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Following up on the previous post on “Why US market Dow Jones didn’t manage to fall and why it might fall”, price has now broken the key support level of 10,593.

Dow Index reacts to resistance

We noticed that recently price has been ranging in the highlighted red zone since 3rd August 2010 to 10th August 2010. Thus, this would give us a hint on the strength for Dow Jones if the support level 10,593 doesn’t hold.

Yesterday, on 11th August 2010, the Dow Jones fell 265 points and price has now broken down the uptrend channel in green, which also gives us a clue to prepare for short upon retracement.

However, price seems to be holding at the support level 10,347 to 10,407 as highlighted in the blue zone above thus, seems to suggest that it might be risky to go short now without any retracement as this would also means ‘shorting on support’.

Therefore, if the Dow Jones manage to hold the highlighted blue zone support level, then one of the way would be to go down to lower timeframe (i.e. hourly chart) to wait for a setup upon retracement and if possible as near to the 10,593 level where previous support turns into resistance and also a ‘potential head & shoulder’ chart pattern, so that the risk would then be minimized.

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

GBPUSD continues to trade inside the up-trending equidistant channel for two consecutive months in June and July after bottoming out during May, this year.

GBPUSD in strong uptrend but resistance is near

Price has now surpassed the high created in April 2010, where the resistance created in April may now appears as a potential support zone in the near term.

On Friday, 30th July, GBPUSD hit the top of the equidistant channel as well as the resistance zone level. We can see a very clear support turns resistance zone highlighted in red as shown in the chart above.

For the bulls that have missed out the rally, would probably want to go long in two of the conditions below:
a) To go long IF price continues to get supported at the bottom of the uptrend equidistant channel
b) To go long IF price gets supported at the support zone, where resistance turns support level

For the bears, they would probably want to see some form of reversal pattern reacting at the resistance zone (i.e. double top, head and shoulder or triple top etc…) in the lower timeframe before the bears are convince to short it down.

It is important to note that currently, we don’t see any reversal pattern as price is still forming a higher high and higher low in the four-hourly chart; therefore, we will continue to assume the trend is up until we see some forms of reversal pattern as mentions above.

Some food for thought: Indecisions punish the procrastinators. Fortune favours the brave. Have we been able to get it right in trading, in our lives? Courage vs. Foolishness vs. Randomness.

July has come and gone. How has our beloved EURJPY performed in the month of July?

‘Somewhat better than June!’ we can say.

Having bounced off the low of 2010 early in the month, price attempted to break the high of June no less than 10 times in the latter stages.

On the Daily chart, price finally closed above 113.40 on Tuesday Week 30! Hooray! Bulls came charging in to bring price to a high of 114.78. However, bears came back to take their revenge and brought price below 113.40 on Friday. Was this a failed break then? All we can say is that there is no successful trend reversal, for now.

Doesn’t quite matter because Tflow® students were BOTH the bulls and bears! On the lower time frame, the bull-charge on Tuesday would have rewarded the Tflow® hunter between 84 pips – 120 pips whilst the Tflow® bear-revenge starting Thursday would have made a simple meal of 123 pips! Either way, decisiveness reaps its due rewards!

EURJPY Failed Break?

The opening and closing prices for Week 30 is almost the same, i.e. Doji for Week 30. However, on the H4 chart, what we have for Week 30 when compared to Week 29 is a higher high (HH) and a higher low (HL). Price has been obeying an upward Equidistant channel that has been in play for the past 5 weeks. Will this pattern continue to hold its ground with yet another HH and HL in Week 31?

EURJPY Upward Equidistant channel

Going into Week 31, we have 2 scenarios to look forward to:

a) Bulls will continue to charge up (Blue arrow) the ED channel, once the stubborn resistance of 113.40 (Yellow horizontal line) is breached. The target level in this case would be the upper border of the ED channel. However, to do this, we would definitely want to buy LOW e.g. at the bottom of the ED channel. Even bulls have to be patient!

b) Bears (Red arrow) will still attempt to bring price down towards the bottom of the ED channel, if the intermediate support of 112.00 (Week 30 low – lovely number!) is breached. Price would then head towards the low of Week 28.

And the Doctor’s Advice for the Week: Courage vs. foolishness vs. randomness. Where do we stand?

1.3000 was a psychological level for the EURUSD for the past 3 weeks. To be precise, a strong resistance can be found between 1.3026 – 1.3040. All that has changed since the start of European trading today.

