday signalled yet another new low for 2010.  We have had a few of them in the past four months!  We have also repeatedly reminded ourselves to be careful of the momentum of the downtrend over the past 2 weeks.

On the Daily chart, after the new low of 2010 was reached, price immediately retraced above the previous 2010 low (June 2010 Low = Green horizontal line).  There certainly was a sentiment of Regret.  So much so that price went as high as to test the next resistance, which was the May low (White horizontal line).  Could this now be a case of support turns resistance?

Chart Daily- EURJPY New 2010 Low

Going down to the H4 chart, price broke out of a downward equidistant (ED) channel (Blue channel) on Friday Week 34.  Support was found on the Green Horizontal line with price rising to close just below the next resistance.  As such, a new upward ED channel (Purple Channel) has formed.  Will this channel be obeyed?

Chart H4- EURJPY New upward ED channel?

Going into Week 35, here is what we can look forward to:

a) Bears (Red arrow) will be rubbing their paws with glee as our beloved EURJPY has parked itself at a price resisted by the White horizontal line and upper border of the purple ED channel.  Bears will bring the price down to the lower border of the purple ED channel and when successful, retest the low of June 2010 (Green horizontal line)

b) Bulls will continue its momentum up (Blue arrow) the blue ED channel, should it succeed in overcoming the immediate resistance (White horizontal line).  The next potential resistance is yet another support turns resistance (Yellow horizontal line).

And the Doctor’s Advice for the Week: Remember to map out your crucial Support and Resistance levels before going down to the lower time-frames!

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

Only registerd users (ie TerraSeeds Tflow® graduates) can view this post. Graduates please log in with your UID and password that you use for Forum. Find out how you can be part of our privileged trading community. Email forex@terraseeds.com

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August 17, 2010

By Elliott Wave International

In the August issue of his Elliott Wave Theorist, market forecaster Robert Prechter alerted readers that the U.S. stock market was slicing the neckline of a classic head-and-shoulders pattern in technical analysis, and that this may send the market into critical condition.

Prechter said that when the Elliott wave count and a head-and-shoulders pattern are saying the same thing about the stock market, it’s best to pay attention.

Read some of the latest nuggets directly from Robert Prechter’s desk — FREE. Click here to download a free report packed with recent quotes directly from Prechter’s Elliott Wave Theorist.

Here’s how the August issue of the Elliott Wave Financial Forecast, the sister publication to Prechter’s Theorist, described the head and shoulders pattern unfolding in the stock market:

“The weekly Dow chart [below] shows the development of an intermediate-term, head-and-shoulders pattern from the January high at 10,729.90 to the present. The January high marks the left shoulder, the April 26 high at 11,258 is the head, and the right shoulder is now ending. The April [Theorist] discussed the pertinent characteristics that Edwards and Magee used to define this technical pattern … all apply to the current formation. Observe how weekly stock trading volume has contracted during the development of the right shoulder, a necessary trait of this pattern. The downward-sloping neckline — exactly as on the big ten year pattern — displays market weakness, which is consistent with our interpretation of the wave structure.”

This chart shows the head-and-shoulders pattern.

"Generally, when the neckline slopes downward, the right shoulder does not rise to the level of the left shoulder ..."

Here’s what Robert Prechter himself said in a recent Elliott Wave Theorist:

“Generally, when the neckline slopes downward, the right shoulder does not rise to the level of the left shoulder …”

Please look at the chart again — then re-read Prechter’s quote.

Read some of the latest nuggets directly from Robert Prechter’s desk — FREE. Click here to download a free report packed with recent quotes from Prechter’s Elliott Wave Theorist.

This article was syndicated by Elliott Wave International and was originally published under the headline Slicing the Neckline: When the Market May Go into “Critical Condition”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

Week 33 EURJPY Review: Really Back In Range

Last week, we spoke of how our beloved EURJPY giving us an emotional teaser that it would be on its way to recovery.  We had been warned “not to ignore the strength of the downfall in Week 32”.  On the Daily chart, true to its warning, price came tumbling down in Week 33; in the process taking out a few important support levels (White, Yellow, Green Horizontal lines) to arrive at a new low for August thus far (Purple horizontal line).  Would this paint a bleak picture for the EURJPY?  For now, it appears to be held in a ranging pattern.

