Posts from — September 2009

Errata, GBPJPY not GBPUSD!

Thanks DAZZA for bringing this to my attention.

I typed GBPUSD and I meant GBPJPY, sorry guys  things get a little hectic around here sometimes.

Here is the post again and the new diagram.

I have a turn in time coming up on the GBPJPY today or tommorrow, as it stands this evening the .886 level was touched, and not breached as of yet. As always you can wait for the market to take out todays bar high, or you can wait for the first wave in the sequence to form, and seek to trade  a pull back which will always come. I was in at the .886 level at 148.618 with a 30 pip stop, target for this trade is the about 158.980, so the RR is good.

Please click below diagram (it will open up in another browser window, click “all sizes” to enlarge):-

I am not a great fan of just fib ratios, so I would want to see some confirmation that this level will hold. So far we have had 1.06241 as our lowest low. What would make me think that a bottom was in would be a break of the high at 1.09301. What we have at the moment is some strong support. A couple of time projections crop up at 20.09.2009 and 24.12.2009. I use time and price in combination and look for key levels in price and in time. Time like price can be estimated in advance as an additional guide. The .618 level in price occurs close to a time projection, this does not mean it will spin on its heels here, and go up, what it does mean is that you should be aware, that a potential turn might be close.

Please click below diagram (it will open up in another browser window, click “all sizes” to enlarge):-

But I do have an ultimate hard stop and so should you.

EURGBP is showing a high degree of clustering at 0.90087-0.90421, the internal wave structure does not look like we are quite ready to put a top in yet, however we are close.

Please click below diagram (it will open up in another browser window, click “all sizes” to enlarge):-

A decline below 0.85398 would indicate that we have a top in place at 0.86768, the target for this trade would be 0.81975 and the termination point is 0.81975 around the 4th October 2009 if this fractal form plays out as hoped. I have entered the trade at 0.86249 which was the .618 retrace of the last swing, I have placed my stop just above the last high at 0.86768. The risk on this trade is 50 points, if you wait for the confirmation, which has a higher degree of success you risk would be 100 points. I prefer to take trades with a lower risk and a higher probability of failure, but thats just my personality type.The potential profit target is 351 points so which ever way you play this trade the risk to reward is good.

Check out the diagram below, (click “All Sizes” to enlarge).

If you are a fan of Elliot Waves then please have a look at the chart of the EurUsd. Elliot waves are certainly something that I never had any joy with. I would recomend that any one wanting to trade Elliot waves should find a dark room and have a good lie down for an hour or so until the feeling passes. According to Elliot waves unfold in 5’s and threes. Well they might have done in his day, but they don’t any longer, it is not uncommon to see 5,7,9,13 waves up. I studied Elliot waves for a bit, and sometimes I refer to them, however I don’t trade according to them as they are only good after the fact.

I have 2 Gartley patterns completing at roughly the same point in time and price on the EURUSD. In itself this is not that unusual, what makes it more interesting is that consumer sentiment just came out far better than expected. This caused a big sell off in the EURUSD of 40 pips or so, I went to brew a cup of tea only to see the move had virtually reversed up from the daily pivot, when I came back. However I sold at the .786 retrace and now I am going out as it has been a real slow day today. If this market does decline from here, it would be a 200 point plus move not 30 pips I would be after.

Failure of the EURUSD to exceed the old high at 1.46337 might mean a potential top lasting days if not weeks might be in place. Certainly the EURUSD has had a good long run up. A stop of 30 pips should do it, beware of a retest of the high once the dealers get wind of a sell off.

I strongly favour a reversal in the USDJPY certainly around the 89.90 area, so far we have had a sectacular decent, but all sell offs eventually hit a wall and reverse. I have put a date in where I would expect to see the reaction occur by 18.09.2009. Now that date has more than one significance for me, but certainly plus or minus 1-2 days is where I would be looking to get in.

(Click to open and choose other sizes to enlarge image)

I will be looking for a reaction on one of the levels, and I will only buy at the close of the reaction bar.

We could be setting up for a potential top in the NZD/USD, my target levels are shown in blue at .74053 and .72900, we have hit the .618 level on the monthly chart of the complete wave down and we might well have a reaction here. Having looked at the COT report (Commitment of Traders) none of the commercials are long the NZDUSD, which makes me wonder whats holding it up?

See Diagram below (CLick to enlarge):-

Looking on the daily chart it looks like we might have 5 waves up, I am not a fan of Elliot waves, but I can count 5 wave up in this last leg. Elliot waves are best left alone in my view, because they are so prone to failure

Yesterdays low was broken by todays candle, which for me would be a shorting signal, stop on yesterdays high plus 20 points or so making a risk of 50 pips or so

EURGBP

Potentially we have a possible short term top formation target around .86749 stop .88398, beware of setting your stop at the last high, the market has a way of catching those with micro stops. Better to give an extra 20 pip stop and get a good trade than go in too tight and get stopped out. Market currently at .88007 which is a nice triple zero nunber.

See Chart:-

AUD/USD Potential top?

AUDUSD has been making some great gains against the dollar in recent weeks however looking at the charts last night I think that we are in for a decline of the AUD which will last for days if not weeks. Yesterday the 5th wave broke into a series of 5 waves which is a very bearish sign and it does not appear that often. This could be the signal for this up trend to decline. Just as when you are at the sea and watching the waves break over your head, you will no doubt remember that all waves collapse slowly at first then with staggering power at the end. This is typical of a chaotic system which the markets are. Usually, 70% of the fall in a declining market is done within the last 30% of the wave.

Potential TOP in the AUD USD (Click to enlarge):-

Could the Top be in for the AUDUSD? (Click to enlarge):-

If this analysis is to hold then the AUDUSD should not trade above 0.86606, if this happens then the analysis is wrong. Should the high not be breached, my analysis is that the AUD will continue to decline for the next couple of days or weeks (Click to enlarge):-

Please add your comments below or send me an email if you have any questions.

Mike Haran: My call on the GBPJPY has now reached 6 days and the levels that were anticipated have not been reached. The original buy area was 149.06, so the trade is up currently 332 points. If you are in this trade, my advice would be to place a stop under yesterdays low at 151.28, at the moment I am looking at 2 doji candles in spite of some good news comming out of the UK yesterday. When markets don’t move on good news it’s not a great sign for more upside.

Dear All,

If you are in this trade please see the attached chart below.

For a bullish senario to continue the GBPJPY should not trade lower than the critical low at 149.38.

If this is an impulse wave in motion then ideally the GBPJPY should not trade lower than 150.067. If it does then it is possible that this is just a corrective wave, which means more downside action.

150.04 is where I have placed my stop. A move below this would suggest a continuation to the downside and the idea that this is not an impulse move but some form of corrective wave, implying the down trend is still in force.

Check out the diagram at my flickr account via the link below:-

http://www.flickr.com/photos/42094845@N02/3884062436/

(To enlarge the picture click on the magnifying glass symbol near the middle in the list of icons above the image).

Enjoy!