If .8950 breaks and can hold lower, essentially we have a bounce off the bottom of the bull channel on the Daily chart. The failure at .9000 will confirm.
Next major support would be .8893 at the 100SMA.
Zeke,
Sorry about that, I didn’t mean to do that. It was actually a 40-day plain moving average, simple I take it, it only said “moving average” as opposed to displaced, exponential, modified, etc.
Daily “Bar OHLC”.
I was here trying to replicate what I had last night and just remembered it was 40, not 100.
I remember some text book from an investment course I took a few years ago mentioned using a 40-day moving aerage.
Again sorry.
Zeke,
Interesting with the bull channel you brought up. I don’t think any well-established bull channel would simply fail on the first test, assuming that is a bull-channel and not a corrective channel.
-But continuing with the bull channel idea, I imagine that major support SHOULD hold. Combine that with a potential quasi-holding (slight break) of the 100-day MA, that could spell out impteus for at least one more push higher above .9405.
-Combined with the 40-day SMA I metioned pushing downwards, plus the .9000 barrier I am currently thinking confusion (point of decision), that could = 4th wave triangle or 4th wave of some type
-If one draws a basic supporting trend line along the previous lows of the BIG move up (starting with around .6300…daily) it is clear that the price has already crashed through. Many times I have seen that happen with 4th waves. It’s like the first one is a warning.
-I don’t know if any moving average carries priorirty over other moving averages, but what do you think about the 100-day carrying more weight than the 40-day? In that case the 100-day MA could win out meaning push upwards.
-I saw an expert with a certain FX?? mention something to the effect that longer-term indicators show room for significant declines but that the dailies are still pretty low right now. So maybe there is enough juice in the dailies for one last push up above .9405 before a longer-term drop/correction.
Still on the sidelines but that channel support seems like a pretty strong idea and has me considering taking a long position.
Not sure what you are saying here…if .8950 breaks and can hold LOWER? Oh you mean if support below .8950 holds? Then we have a bounce off the bull channel and therefore movement up above .9405?
You mean if .9000 fails to hold as resistance?
I am still curious to see if any support below .8900 gets tested.
Anyways, I could be resuming work late here but yesterday I had tried to figure out some potential downside targets to see if they fit any current shapes.
A 38.2 retracement of .6248 to .9405 falls at .8203. Halfway between .8203 and .9405 is .8804. Resistance hit .8733 so it could be a bit of a stretch to matchup .8804 and .8733 as a potential breaking point for a mesaured downside target.
-Seems to me like that apparent H and S has been invalidated but I am not quite comfortable in ruling it out completely…or at the very least that potential H and S is still lingering my mind.
-If that potential little wave 1 from .6248 to .6848 is attributed to a move from .6248 to .8262 then that leaves potential for one last wave up above .9405 as part of a looooong 3rd wave from .6248 before some serious longer-term correction.
-On a weekly chart the .786 retracement of the big drop (.9849 to .6005) falls at .9026 which could also add to the 4th wave “confusion” idea. Clearly .9026 was already broken once quite nicely so if the price can re-establish itself above there that suggests to me potential for some nice upward movement towards .9849 (possibly after some “confusion” first).
-Interesting note to me, the big drop (.9849 to .6005) measures .3844 very close to fibo retracement number .382
At this point I am still on the sidelines and my thoughts are still leaning towards AUD bullish. Having acknowledged and shown some respect to potential downside movement, overall and to me, the pieces seem to most strongly suggest AUD bullish. And nothing is really drawing me towards AUD bearish, is that a sign that the complete opposite of my thoughts is the way to go here? Am I missing something that strongly suggests downward movement? Am I not giving enough respect to potential downward movement?
“conquer your fear with knowledge”
Dre,
Check my blog for a picture. The channel I’m speaking of is easy to spot on the zoomed version.
Okay Zeke, I see where you are coming from. The channel you are referring to is different than the channel I was referring to. Interesting food for thought but I’m not sure why you would isolate that stretch only. The whole move from around .6300 is pretty powerful itself, well to me it is. I thought you were channeling the whole trend.
But that line itself is still pretty interesting. It just adds to the whole importance and “confusion” of that area.
- .786 retracement of the big drop from .9849
- .382 retracement of the drop from .9405
- 100-day MA
- 40-day MA
- Neckline of that apparent H and S
I tried attaching an image. I acknowledge the channel lines of the channel I indicate are not parallel. I still think it’s interesting that it is essentially the first time that bottom line has been tested. It’s interesting how different charts show different things.
I take it your leaning is AUD bearish? I mean with that target of .8600 you recently had.
A great example of two different ways of looking at things.
I like that 40MA on your chart.
