Price Action on Daily & 4H Charts- No More Indicators, News or Smaller Time Frames - Page 3
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  1. #21
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    EURO USD - HUNDREDS OF PIPS BEARISH ON OFFER?

    The Daily Chart below shows that after breaking out of the large Pennant setup recently, the pair appears to be forming a Range just below the Support of that Pennant.


    DAILY CHART

    Name:  JULY WK2 EURO USD DAILY 1.png
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    Taking a wider view, we can see that this possible Range setup is also taking place on top of the Resistance of a much larger Pennant on the Monthly Chart.


    MONTHLY CHART

    Name:  JULY WK2 EURO USD MTHL 1.png
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    This would explain the long period of indecision and volatility for this pair over the last few months. The larger the Consolidation, the larger and longer the time it can take for the pair to either breakout or return inside of the Consolidation.


    In order for us to start a downtrend to the other end of the Pennant, we will need a convincing break below this major Resistance and the Uptrend Line.


    DAILY CHART

    Name:  JULY 2ND WEEK EUR USD DAILY 3.png
Views: 1003
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    This movement in favour of the USD would be in sync with the reduction of interest rates by the European Central Bank that narrowed the Interest Rate Differential between the EURO and the USD. If this bearish breakout does not materialize, however, then the alternate scenario is that of a bullish breakout. This would mean that the Resistance boundary of the Monthly Pennant is acting as a Support, from which the currency pair will rally to resume the uptrend on the Daily Chart. It would also effectively render the current bearish breakout from the Daily Chart´s Pennant a False Breakout.


    DAILY CHART

    Name:  JULY 2ND WEEK EURO USD DAILY 4.png
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    Ultimately, the combination of Economic data, Monetary Policy and Investor Sentiment will determine market direction. Whichever direction the currency pairs takes, it is likely to move by several hundreds of pips given the strength of the crossroads at which it is right now. To take advantage of the expected breakout, we will need to patiently wait on the right setups and signals, then confidently execute trades for strong gains.

    Regards,

    DRFXTRADING

    __________________________________________________ _____________
    Last edited by DRFXTRADING; 07-09-2014 at 02:30 AM.

  2. #22
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    Default Nzd usd 10 pips away from major decline

    NZD USD 10 PIPS AWAY FROM MAJOR DECLINE

    Following a strong False Breakout rally for the Kiwi against the US Dollar, the currency pair has now settled above the Resistance of its Range just 10 Pips away from a major Resistance formed 3 years ago. If this price is hit over the next few days, we are likely to see a sharp decline of several hundred Pips that carries it back inside the Range and possibly even lower over the next few months.

    The Daily Chart below shows the False Breakout below the Support of the Range that turned into the sharp rally over the last few weeks.


    DAILY CHART

    Name:  JULY 2ND WEEK KIWI DAILY 1.png
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    Despite the fact that False Breakouts usually lead to a break at the other end of the Consolidation, the Bull Candles above the Resistance have so far been very weak. This gives us a very small probability of a continued breakout that supports further gains for the Kiwi. One reason for this might be due to the fact that we are very close to a major Resistance that was formed in August of 2011- a major Resistance that has not yet been tested.


    As we can see from the graphs below, this Resistance was formed when the strong 2-year rally came to an end and led to the formation of a large Pennant setup. Any Resistance or Support price formed when a major trend comes to an end is likely to lead to sharp reversals when tested for the first time. Whenever such a test is close to taking place, the market tends to hesitate ahead of this test-partly due its significance and partly because of the growing expectations of the trend reversal to follow.


    DAILY CHART

    Name:  JULY 2ND WEEK KIWI DAILY 3.png
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    DAILY CHART


    Name:  JULY 2ND WEEK KIWI DAILY 6.png
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    Assuming that the market will rally to hit this Resistance, let´s see what is likely to take place thereafter. This pullback would take us back inside of the Range where it could continue to oscillate between Support and Resistance, moving by 230 Pips on each occasion.


