There was an RBA Interest Rate announcement at 2.30PM (GMT+11) today in Australia.
Ninth month of consecutive rises… up 0.25% to 3.35%…
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Tuesday 07/02.
Uptrend conditions still apply.
Chart shows a blue daily bar - higher high and higher low than the preceding day - Bullish.
A higher close than the preceding day’s - Bullish.
AUD pairs slightly more bullish now with respect to the 50EMA, scoring 6-1 - Bullish.
None of my buy signals printed.
Waiting.
Should have mentioned that Monday’s daily bar printed as a doji, suggesting the loss of downwards momentum. The close also appeared to have benefitted from support at around the 50EMA, price having pierced it during the day but failing to hold the lows.
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Wednesday 08/02.
A “blue” day, with a higher high and a higher low. But the close is down from Tuesday’s.
AUD has slipped slightly to 5-2 v’s the 50EMA and USD has strengthened slightly to 3-4. This pair will become a “weak buy” again if we get a close above the 20EMA. Good thing I’m not in a hurry.
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Thursday 09/02
Another blue day, with a positive close. But price still remains below the 20EMA so no entry signal from that one. And the day’s candlestick is a very decent shooting star - very bearish. Similar candlestick on other AUD pair charts.
No other changes to report. I still have zero Strong Buys / Strong Sells across the 28 significant pairs and only 2 Sells. The market continues to fluctuate…
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On swing charts, this pair is a long way from generating a bullish signal according to my rules.
02/02 was clearly a swing high: this marked the end of the swing “upleg” starting from the swing low at 20/12. This was followed by 2 successive red days with lower highs and lower lows. As there were only 2 red days I don’t mark 06/02 as a swing low from which an upleg can commence - I follow the trader Marc Rivalland’s rules here, which are quite cautious and insist in 3 red days to form a downleg.
So where will I get a bullish swing signal on this chart?
One possibility will be a breach and close above the high of the last swing high, 02/02. Entry way up there would not be low risk but I would take it if the weekly bars showed a bullish sequence and there was confluence with the other AUD pairs. This price level is also the entry trigger level for a bullish fractal and only just above a bullish IB pattern.
The other swing trade possibility is a breach and close above the high of the next swing low (assuming the uptrend remains intact). But this would mean a daily range would be required to print a third red day below 06/02, so its low would have to be way down, probably below the 50EMA. That’s such a deep fall it might only arise from a loss of uptrend criteria which would make long entry academic.
We certainly live in interesting times.
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A more simplistic view of this pair would be on the 4H chart where price is sitting at the bottom of this bullish channel.
Could very well see more bullish action next week, unless we get range-bound.
Happy Friday!
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Glimmers of hope.
There’s now the possibility of setting an aggressive new buy order on Monday night. Fractal and swing patterns are setting up for longs.
More thoughts over the weekend.
Another fun packed week of USA data
Tue
We’d
Thur
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Friday 10/02 -
A narrow range day, the narrowest in the last 10 days - no confirmation of energetic movement or determined direction.
Negative close - bearish.
A somewhat shooting star formation - bearish,
A red day, with lower high and lower low - bearish.
Week 6 -
Negative close - but only by a few pips.
The week showed no determined bearish activity, with only one breach of the 50EMA and no daily closes below it.
The week’s candlestick is somewhat of a shooting star - bearish.
A red weekly bar - with lower high and lower low - bearish.
Where do we go next?
More shortly…
Despite the lack of price action last week my three criteria for an uptrend remain in place - the 20EMA is above the 50, price is above the 50 and the swing chart remains bullish (price closed 09/01 above the swing high of 13/12).
The longer price fails to degrade the trend or to strike downwards away from the EMA’s, the more likely the trend will be re-asserted by rising price.