I draw my trendlines right-to-left and leave them in tact until they’re violated. Before the October high, the channel I had was more gradual due to the June consolidation. Before that, a much steeper one from the March run.
So for example, the chart shown in that picture needs to have the bearish channel on the right updated to accommodate the new swing low made on 12/23 .
So yeah, I’m bearish until the top of the channel is violated up just shy of .92 . After that I could see some range-bound action possible until we get some indications of where rates for both countries are headed.
My current thinking…I wouldn’t be surprised to see the price further retrace the move up to .9009 by testing the .8875 to .8825 area (roughly .50 to .618 retracement). Both as a 1) retracement and 2) testing of the bottom line of the channel I indicated as support. Then maybe some “crawling” up that trend line before potentially climbing more strongly.
True. I ultimately am having trouble accepting that channel as a form of analyzing the bigger picture, the longer trend, it seems so isolated… though a useful tool it can be to help with feeling better about a trade, as a little “check”. Different charts even show different slopes in the same price movement, it’s like the different projections of a map.
Cool, thanks. Yes, it has been pretty good in “guiding” the price, that’s why I was so enthusiastic about it the other night. Though I couldn’t help but wonder, is that why you like it because of it’s guiding potential? Or do you like it because looks like it supports your bearish view? 
Or both?
Interesting way of drawing trend lines, though I am not sure what you mean by more gradual. I like how your trend lines kind of help structure potential future movement. Did your trend lines help you capitalize on the June correction? See even using that as an example, just because the price broke through your bottom line, the larger trend was still bullish. That could be the same thing here, though yes of course just because it happened back then is not a guarantee that it will happen now.
Which chart in the picture are you referring to? If mine, well I think the bottom line has to go there otherwise it isn’t a channel, it’s just a rapidly narrowing triangle.
I can see the potential range-bound action for sure, I mean I’ve already alluded to it.
Bearish until top of channel violated, you mean bottom? Price climbs up above?
I am still thinking bullish. If the price moves into the .88s as I am currently thinking I may give it a try. While I am not ruling out corrective retracement yet; 1) A move above .9000/.9025 will have me feeling better about AUD bullish, 2) A move up into the .91s and back into the channel you indicated will have me feeling even better about AUD bullish.
Other interesting notes that I will put on chart later, of course you can do yourself too: fibo points above .382 and s downward sloping trend line from .9405 which will almost certainly act as resistance.
This is pretty good, I feel like we are making progress. My aggressiveness has been shifted from analyzing and in the market to solely analyzing ideas about the market.
Peace, have a good evening Zeke.
Both
The bull channel after June was less steep, until October highs. Then it got steeper when adjusted for the new swing high. I’m familiar with the chart scale/slope issue, I should’ve clarified that I was speaking relative to other non-horizontal lines on the same chart.
I was banging my head against a wall with GBPJPY in June. It was actually the fairly orderly June flag correction that led me to start trading AUDUSD later.
[I]Bearish until top of channel violated, you mean bottom? Price climbs up above?[/I]
I’m referring to the top of the new bear channel being formed right now.
Still waiting to hear what products you traded before last year… :rolleyes:
Still bearish zeke? I keep waiting for some significant drop-off but nothing yet. I haven’t opened any further positions, I would have preferred to see a test below .8900 but at least my general bullish AUD vision is still intact. Safe to say now the potential H and S top is done. Another key spot hit… .618 retracement of .9405 to .8733 and obviously the downward trend line.
As far as a measured target, the drop down is 672 pips adding that to a potential break of the downward trend line in the .9150/.9160 area produces an approximate target of .9822/.9832 not far off from the .9849 high.
What had you pounding your head with GBP/JPY?
I have dabbled in probably all of the most popular pairs but I eventually decided to focus exclusively on EUR/USD unless there was an absolutely irrestible trade scenario elsewhere, as just happened with AUD/USD.
Off the top of my head I have opened at least one position in the following pairs.
EUR/USD, EUR/GBP, EUR/CAD, EUR/JPY, EUR/AUD for sure…probably EUR/CHF as well
USD, EUR I already mentioned, all of the more popular pairs. Nothing obscure except I maybe the peso once (should be a smile here)
Others…AUD/CAD, CAD/JPY (had me pounding my head in spring 2007), AUD/NZD, GBP/JPY…probably GBP/CHF too.
Back then the “carry trade” was all the rage with GBP/JPY. After you mentioned that pair, I decided to look it up, wow! The Yen has been slamming the pound recently, that didn’t even seem fathomable to me at one time. Well recently meaning 2007/2008, obviously the GBP has bounced back over the last year but to lose HALF, practically half of its value so quickly, that is just amazing to me.
And yes I know there is no guarantee, at least in my eyes, that AUD is clearly bullish yet. But to think it has gone up 400 pips so already, wow!