Telltale consolidation gave early hints of continuation move

We can see that 1.3006 high was first reached on 16 July 2010. Since then, we had at least one attempt to breach this level in Week 29 followed by several early this week (week 30).

Did we get a clue that the market was finally going to go up? You bet! Price action over the past 2 days show us a horizontal consolidation at the resistance with ever tightening levels just hinted of an explosive move. The fact it did not weaken or paint a reversal pattern but instead stuck near the high just tells of the market’s inclination to go long.

Going forward, it would be logical for some kind of throwback action for late bulls to enter. The best place for look for this throwback is in fact 1.3000. At the same time, bears will still be looking for the move above 1.3000 to fail so any large movement below 1.3000 would be seen as failure.

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The FTSE 100 Index (London Stock Exchange) has created a strong support zone highlighted in blue to be taken note of. This [level has been touched many times – therefore concluding it as a strong support

Price has been testing this support zone level 4,985 to 5,030. There are also signs of bear trap seen on the chart circled in black. Currently, price is staying above the support zone at the moment. Any pullback to the support zone would probably give a potential signal to go long.

FTSE 100 Index also shows price and MACD divergence. However, the confirmation trend line in orange has to be broken to confirm this move. Do note that IF the orange trend line is not broken, then there will be a chance that price will be resisted there instead.

Bottom line: Orange trend line has to be broken to confirm further upside in the FTSE 100 Index.

Support predicted

On my previous post regarding Dow on 6^th June 2010, support predicted at 9,684 was actually hit off the market trading hours on Monday 7^th June 2010 early morning, where after Dow closed 9,811 on Monday and it went down further to hit a low of 9,683 (In CFD US indices), before recovering all the way up.

I have added in a new neckline (orange) on top of my previous initial neckline (in green). Currently, Dow is being supported at the neckline, to execute a short, price have to go up first before shorting it at the high instead of low.

New Resistance Identified

Resistance would still be the 200-days Moving Average (highlighted in yellow), and 10K psychological level is still a level to watch out for.

Ever wonder why Dow stopped at 9,758 and rebound upwards with almost 200 points?

Tflow student will be able to understand why Dow won’t just break down like this, look at the degree of the orange neckline.

The USDJPY is likely doing a pullback for a renewed fall. Pull back levels are therefore attractive for consideration to go short. This makes any upward move in the following days opportunity to discover resistance levels.

Weekly USDJPY chart suggestion near to sideway consolidation

4H chart favors continuation move due to prior momentum

Pullbacks will test resistance; shades indicate potential confluence

The 4 hourly chart of Kiwi Yen, NZDJPY shows that it is on a up trend and may be facing a possible trend resistance soon.

The monthly equidistant channel and the weekly equidistant channel are still on an up trend.

However, NZDJPY was being resisted by middle line of both equidistant channels.

Thus, NZDJPY might find support on the lower channels of monthly or weekly channel, before resuming the up trend movement.

The Dollar Yen pair had just made a new High for 2010 today on 4 May, while Japan is on the Golden Week holidays.

Coincidentally, the recent 2010 high was just made in the beginning of last month. Thus, with both Highs in mind, there is a potential Resistance Zone formed for USD/JPY to find a support after the recent bull rally.

The 4 hourly chart reveals a possible upward trend and the recent Price movement forming a rising wedge.

4 Hourly Chart of USD/JPY

The convergence of the resistance trendline and the rising wedge suggested a possible consolidation is underway.

EURJPY has touched resistance of 125.26.

Resistance of EURJPY at 125.26

This level was made up of:

1. Prior price level

2. Advance Fibonacci Confluence of 38.2% and 76.4%

Based on Tflow®, there will be 2 paths as shown in chart. We like to assume the path of least resistance – that is EURJPY will be resisted unless broken.

So, we can finetune in lower timeframe for trigger.

Again, wait for flow to establish and the trigger to be presented.

No trigger no action!

It is getting hard to decide where the EURO is going these days. The charts offer few clues and it is up to nimble traders to find their space.

While the daily chart shows EURUSD firmly in a downtrend, we are after all approaching the resistance and enthusiastic bulls make see a case for an up-move. It is usually common sense not to defy the trend and indeed the reward to risk proposition seems to favour a short.  It is however possible that a reversal might occur if the charts are showing a higher base.

Careful bulls should only enter after retracement following a confirmed move. Bears watch for trigger.

