5.7.07: 9.00GMT Gbp/Usd Short: Entry -2.0160; Stop 2.0180; Targets 2.0130 / 2.0119 Comments: This trade was based on the Power Hour Gbp breakout strategy.
It went as per planned, with price reaching the first price objective.
We had the BoE interest rate decision coming out at this time, and due to an unexpected quarter point increase in the Interest rate, price spiked and approached the second target. But we did not get a fill since the spreads had grown larger, and we closed the trade at the first target level. R: R ratio - We got a profit of 30 points for a risk of 20 points.
This gave us a good R: R ratio of 1:1.5
On the daily chart of Usd/Jpy, we are looking at a triangle breakout.
The direction should be to the upside, since we also have a
possible Head & Shoulder pattern.
The chart attached indicates the possible targets to the upside,
of both the triangle and the H&S...in case there is the breakout.
After the huge moves to the downside, we could be looking at some retracements on the Usd/Cad.
The 1hr chart attached, is showing an ascending channel, and we also have a possible bullish hidden divergence.
If price is contained by the fan lines, then we could see up moves to the Fib expansion levels of 1.0156, 1.0198...and above.
We also have the trend line from a previous high, which is resistance turned support. As seen, price has found support on this trend line, twice..thus reinforcing the bullish moves.
Gbp/Jpy long On a bullish divergence. (17/10/07 0750GMT)
Gbp/Jpy long On a bullish divergence. (17/10/07 0750GMT)
We entered long on a bullish divergence observed on the 30min time frame.
Since this was an aggressive divergence, with a very high probability of price changing trend to the upside, we decided to enter early into the trade. Aggressive Bullish Divergence - When the stochastic at D1 is below the oversold level of 20, and the stochastic at D3 does not go below this 20 level. This signifies that the lower low which formed at D3 did not have the underlying momentum to continue the down trend. For an Aggressive entry, plot a horizontal line on the low of D1, which becomes the Neckline of this divergence setup.
The entry into a long trade is when price closes above this Neckline, and the stop should be placed below the low of D3.
The aggressive entry we got was at 236.60, with the stop at 235.80.
We first plotted the expected targets using the fib projections on D2-D3, which gave us the initial target at 127 fib projection at 238.40
Hence our risk fort his trade was 80 points, and a we had a minimum profit potential of 180 points, which gave us the minimum Risk-to-Reward ratio of 1: 2.25
Another confirmation factor was also the fib fans which were plotted on the entire down move. The 61.8 fan level coincided with the 127 fib projection, making this area as a high probability target zone.
We entered the trade at 236.60 with multiple lots, and when price reached the 78.6 fib retracement level (237.40), we closed 1/3 of our position AND shifted our stop to the entry level.
At this stage, we were at a No-Risk situation, since we had already locked in a profit of 80 points, and our stop was at the entry level.
Following up with the trade, we closed another 1/3 position when price reached the 127 projection level at 238.40, and shifted our stops further up to the 78.6 fib level of 237.40.
I was planning to let the balance position run further, and follow the price with trailing stops, but I noticed that price had formed strong resistance at this confluence level (of the Fib projection 127 & fib fan 61.8)
Hence we exited our entire position at 238.30.
Gbp/Chf long On the Gap technique and 1-2-3 formation.
Gbp/Chf long On the Gap technique and 1-2-3 formation. (22/10/07 1100GMT)
The Gap strategy says that price should always come back to fill in the gap which has been formed.
In this case, after price gapped down on the opening of the new weekly session, we were expecting price to rally up to fill in the gap.
Price did rally up, but did not fill in the complete gap, and made a pullback forming a bullish 1-2-3 formation.
The 1-2-3 chart pattern is an excellent indication of the continuation of the trend, and we use the Fib Expansions to ascertain the entry into the trade.
We entered long on the break of the FE 50, targeting the upper level of the gap, which also coincided with the 127 FE.
The entry was at 2.3850, with the stop at the low of the pt.3 of the 1-2-3 formation at 2.3800.
Our initial objective was at 2.3930 and the secondary objective at the 161 FE at 2.3970
Hence our risk fort his trade was 50 points, and we had a minimum profit potential of 80 points, which gave us the minimum Risk-to-Reward ratio of 1: 6.
We managed the trade, and when price reached the 100 FE (2.3900), we closed 1/2 of our position AND shifted our stop to the entry level.
At this stage, we were at a No-Risk situation, since we had already locked in a profit of 50 points, and our stop was at the entry level.
After this unfortunately, price made some pullbacks and we got stopped out for the remaining position.
Price did continue further to the initial target of the Gap & 127 FE.
Finally we came out of the trade with a small profit of 37 pointswhich is still a profit.
Gbp/Usd Daily on 23.10.07
The previous days large down move has formed an engulfing bearish daily bar, and we can expect some pullbacks / retracements today.
Analyzing the daily chart for the possible moves, the overall picture looks more to the bearish side.
But first looking at the possible bullish moves, we have the formation of a bullish Flag pattern.