I stopped writing for bit to study the ever rising price action and have come close to opening a position but I feel torn. On the one had I kind of hate to miss out on any more upward movement in the event there is no significant drop but then I keep thinking what if there is a significant drop, I hate to be wrong AGAIN.
Alright 
So I made a move back in. LONG at .9142. TARGET: open (but if my bullish thinking is right then I am thinking waaay up there). Alright Zeke, I think you’ll like this part. And I still say let the record show that my ultimate goal is to become a master trader that [I]never[/I] uses stops but for the time being I gave it a go, I am hopefully taking a “step back” to take many steps forward. STOP: .9100 (modified to .9110) AND the position taken is only half of the biggest position I could have taken. So if I do end up getting burned it’ll only shave a tiny little bit off of my little pile.
I have been wanting to go to sleep but I hate to miss out on any potential move up so this trade seems to make the most sense. If my measured target thinking turns out correct then the price pretty much has to break here, well I should say in the .9160 neighbourhood. [I]Of course[/I] if the price is going to trace out a triangle, the breakout in the .9160 area could come later on. Going on AUD bullish thinking of course.
Peace
I had 5 smilies in my message, too many, limit of 4.
Zeke,
I happened to notice you went short near the trend line.
After my first trade got stopped out, I went long again at .9141. Still open, but I too am starting to feel a bit of over-extension (and some potential pattern exhaustion in the air) in the air so I looking for one last kick up into the 92s. [I]Maybe[/I] as high as the .786 retracement at .9261 but that could be stretching a bit. I would be happy with .9220/.9230. (Oh wow! As I write the price bolted back up to .9200 from .9180!) I see a potential triangle (base .9173 to .9091…82 pips) Add 82 to an approximate break in the .9150 area projects to .9230ish and there is recent noteworthy resistance in the area.
At that I am currently thinking short for a .618 retracement to the .8940 area (which fits nicely and is a pretty key support area) as part of a potential tracing out of a 4th wave triangle.
Peace.
Still holding out for a move higher into the 92s, at least the low .9230s. But I moved my latest STOP way up from .9077 to .9160 to at least lock in a little profit on this trade. If stop triggered I can then reassess.
I see some potential for a move to the .786 retracement of .9261… .618 of .8900 to .9173 (maybe a completed third wave of some type) 168 + .9091 (bottom of potential 4th wave) = .9259 But, while it seems to fit, I don’t feel as strongly about it. And with me currently envisioning a reversal, unless the price action blows through that area (.9230s) I may not keep my trade open just to try gain another 30-some odd pips. The downside risks may be way too high.
I am hoping .9170 holds as the .382 retracement of potential 5 completed waves from .9097 to .9216 (also some support/resistance there). With only one last potential wave 1 to acknowledge (.9091 to .9147). If .9170 doesn’t hold oh well, at least I can reassess with some profit in my pocket.
Ideally, for me, the price moves higher into the .92s and reverses in the evening (maybe during Asian session).
Long opened at .9141 closed at .9237.
Short at .9248, I don’t envision a stop really being necessary but I threw one up at .9300. Hoping for the previously mentioned .8940 area, might refine that later.
Peace.
Sounds like you’re getting back into the rhythm
Keep guarding the downside and let the upside bloom!
Sounds like a good quote to me.
It is actually pretty rare that I am in THAT kind of rhythm, not to get ahead ahead of myself and gloat…become overconfident. Hopefully it was the birth of a new era of trading for me, a sort of epiphany. It’s weird, I was sitting right there watching the price rise and somehow ended up closing my trade at “only” .9237. I could have sworn I closed it when it was higher, but sometimes weird things happen with those bursts.
So far, so good with that short. I can’t believe I read some technical analysis on FX?? that still believes that H and S top (with neckline at .8900ish) is valid. Where in the world has anyone ever seen an H and S like that?
But anyways, IF my short-term bearish view is correct the supporting trend line from the .6300 area (connected to .8733) will probably factor in as support. There is enough room for the price to come down to the .8940 area without really breaking through that line, though there could be some slight “bending”. I am currently wondering about any upside risks. And about more a more refined target in the event the downward action continnues
That’s it for now.
The big daddy, non-farm payrolls, tomorrow at 8:30am EDT.
I have been thinking, hoping that this morning’s move is a corrective one and wasn’t surprised to see a retracement move of .618 to .786 of some type (as the movement downwards seemed to be too fast)…BUT the move back up from .9171 is pushing the limits of comfort for me.
Either way, it’s too bad I didn’t capitalize on this morning’s big move. My read this morning was just mixed enough to cause me to just stay out and ride my short position.
Oh well, next time.
Staying short for now.
currently at .9287.
Throws hands up in the air.