Chart Daily- EURJPY Range play

Going down to the H4 chart, I have left the 2 equidistant (ED) channels that I drew last week on the chart; albeit redrawing the lower border of the blue ED channel to accommodate the tail that took place on Friday Week 33.  So to recap, there is a blue upward ED channel (which still holds firm), and a purple downward ED channel.

Chart H4- EURJPY Which Channel Will It Obey?

Going into Week 34, are we going to continue to see our beloved EURJPY feature in a range?

a) Bulls will resume its climb up (Blue arrow) the blue ED channel, since it has bounced off the lower border of the Blue ED channel. Buy low, sell     high!  We would like to buy in as ‘cheap’ as possible e.g. lower border of Blue ED channel.  The lows of Week 29 (Yellow horizontal line) and Week 28 (White horizontal line) will serve as obstacles to price.

b) Bears (Red arrow) will continue to bring price down towards the bottom of the blue or purple ED channels should the Green horizontal line (Week 32 low) serve as a resistance.  We will be ready.  The low of 2010 may well be tested.

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

GBPUSD reacting to the horizontal support zone

On last week Monday, 16 August 2010, we mentioned that “if price couldn’t hold the channel and breaks down then the next potential support will be the highlighted blue zone shown in the chart above”.

Indeed, GBPUSD seems to get supported at the support zone. After all, the GBPUSD has fallen a total of 500pips from the past 2 weeks, thus there might be a group of bulls waiting to go long IF price did some sort of reversal pattern in the lower timeframe (i.e. hourly chart).

For swing trader, do look out for any inverted head & shoulder pattern, double bottom or triple bottom in the lower timeframe (preferably the hourly chart) and this might just paint out to be a B3S4 trade?

For scalper, may want to look down to the 15minutes chart to spot any signal of a buy (especially Tflow® buy signal), but one of the very important criteria for scalper is to know the support and resistance level in the higher timeframe before fine-tuning all the way down to M15 chart.

However, do take note of the resistance zone highlight in red as shown in the chart above. As long as price pulls back up and gets resisted, we would be looking to short again.

But before we want to go short, we may want to go long first upon conditions met.

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

Only registerd users (ie TerraSeeds Tflow® graduates) can view this post. Graduates please log in with your UID and password that you use for Forum. Find out how you can be part of our privileged trading community. Email forex@terraseeds.com

The Dow appears to be more ‘resisted’ than supported. A bullish situations hangs on the a few potential ‘ideas’ for support as well as the 200-day ema.

DJI faces many resistances; bearish reversal

GBPUSD prints likely continuation for short. This is despite it near to more resistance of March 2010 and mid-July 2010. This level might be a potential support.

GBPUSD display continuation for short

EURJPY prints a descending triangle or bearish pennant depending on how one looks at it. I see the shape of a shoe. Anyhow, the lower highs hint of a continuation move.

Descending triangle for EURJPY

So despite a bullish close in Week 32 for USDJPY, this week is just so negative. What’s worse, it just gets resisted lower and lower. 84.70 could be threatened.

Week 33 for USDJPY bearish despite good close in Week 32

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

Week 32 EURJPY Review: Slumped Back Into Range?

Some food for thought:  How much effort/time/energy do we put into something that we want?  For e.g. FX trading.  How much effort/time/energy do we put into finding a winning formula, versus repeating the same mistakes over and over again, resulting in disappointing losses?

Take a step back into other areas of our lives… Career, Relationships, Hobbies… Are we as successful as we dream of becoming?  Or have we already given up with many reasons/ rationalization/ excuses that we can conjure up?

After a week away in India, I have come back to spend some time with my beloved EURJPY.  And what happened in the past week?  The glimmer of hope that our beloved brought to us (with the formation of a head and shoulder on the daily chart) turned out to be an emotional teaser for some of us.  Going into the first half of August, price came down to the levels of that of June and July 2010.  Is price about to embark on a ranging situation?  Be it the fall that took place last week, or the range play that we might come to expect, Tflow® students are always left smiling with the low risk set ups that they embark upon.  Ask ourselves, really, are we trading?  Or are we gambling?  It’s a personal choice!

Back to our beloved.  On the Daily chart, price fell back into the range with no evidence of a reversal in fortune.  Price is now closer to the low of May 2010 that the high of July.  Yet, it would appear that a gentle upward equidistant (ED) channel (blue channel) has surfaced in the past 2-3 months.  Would price continue to obey this channel?