    DAILY CHART

    Name:  july 2nd week kiwi daily 4.png
Views: 937
Size:  31.7 KB



    If the Candlestick Signals are strong enough with little volatility, trading within this Range can be very profitable. ABC Signals, Consolidation breaks and Trend Line breaks are possible signals that could provide entry signals inside of this setup.


    Alternately, instead of continuing to move inside of the Range, the pullback at Resistance could lead to an even stronger breakout that breaches the Support, the Resistance of the large Pennant and an Uptrend Line. This would take us down to the 0,7900 area of Support over the next few months, as the US Dollar recovers lost ground of over 900 Pips.


    DAILY CHART

    Name:  JULY 2ND WEEK KIWI DAILY 5.png
Views: 916
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    Trading this breakout would also involve the use of ABC Signals, Consolidation breakouts as well as Counter Trend Line breaks. Trades can be held for a much longer period over the course of weeks or months, with less monitoring required compared to trading within Ranges.

    Under both scenarios, the signals and the corresponding setups given on the Daily and 4 Hour Charts need to be strong and clear enough. Once these are provided and the trade meets the other criteria established to justify entry, consecutive gains will be realized by traders.

    __________________________________________________


  3. #23
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    Default Usd jpy breakout short- crisis looming ?

    USD JPY BREAKOUT SHORT- CRISIS LOOMING ?

    As we continue to struggle in a very low liquidity environment for the Currency Market, the USD JPY has also fallen victim to the absence of meaningful, tradeable volatility. This has led to the formation of a 145-Pip Range within which the pair has moved since the middle of April this year. Short-term aggressive traders may have profited from this period of market indecision by trading between Support and Resistance despite the erratic nature of the candles. However, those focused on the larger picture could be rewarded for their patience with a strong bearish breakout of 300 Pips that seems to be looming following the break of two previous Uptrend Lines.


    The chart below shows the Range within which we have been for the last 3 months. Traders who enter and use the Resistance and Support boundaries for Stop Losses would have done so at the 102,75 and 101,30 price areas, respectively.


    DAILY CHART

    Name:  JULY 2ND WEEK USD JPY DAILY 1.png
Views: 898
Size:  32.3 KB


    Trading based solely on Support and Resistance without strong candle signals can be a very risk strategy given the possibility of large price spikes at these areas. The absence of such strong candle signals also leads to unexpected Double Tops and Bottoms that appear at the mid-point of these Ranges. On the other hand, if these Range traders were to instead take a broader look at this currency pair, they would see the potential for even larger gains in the next few days.


    The chart below shows that this Range is actually sitting atop the Outer Trend Line that has been in place since November of 2012. We can also see that the movement to this Trend Line followed the break of two Inner Trend Lines.


    DAILY CHART

    Name:  JULY 2ND WEEK USD JPY DAILY 2.png
Views: 890
Size:  49.0 KB


    In general, trend reversals tend to occur whenever there are successive breaks of trend lines and/or long periods of indecision and sideways patterns. Whenever they are as large as the patterns that we are seeing here, however, they are usually associated with a major change in investor sentiment such as with the GBP USD prior to the safe-haven trading of 2008;


    DAILY CHART - GBP USD

    Name:  JULY 2ND WEEK GBP USD 2008 TL BREAK DAILY 3.png
Views: 889
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    Given that we are seeing something very similar with the USD JPY, we are very likely to see a significant trend change associated with another major shift in market sentiment. If this actually takes place, it is likely to start with a break of the Support of the current Range setup.


    DAILY CHART

    Name:  JULY 2ND WEEK USD JPY DAILY 3.png
Views: 885
Size:  39.0 KB


    Even though such a major trend change could last for several months, let's examine what can take place in the very short-run period of 7 to 14 days.


    As the breakout begins, there will be several price points of Support to provide traders with good exits for their trades. However, given the precocious nature of breakouts, the trader would need to know beforehand that a particular Support point targeted for profit, will in fact be hit before the trend ends.