Ideally, in case of a bullish pattern, the channel of the Flag is usually down sloping. In this case, we have an up sloping channel and this is also acceptable.
To give it an additional filter, I have plotted a trend line in the middle of this Flag channel, which usually acts as an early indication for a confirmation of the pattern.
As per this, the mid line level of 2.0400 would act as an effective confirmation level.
If todays daily bar has a close above 2.0400, then we can expect the Bullish flag pattern to fulfill.
The entry to the bullish side would on the breakout of the Flag channel (which should be appr. 2.0550)
The target for this bullish Flag pattern should be the Flag pole distance added on the breakout level, which should be 2.1150.
Now looking at the bearish side, we can identify a bearish regular divergence which has formed and this down move has driven price to find support at the 78.6 retracement level (which is also the support of the Diamond formation).
Presently, as per the rules of the divergence entry, we do expect a pullback, and a confirmed short entry would be the break of the lower channel line.
The expected trade would be an entry at 2.0260, with the stop at the mid channel line at 2.0400, and expected target of the 161 Fib projections at 2.0060.
The Risk to reward ratio in this case works out to 1: 1.40
The mid channel line would again, act as an effective indication of the trend. If price finds resistance at the mid channel line, then we can consider an early aggressive entry to the short side at appr. 2.0350.
I am enclosing an analysis on the Aud/Jpy which I had done on 5th Nov, based on certain technical patterns.
The charts of 5th Nov are also attached, and so are the current charts, after the price action has moved in the anticipated direction
Aud/Jpy. (11/5/07)
There seems to be some bearish moves forming here, on a longer term basis.
The first chart 4hr (aud.jpy.1) shows that price has gained momentum to the down side as of now, and we need to analyze if the down trend is going to continue, or would it end in just a pullback?
If we plot the Fib retracements, and the fib fans on this down move -
As per the Fib retracement conditions, if price breaks the 23.6 down, then we should expect a down move to form.
I prefer Fib fans over the Fib retracements, for the simple reason that the dynamic levels are more accurate, and the conditions of the fans give us a better picture. In the chart.1 attached, we can see that in this current up move, price has entered the middle fan channel.
Hence we can expect some further up moves to test the 76 fan line, and maybe even further to the 88 fan line.
If it closes above the 88 fan, then we can expect a resumption of the uptrend. But there are 2 reasons why I am expecting a down move here.
First, on the daily chart we have the forming of a possible bearish regular divergence (shown in chart - aud.jpy.2). So this swing high (marked as H on the chart.1) could be the D3 of that higher divergence, and hence a possible down move can be expected.
So, if the current price action (in the chart.1) moves up in a 3 wave ABC correction (marked in red), then we could be looking at a possible bearish Elliot wave in the making...and a strong move down.
Second, based on the 4 hr support fans (in chart.2) price has already entered into the fan channels. And the thumb rules of the fans say, that the probability of price going down to the mid channel line of 61 is pretty high.
All this, of course, subject to price confirming the ABC move...but I like to be prepared.
Just as a guideline, the Nzd/Jpy seems to be in a similar downward move....BUT the Gbp/Jpy & Eur/Jpy are still showing upward momentum.
So, if I am looking to trade this one on a longer term basis, then right now, this becomes a No-Trade zone....till price confirms it one way or the other.
Aud/Jpy. (11/5/07) Price has moved in the downward direction, and looks like we could be in a strong down move.
As of now, we have also completed a bearish Gartley pattern.
(shown in chart aud.jpy.gartley)
(A Gartley pattern is quite similar to an ABC correction, which usually forms in the corrective Elliot wave.2)
The Gartley price objective of the 127 projection has been reached so far. If price finds goes beyond the 161 projection, then we are looking at the Elliot wave.3, with an expected target of the 261 projection.
In the chart (aud.jpy.3), I have shown the price projections of the Gartley pattern, and we can see that price has stopped at the 127 level. The Gartley pattern normally achieves the price objective of the 161 projection, and we could see some more down moves.
As seen in the chart, this entire pattern can also be taken as a bearish 123 pattern, where we can plot the Fib Expansion levels to determine the expected targets (not shown in the chart...would be too many lines -)
Also, if we plot a trend line from pts. 1 to 3 of this pattern, and use our concept of the advanced APF, we can see that the APF targets have been achieved precisely.
This was one situation, where we had a number of factors lined up...all pointing to the same conclusion -
Bearish divergence on Daily
Price entering the Fib fan channels.
Pullback taking place to form - a 123 pattern, a Gartley pattern and possible Elliot wave.2 (ABC) correction.
Its not surprising that price has moved in the anticipated direction.
very but very interesting stuff sunil. live and learn. very good sunil. but like all james bond movies i will shurely see it more than one time to understand. tks sunil
2007-07-05, 9:00 GMT - GBPUSD Short - "Power Hour" GBP Breakout - Target Reached, +30
Possible Head & Shoulders on Usd/Jpy
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Linear Mode