EURUSD higher base in 2 weeks

The CADJPY displays a formation that looks remarkably like a pennant. This is because of the ‘flagpole’ which tells us the strong upward momentum in its previous rally. This flagpole and subsequent side-way movements suggests a continuation action after profit-takers have been cleared and strong bulls take command.

Possible pennant in CADJPY

On the other hand, price remains resisted by an August 2009 level so upside is restricted until this level is breached successful.

Equidistant channel in 4 hour chart of CADJPY

In the 4-hour chart, an equidistant channel can be seen. The resistance of this channel is the resistance of this possible pennant formation.

In previous postings, we discussed the elements of a good signal. This week we see such a combination unfold before us in the EURYEN. Lets recall.

A good signal has the following:

1. Resistance level provides a ‘hard’ place for price to reverse
2. A chart pattern hints at reversal
3. At the critical point, a candlestick pattern can be seen
4. All of the above come together in a confluence ultimately confirmed with trend line break

Let’s good at the EURYEN chart.

Firstly, the daily chart provides the ‘hard’ place to start looking for a reversal.

Daily resistance hints at reversal

At the 4-hour chart, we can other elements fall in place.

• The violation of the first trend line shows the end of the predominant trend
• A price pullback after the first trend line break hints now a head and shoulder pattern
• A second (shorter) trend line can be drawn to indicate the trend of the pull back
• A big evening doji look-alike bar that violates the second trend line shows the breakdown of the pullback
• Finally the violation of the neckline confirms the head and shoulder formation

Head and shoulder in EURYEN at resistance

Some previous postings

Elements of a trade signal

Reversal signal also shown in Loonie

The dollar’s movement in the past few days could be just a retracement or pullback to test 97. Until 97 is taken out, the USDJPY is technically likely to continue its downward movement. This also has to be confirmed by breaking 93.80.

From the chart, we can see that the pullback tested a Fib level as well as a previous support line. That line has been tested twice.

USDJPY tests resistance at 97

This is another execution by a student. The analysis is flawless but strong market momentum may have stopped this trade out. There was a bearish candlestick pattern in the hourly chart that was apparent in the second attempt on the resistance line. A valid but unfortunate short.

Hi All,

Last night i notice a huge movement in the EUR/USD.

1) initial thoughts at chart “eurusd1 h4″ was to long once the candle close above the “purple channel”

But some teaching by Binni and Tiong Hum came into my mind  “bigger picture”, “false break”, “huge increase is hard to sustain”.

By looking at the bigger picture i manage to draw another channel (in blue) and when i put in the fibo level it is clear to me that shorting this pair is more in line with what i learn.

2) Zoom out to look at the bigger picture draw another 2 channel (blue)

Went in to fine tune at H1 Short after forming of the doji red candle

Regards,
Ivan

EUR meeting resistance

Confluence met

There was apparently a evening star candlestick

The postings here are analyses made for educational purposes. None of the authors, contributors, trainers or management has license to give investment analysis or advice. It is made purely for learning purposes and at no time should be taken as advice to buy or sell. We are not liable to any damange or loss in anyway.

This analysis is posted to terraseedsgooglegroups by one of Tflow students. He is also a trainer of some of our TA courses.

Hi!

Here is my analysis of AUDUSD in D1.

The 4 days price advance from 0.6592 found resistance at 0.7225, which
is the 76.4% Fibonacci retracement of the down swing from 0.7325 to 0.6952.
This level also confluence with the horizontal price resistance levels.
A support zone exist at the region of 0.6810, which is the confluence of the
138.2%
Fibonacci extension, the 50% Fibonacci retracement of the up swing from
0.6285 to 0.7325,
and multiple horizontal price supports.
Please see attached chart.

Feel free to comment. Thanks.

Bee Heng

AUD Evening Star at Confluence

The postings here are analyses made for educational purposes. None of the authors, contributors, trainers or management has license to give investment analysis or advice. It is made purely for learning purposes and at no time should be taken as advice to buy or sell. We are not liable to any damange or loss in anyway.

Price pull back to a resistance trendline has tested the latter thrice.  The resistance continues to hold and could spell implications on the strength and direction of the sterling in the near future.

Risk-Reward zones are immediately visible and offer clear guides to swing traders and scalpers

The Kiwi shows the symmetry that can be found in the forex markets. All the lines inside were drawn using a feature called ‘equidistant channel’ or other words parallel lines. Immediately evident is where the boundaries lie and the risk-reward ratios available.

The 4-hour chart is good for identifying such patterns but the 1-hour and 15-minutes chart are the places to get a trade signal.

NZD brought Double Top