    This is where the concept of the Breakout Equivalent becomes useful. It measures the distance over which the breakout is expected to take place before coming to a slow or abrupt end. Knowledge of this price and how to measure it allows traders to set their pre-determined pip targets with greater certainty and avoid the trap of unexpected reversals. If this breakout actually takes place in favour of the Japanese Yen, the Breakout Equivalent target would be at 98,40, some 300 Pips away from the current price.


    This concept can be seen throughout the Currency Market, with the USD CAD providing a very recent example.


    DAILY CHART - USD CAD

    Name:  JULY 2ND WEEK USD CAD DAILY 1.png
Views: 877
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    In this case, the Breakout Equivalent took us very close to a major Uptrend Line that started in September of 2012. You will also notice that the breakout signal was strong enough to give traders the added confidence that we would not fall into the trap of a False Breakout to go long. Once a strong enough signal is given to start a breakout, pre-determined targets can be comfortably set to capture between 100 and 200 Pips (125 Pips in this example).


    Another major issue related to these setups is the holding period for our trades. Breakouts can last anywhere from a few days to a few weeks depending on the speed of the market and the size of the Consolidation. This means that two currency pairs with similar size Ranges can reach their respective target at different times. Given that we do not necessarily want to hold our trades open indefinitely, what would determine our decision to stay in these trades for 4, 7, 10 or 14 days?

    __________________________________________________ __________

  4. #24
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    Default Weekly range keeps gbp usd traders holding gains

    WEEKLY RANGE KEEPS GBP USD TRADERS HOLDING GAINS


    The Pound Sterling has been in a steady uptrend over the last few months in keeping with growing expectations of a rate increase by the Bank of England. This has led to very profitable trading opportunities for Swing Traders who are patient enough to hold on to their trades for several days at a time. One such opportunity presented itself several days ago when there was a strong break of a Counter Trend Line (CTL) that appeared to indicate the resumption of the trend. However, this signal was one to have avoided given its proximity to the Weekly Range- an important price barrier that all currency pairs obey before pulling back. Those lucky enough to have spotted this price barrier would have easily avoided the pullback and been able to hold on to their trading gains.


    In the chart below, we can see that the most recent uptrend began with a breakout from a Pennant Consolidation Setup. This led to price gains of several hundred pips over the next few days before pausing to pullback and form this CTL Setup. Following this pullback, another Bull Candle was provided to signal another entry possibility to capture more pips in the direction of the Pound.


    DAILY CHART

    Name:  JULY 2ND WEEK GBP USD DAILY 1.png
Views: 879
Size:  37.5 KB


    As tempting as this appeared to be, caution needed to have been exercised here. Given that we were very close to the Weekly Range, entry at this latest signal would have led to a floating loss for several days or Stop Losses being triggered. The better option is always to wait on the sidelines until the currency pair goes through its natural cycle of pullbacks at these areas and then provides another signal to start a new Weekly Range trend.


    DAILY CHART

    Name:  JULY 2ND WEEK GBP USD DAILY 2.png
Views: 892
Size:  31.3 KB


    Such an opportunity could come from another strong break of the latest CTL or a Consolidation that could also be formed in the next couple of days. In either case, the price area of 1,7485 could be the next Weekly Range target to be hit for more trading gains, once the right setup is provided.


    __________________________________________________ ______________

  5. #25
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    Default Usd chf bull signal given - but not to be traded

    USD CHF BULL SIGNAL GIVEN - BUT NOT TO BE TRADED


    This pair has given us a bullish candle break of the Resistance of its Pennant, signalling its intention to rally to the Outer Trend Line. However, the size of the candle is too weak and does not warrant entering to capture the `tempting´ 70 Pips on offer.


