Weekend -reaction methods Part Two

The fact of the matter is that if you choose to not use John Cranes forward/reverse count and just do a straight count forward 50 daily bars from B (instead of C) you end up bang on the doji bar at 89.00 which is the reversal bar.This is also the equidistant point at which you would draw the normal reaction line parallel with BC. This reaction line has done a superb job at containing price until we reach the forward count from pivot C of 83 bars. The reverse count represents the most important recent reversal low at point E (74.00) last December so we could expect something special when we do the forward count from C as per John Cranes method.
There is no limit to how far back you go if you get successful results from a reaction swing/fork.












Now we need to look at the possible future direction of price. The recent swing low at F ( the 83 bar forward count) we see that it did not take out and breach the previous SL of point C (around 80.00) and price rallied then was stuck in a trading range before being forced lower by the next reaction line. Even though many would tell you not to bother to draw forks unless that low had been taken out i ignore this advice. Why? Because we know that if price does not reach the CL of any of the three mauve /magenta forks i have drawn ( including one Mod Schiff) then we can expect price to accelerate in the opposite direction. At this point in time it is by no means certain that price will not continue to be forced down by the reaction line and has broken out of the trading range in the direction it entered it as we would expect... however the black CL seems to have offered support. Personally with this current formation i would almost always expect price to fall lower- BUT it may not in which case as we rise upwards & away from the centre lines we can deduce that the US $ Index is going sharply higher. This of course is a simple basic analysis but if we start to add into this picture possible long term supporting (up-sloping) reaction lines form various high/medium time frame forks we can then see potential support levels. Remember with both the charts shown here i have only plotted two reaction lines-both resisting price and down sloping but using Ensign and Metrader platforms i have many charts for USDX plotting in major time frames from 1min to daily all relevant reaction/warning lines. To avoid the charts becoming like a birds nest of lines and unreadable/confusing i plot groups of reaction-lines according to TF and regularly switch between various charts. Lastly i have found that where you have forks that have horizontal attitudes such as the black fork, the power of the up-sloping reaction lines( usually at around 45 degrees) tend to be extremely reliable and powerful. The point at which price action will encounter this first back forks reaction line is bang on the confluence of the black centre line and the mauve down sloping upper median line parallel of the mod Schiff fork......some two months away.( see small chart)