Chart Daily- EURJPY Upward Channel

Going down to the H4 chart, another interesting scenario has come up.  On top of the blue upward ED channel, another purple downward ED channel could be drawn.  Which channel will our beloved follow this week?

Chart H4- EURJPY Which Way Will It Head?

Going into Week 33, we have 2 scenarios to look forward to:

a) Bulls will resume its climb up (Blue arrow) the blue ED channel, should price reject the immediate support of Week 29 low (Yellow horizontal line) and the next resistance of Week 28 low (White horizontal line).

b) Bears (Red arrow) will continue to bring price down towards the bottom of the blue ED channel.  This would turn out to be a good support level as there is a horizontal support (Green horizontal line) provide by Week 28 low.  Nevertheless, with the strong downward momentum, price may head towards the lower border of the purple ED channel too.

Our beloved EURJPY looks to be supported at this point in time.  But do not ignore the strength of the downfall in Week 32.

And the Doctor’s Advice for the Week: Never forget your dreams, never forget your passions.  Too often in life, we have given up too early, too easily, too often.

Editor’s Note: Indeed it is true. Giving up is so easy likewise blaming others and not reflecting on ownself.

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

USDCAD is still stuck in a triangle formation for many many weeks and price may be near at the upper channel of the Day Triangle, but with Tflow® we don’t play break out.

With week 31 opening at low of 1.0260, reached a high of 1.0493 but Friday 13th Aug closed was at around 1.0410. This seems to suggest some bullishness in price with a Higher high and higher low seen.

2 Scenarios to look forward in the coming week for the patience and impatience traders:

- Long Term Traders (patience) would be looking to go long once price reach a strong support level.
An ideal zone would be near the red support line. 1.0274. But watch out for immediate support level (orange line)

- The Short Term traders (impatience) would be looking to short. Possibly in a lower timeframe, 1hr or 15mins. A potential good short would near or at resistance level. (Blue line. Support turn resistance zone) While price still seems to suggest that trend is still up. It is prudent to take some profit at the immediate support zone. As this could be counter trend move.

Yes long term trader may still look forward to go long at retracement or strong support level and thus eventually breaking out the triangle formation. But with Tflow® we could look to short before we resume our long position.

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

GBPUSD at a critical decision point

Following up on the previous post, we mentioned that if “GBPUSD can’t break above the previous high and form like a “double top” pattern, then we’ll let the down flow establish first and wait for the Tflow setup before taking a short position.”

Indeed, the GBPUSD did a reversal double top pattern, as well as breaking down the steep uptrend channel in blue and price has fallen back into the green uptrend channel.

Interesting fact is that after price fall inside the green channel, it did a pullback up towards the green channel top and gets resisted again, which at then did offer a short opportunity before it started to plunge again. The pullback – that’s a typical Tflow® trade signal – a 300 plus pips movement (a reward to risk ratio of 4:1).

For this week, price opens at the high and closed at low, therefore, the sentiment seems to change at the moment. Any pullback to any resistance would offer an opportunity to go short.

However, GBPUSD is now near to the bottom of the green uptrend channel which might suggest some immediate support but if price couldn’t hold the channel and breaks down then the next potential support will be the highlighted blue zone shown in the chart above.

Alternatively, those who have missed the whole sell down may be waiting for an opportunity to do some bargain hunting at the support zone (i.e. buy low sell high). One of the very important criteria is to look out for is Tflow® reversal pattern in the lower timeframe before going long as this is a counter trend play and (a possible B3S4 trade?), planning in advance.

To find out more, you can join our free forex seminar where we are going to showcase Tflow®.

Only registerd users (ie TerraSeeds Tflow® graduates) can view this post. Graduates please log in with your UID and password that you use for Forum. Find out how you can be part of our privileged trading community. Email forex@terraseeds.com

Only registerd users (ie TerraSeeds Tflow® graduates) can view this post. Graduates please log in with your UID and password that you use for Forum. Find out how you can be part of our privileged trading community. Email forex@terraseeds.com

Only registerd users (ie TerraSeeds Tflow® graduates) can view this post. Graduates please log in with your UID and password that you use for Forum. Find out how you can be part of our privileged trading community. Email forex@terraseeds.com

Only registerd users (ie TerraSeeds Tflow® graduates) can view this post. Graduates please log in with your UID and password that you use for Forum. Find out how you can be part of our privileged trading community. Email forex@terraseeds.com