There is the potential for a couple of my preferred buy set-ups to be generated this week, possibly as early as Monday’s close -
- price remains close below the 20EMA and a close above the 20 would be a valid buy signal
- another red day with lower high and lower low than Friday would give the minimum three red days to form a swing downleg: if price rises above the high of the last daily bar in the downleg, and especially if it closes above it, that would be a valid buy signal
- the two daily bars preceding the bar of 09/02 were lower than it’s high (helpfully the first low was the lowest) and Friday’s bar had a lower high also: a daily bar on Monday with a lower high wold print a bullish fractal pattern and offer a buy entry level at either a breach of Thursday’s high or a close above it: contrary to what some commentators write a bullish fractal is a buy set-up, not a sell set-up
Other long entry set-ups may also complete, but I don’t usually take entries off these. One example - we may get a bullish outside bar tomorrow with a higher high and lower low and a positive close above Friday’s high - highly possible as Friday’s range was so narrow: some people call that an Outside Bar Key Reversal and they are a potent signal of upward momentum.
As @greenscorpio points out there is significant fundamental news coming in the next 5 days. So far I’m feeling safe taking the view that if the banks aren’t selling, neither should I. But its no time to be complacent.
This coming week could be a bit more interesting than the last one…
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Monday 13/02.
Everything changed. Everything remained the same.
Uptrend criteria reman in place.
A positive close - bullish.
An Outside Bar day with a close above Friday’s high, making this a Bullish Key Reversal.
Close just above the 20EMA - bullish.
Bullish engulfing pattern also.
I have now marked the swing chart as showing a swing downleg extending as far as Monday’s bar. The low of the downleg is actually not yesterday’s low but the low of 06/02 - this is a minor anomaly that sometimes happens - the high is the key for entries but a different day’s low is more appropriate for a stop-loss level.
Monday was a pretty bullish day for all the AUD pairs, as a result it has taken the top spot in the ranking v’s the 50EMA: and what do you know, USD has the bottom slot. This pair meets the ideal bullish match-up on this measure.
So, what to do about it? -
Close above the 20EMA - gives a buy set-up for the next close above the 20 and above Monday’s high.
Confirmed a swing downleg - gives a buy set-up for the next close above Monday’s high.
Bullish Outside Key Reversal - Why not. Gives a buy set-up for the next close above Monday’s high.
Onwards and upwards.
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Tuesday 14/02.
Interim update.
Tonight’s close was indeed slightly above Monday’s high and also the 20EMA, while thew day’s range breached the bullish fractal of 09/02. Both bullish indications yet the overall day’s pattern was more like a doji than a bullish bar. So while I see a buy set-up I would like further confirmation and have therefore set a buy order at today’s high, not entered at today’s close, SL at Monday’s low.
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Weakness regarding Asian stocks overnight could be a big sell off through the sessions yet, see what the effect of the USA data later too
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Yep, glad I decided to wait for confirmation, major drop on AUD/USD since the NY close.
Cancelled the buy order already, going to need a new and convincing bullish set-up of some sort before I can again consider getting long.
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I didn’t want to make cristism as you been trading lot longer than me but I was nt convince going long till breaking 7120 when you started the post,you might have good opportunities now in the future for a buy set up
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7120-ish would be a valid bullish milestone - I have a potential long entry signal above there which remains valid - the bullish fractal of 01-02/02 - but in abeyance now until the dust clears.
I have to say I think fractal is my favoured pattern - I would enter long on a bullish fractal s soon as the pattern high was breached, without waiting for a close above the high.
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Note re bullish fractals - I seem to have confused myself, which led to me posting some nonsense.
A bullish fractal is a 5-bar pattern in which the middle bar has a higher high than the two bars preceding and the two bars following. In profile it looks like your hand when you hold it up in a “Stop” gesture - the middle finger is the highest digit of the 5.
In ideal form, the second bar to form in the pattern is higher than the first, while the fifth bar to form is lower than the fourth. But this is not mandatory: as long as none of the 4 are higher than the middle bar, you have a bullish fractal.
The response is to buy when price subsequently breaches the high of the fractal pattern. The stop-loss level can either be the lowest low of the 5 bars or a volatility-based price level, perhaps using ATR.
Sorry if I caused some confusion.
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The Bill Williams Fractal indicator standard on Mt4 seems that way - showing fractals without the lower highs either side of the middle bar
Yes, that’s the idealised pattern. But a less precise version also works.
The Bill Williams fractal is the only pattern I’ve come across which he said can be used to do one thing and many commentators say the opposite. Williams said a bullish fractal meant buy on breach of the high and exit on a breach of the low: others said that a bullish fractal meant do not buy on a breach of the high, but do sell on a breach of the low.
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