    DAILY CHART

    Name:  3RD WEEK USD CHF DA 1.png
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Size:  31.7 KB


    DAILY CHART

    Name:  3RD WEEK USD CHF DA 2.png
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    DAILY CHART

    Name:  3RD WEEK USD CHF DA 3.png
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    As you can see, the currency broke above the Inner Trend Line of the previous downtrend. Normally whenever major Inner Trend Lines are broken after such a long trend, the currency tends to move to the Outer Trend Line if there is one. If the setup and the signals are strong enough then, the currency normally goes to that target with little volatility. However, the weaker the setup and /or signal, the less chance it has of going there -without excess volatility-and the more likely it will resume the original trend.

    The candle to left is an example of the candle size expected/preferred for breakouts.

    DAILY CHART

    Name:  3RD WEEK USD CHF DA 4.png
Views: 838
Size:  32.4 KB

    The weaker the candle, the greater the chance of a false breakout- the stronger it is, the more successful your trade will be.

    More examples of this analysis can be found at DRFX TRADING - PRICE ACTION FOREX TRADING where you can also get the Manual that goes indepth into distinguishing between weak and strong signals.

    DRFXTRADING

  6. #26
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    Default Last gasp aussie rally ahead of sharp decline

    The Aussie-Dollar pair has definitely been testing the patience of traders over the last few weeks, with an extended period of Consolidation above the most recent Uptrend Line. This period of market indecision could either be a setup to resume the current uptrend, or lead to the break of the Uptrend Line to start a downtrend. With the Monthly Range of this pair having been hit (see Trade Manual) and the possible formation of an even larger Pennant taking place, a bearish reversal looks to be the more likely outcome for the rest of 2014.


    Both a Pennant and a Small Range have now been formed as the pair slowly drifts sideways below the Uptrend Line. The rally between 1 and 2 and then between 3 and 4 represented the 2 Weekly Ranges that completed the Monthly Range. As with all currency pairs, strong periods of Consolidation are normally formed ahead of either a resumption of the trend or that start of an opposing one.



    DAILY CHART - CONSOLIDATION

    Name:  4TH WK AUSSIE 1.png
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    One reason to support a bearish bias is the fact that we were in a large downtrend that formed with the breakout from a Pennant in 2013. Previous trends can still continue even when the Trend Line has been broken.


    DAILY CHART- BROKEN PENNANT

    Name:  4TH WK AUSSIE 2.png
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    A 2nd reason to expect the depreciation of the Aussie currency is that there have been 3 successive waves of Uptrends and Downtrends that are usually indicative of a large Consolidation setup being formed. The bearish breakout below this Uptrend Line would be the fourth wave and the one that would create the 2nd Resistance point of the Pennant.


    DAILY CHART - NEW PENNANT?

    Name:  4TH WK AUSSIE 3.png
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    Finally, the break of this Uptrend Line is likely to take place based on one of the peculiar aspects of the currency market. Sometimes when there is about to be a trend change, the market will make a last gasp new high or low that changes the angle of the existing Trend Line. When this happens, the market will then break this line to start the new trend.



    DAILY CHART- PREVIOUS TREND LINE

    Name:  4TH WK AUSSIE 4.png
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    The previous Uptrend Line was formed by connecting the S1 and S2 Support points, but when the new high was formed, the 2nd connecting Support point changed to the one below the Pennant.


    DAILY CHART - NEW HIGH & TREND LINE

    Name:  4TH WK AUSSIE 5.png
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    Several other examples of this can be found across all time frames and with all currency pairs. These types of Trend Line changes may be thought of as mere coincidences, but the frequency with which they occur makes this unlikely. Traders can use this knowledge to anticipate a trend change especially if the existing trend has had a very long run followed by a period of Consolidation.

    The fact that several of the most popular and liquid currency pairs have also been in Consolidation supports the bearish scenario for the Aussie Dollar. Trends have been few and far between in an environment of low volatility and minimal interest rate differentials. Therefore, identifying and knowing how to trade these setups will allow traders to continue to make money.


