This week I will be keeping an eye on the following FOREX markets (and gold). I'll be writing this post every week as place for me to journal my trading. It's value added if these posts can be of help to anyone else, so let me know if you appreciate the write up by upvoting below. ;)
Looking at the EURGBP daily we can see that price failed to reach the ML on the red fork. This always tells us that price is very likely to move considerably in the opposite direction.
Rule #8. Price Failure Rule; When prices fail to reach the ML as shown by a space between the P of reversal and the ML, the probability is that this price reversal will go further than it did on it's approach toward the ML.
Andrew’s Action Reaction Course
Looking at the following swings we can see the bears fully in control until price reaches the warning line (dashed red line). By reading price action we can clearly see the bulls taking back control of this market with higher highs and higher lows, and by busting the seller levels of the previous swing down.
There is a sweet balance point at the level marked as 0.5 that projects this swing could run out of energy approaching a DT(double top) with the major high.
If price can make it’s way down to the recent mirrors/minor swing low, I’ll be hiding a stop behind that structure and holding a long to the DT. There are also possible considerations to be taken for shorts up there depending on what gets painted in the hourly or 4 hourly view.
I’ve already got an order in to short cable as the buyers are starting to look weak. Despite recent efforts from the buyers to take this up higher, on the hourly we can see sellers are gobbling up buy orders and driving prices back down again. Sellers are currently holding their levels at the recent high.
If we linebaby this chart a bit we can also find some nice bear indicators. The blue MS (modified schiff) catches price nicely at the high; but remember as a regular fork price would miss the the ML. Rule 8 is that when price misses a ML you can expect it to move further in the opposite direction.
You can expect new pivots to form around ML’s so that gives us the third point on the black fork illustrated. As predicted by this fork we can see price struggling to find legs to carry it higher than the black UMLH (upper median line parallel).
From a daily perspective we can see sellers dumping (orange arrows), and after the double top we have made a lower low (barely). The more recent dump marked out looks like a good place to hide a stop behind, so as we approach this level I’ll be monitoring gold on the lower timeframes to see if we get any confirmations for a short.
I’m traveling at the moment so I’m keeping it fairly relaxed. As always RvR must be valid for any trade, and risk must be clearly defined and accepted. It’s all too easy to get caught up in one trade or another, but individual trades do not matter in the grand scheme. Trading is very much a numbers game.
If you appreciate this post please give that upvote button a click. It encourages me to keep doing this. Of course please leave a comment sharing your own charts or thoughts. Markets are fascinating and I welcome any and all discussion on them.