    __________________________________________________ _____

    More Information on Consolidations, Breakouts and Trend Lines can be found on my Trading Blog, drfxtrading.blogspot.com


    __________________________________________________ _____

  7. #27
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    Great and useful analysis.
    Thanks.

  8. #28
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    Thanks, more to come

  9. #29
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    Default Euro usd finally breaks short - dangerous 100 pip trade?

    After what seemed like an eternity, we have finally got what appears to be a meaningful signal from the EURO USD that could indicate the start of a profitable trend. The pair had been meandering sideways for months above the Resistance of a major Monthly Pennant, forming a smaller Pennant on the Daily Chart in the process. Having formed an even smaller Pennant at the Weekly Range following the break of Support of that Pennant, a strong Bearish Candle Signal has now appeared. Although this might represent the start of further USD gains in the months ahead, a closer look at the price targets indicates the potential for short-term volatility that should be avoided.


    A look at the first chart shows the large Monthly Pennant that this pair has been in since the end of the sharp gains for the USD in 2008. We can also see the current area of price congestion above the Resistance of this Consolidation and the Inner & Outer Uptrend Lines.


    DAILY CHART- MONTHLY PENNANT

    Name:  4TH WK EURO USD 1.png
Views: 798
Size:  41.1 KB


    A closer look at this area above Resistance shows the Pennant on the Daily Chart that was formed and then subsequently broken. There was a brief pause in this breakout at the Weekly Range to from an even smaller Pennant on top of the Outer Uptrend Line and the Monthly Pennant's Resistance.


    DAILY CHART- PENNANT FORMATIONS

    Name:  4TH WK EURO USD 2.png
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    As with most types of breakouts from Pennants of this size, the trend usually comes to a temporary end at the Weekly Range before continuing. Having completed this 'mandatory' break, the signal to indicate the continuation of the breakout was given today, July 22, 2014. This candle simultaneously broke the Support of the small Pennant, the Resistance of the Monthly Pennant as well as the Outer Uptrend Line.


    DAILY CHART- BREAKOUT SIGNAL

    Name:  4TH WK EURO USD 3.png
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    This setup and signal given here are very strong and under most circumstances would justify an entry to go short. However, the proximity of the Breakout Equivalent (BE) to the Breakout Candle of only 100 Pips suggests that a short position may not be that feasible.

    With all Consolidations, the BE measures the price at which the breakout is expected to end. If this price is going to be hit ahead of the Weekly Range (WR), the breakout usually ends at the BE. If the WR is closer than the BE, then the market would break beyond the WR to hit the BE. The BE is therefore the price target that Consolidation breakouts will go towards regardless of the proximity of other price targets. However, I have found that if the distance between the start of the breakout and the BE is 100 Pips or smaller, the movement can become volatile and may not actually hit any of its targets. Ideally, a distance of at least 130 Pips is needed to ensure that a strong breakout with minimal volatility will take place.

    These rules related to breakouts are very important for traders to be aware of when looking to take advantage of these strong setups. Breakouts can offer very fast and profitable trades and they can be all the more appealing when the market has not been offering that many opportunities. However, the knowledge of and the adherence to these small details can make all the difference between a successfully hit target and an unexpected reversal and trading loss.



    __________________________________________________ ________


    More Examples of Consolidations, Breakout Equivalents & Weekly Ranges can be found at

    DRFXTRADING

    drfxtrading.blogspot.com


    __________________________________________________ ________
    Last edited by DRFXTRADING; 07-22-2014 at 10:10 PM.

  10. #30
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    Wow...these markets are really dead.. admittedely I have missed a couple in last 3 weeks, but more setups are usually seen to make up for those..what gives?

    One drawback of Swing Trading is the time in between trades, but the setups are not normally these far apart. Wonder how the Day Traders are doing..

    How much of it is related to low interest rate policy & lack of interest rate differentials, market investigations into corrupt practices?

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