Euro$

Strength or weakness? Nice lift from the RL but a failure as yet for the CL.

Take care with Euro$ as U$DX nears possible RL support...Continued

Euro$ is making alot of noise and looks uncertain and USDX has a nice little base....Is this the begining of the end and perhaps as high as we go for the Euro? I doubt it but i am out of this market & flat today and will watch unless we see further strength and upside momentum & will wait and have a look at Dec Wheat which looks like we could have seen the low on a major LMLP.
I will also post a reverse action-reaction count on Euro$ to try to get some clarity on a possible reversal time

Take care with Euro$ as U$DX nears possible RL support

What great opportunities we have seen in the last 24 hrs-so much so that i have been too busy to write this blog. Great vertical bars in Euro$ and another 'spurt' at 8.30 this morning. No one would doubt the strength of price action we saw in the European session and the US session yesterday and minimal retracement overnight.
However on this mornings move up to 1.3637 we already have a 100% RT and in the back of my mind i am wary of a coming severe reaction-perhaps it will come this Friday-perhaps next week or perhaps it will never come and price will fall straight through the RL on the USDX ( arrowed in red). There is little doubt in my mind that Euro$ is heading for the black CL on the above chart which coincides with the important 'phyc' level of 1.4000.

Dec Wheat px failure

Euro$ .....time for a retracement?

Here's a cracking price failure in the mid European morning session. Price falls after encountering resistance from the RL in the mauve fork. Price falls and is caught and supported by the RL in the aqua blue downsloping fork.

Euro$ -Anatomy of a line and a trade

OK, Here is my long trade on €$ today and at the time of writing (4.29pm Euro/Paris time) i am beginning to worry that we may have a CL failure( see last chart bottomRHS). You can see in the bottom row the CL and fork concerned and i guess we are looking at a trade objective of the 1.3489 area.
This type of price action is excellent for me to trade and i usually look for this price behavior during the London/ Euro session about 8-10am everyday. Nice thick long bars and a fast market.
I went long on a break of an important RL that had held back price since the London highs had been achieved and knew that Europe usually waits for the US open before further direction is seen after about midday.
You can see my long entry in a 5 min chart after the first bar above the RL takes out the high and closes above the RL with good bar/HLOC separation.
Then you can progressively see the market reach each new RL (some are drawn in as dotted lines manually and taken from other charts like Ensign or other MT charts of different TFs) so there is only one yellow ML and the rest are all reaction lines either automatically drawn as deep red or manually as multi coloured dotted lines. The only line that is not either RL/ML is a dotted red line drawn under the base of the RT. Another point to mention is that if P2 was drawn on the incorrect next low pivot the CL intersection with price would be 1.3480 ish as opposed to 1,3490( see last chart at bottom)- however if the correct pivots not used it doesnt matter as if price does not reach the CL related to the true pivots a CL failure will result. Lastly P0 is always the most recent SL not as we are taught by various sites/information the lowest SL. You only have to work with RL's for a bit to see that there is only good interaction between price and the RL using the most recent low P0 even if the low before/preceding it was lower.

The Grains

Here's Dec Wheat. In the Metatrader chart you can see the reaction line from a fork that can only be seen in 240min and higher TF's. It was already proved to be effective and tested (the previous RL from the same ML set having had much effect on price action) and can be seen stretching from top left hand side at 11 o clock downwards to the bottom RHS at 4 o clock.
Current levels represent a 50% Fib RT from the recent bullish move from the late August low at 650.00 to the high at 756.00 but my feeling is we will go lower and have already visted and tested 700.00( bang on the down sloping dark blue LMLP and P3 on the mauve/magenta fork) and now hover at 705.00 on the mauve/magenta LMLP. This week is critical as if we hold above 700 we could see a sharp rally back up but i favour a sell off towards 650-660 where a major CL of a important fork on the daily chart is located and this would represent a 78.6% Fib RT from the previous move (from the late August low at 650.00 to the high at 756.00).











Corn has a similar problem and is having a RT after touching the UMLP of the mauve fork and having a huge resisting reaction line standing in it's way slightly to the right.
Looking at these two (not the soya complex) i can't see anything huge on the downside and i would expect with current fundamentals to see the highs retested after a moderate retracement .

US$ Index...continued

Continuing on from recent post on the USDX and with the current fashion being "let's whip the US$" i can't see a potential bottom yet and think as i have said before that it will be the reaction line to the right of the red arrow that may put the breaks on. Initially i thought that we were a few weeks away from that RL (based on a average bar/time count) but with price falling faster than anticipated we could arrive sooner than we think especially if we penetrate convincingly below 80.00 and continue towards the various centre lines all bunched up there . In addition there is another problem with reading reaction lines and that is often price action appears to 'react' before it actually physically touches the line and the reverse situation is also true that price can penetrate/pass through the R- line but then have a decent/ascent parallel to the RL but on the opposite side.
Below we have a decent fork in the 60 min chart with a 125% warning line plus a couple of RL's. This is just one of many forks that price is acting/reacting with and you can see the first RL works a treat but the second seems to have little or no effect. Normally i would add the 50% reaction lines but in this case they also have no effect on price action. So my prognosis is still bearish for the US$ but i am confident that we will eventually have upward movement for the $ and looking at the Euro (vs US$) this morning it is beginning to look slightly tired & exhausted
(an Oxymoron i think ?!!) but only a fool would short the Euro which still has the potential to push towards the upper thirties towards 1.4000

€$ & US$ Index

It seems certain that price will at least try to reach the CL of the green ML set in the USDX...However as per the weekend post the next upward 'lift' could come from the reaction line arrowed below in red. All this points to further US$ weakness for the next week or so at least and we could see the euro well above the 1.3500 and remember the USDX is (i think) nearly 40% weighted by the Euro.












Now we have some overhead resistance at 1.3430-40

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)

Weekend -reaction methods Part One

Are you sitting comfortably? There are many methods of using reaction lines in your charts/technical analysis. You can use the distance from the A to BC line of your fork by projecting it forward, which is the most common method found in use. Then you can use the reverse count method expounded by John Crane in his remarkably confusing book Advanced Swing Trading (available free as PDF file from me- pls contact) which is complicated but again can yield remarkable results. One of the problems with the book is it was written some years ago ( not many) but long enough to have been surpassed by nearly all charting packages which now offer Andrews forks as a standard drawing tool plus some chart packages that can do dedicated reverse bar counts between swing highs/lows and draw reaction lines etc. It may seem hard to imagine and few of us have needed to try, but drawing an Andrews fork by hand using a pencil and ruler is a time consuming occupation and includes a fair amount of work just to get a simple ML set.
Below is a daily bar chart of the US Dollar index showing recent activity and have have plotted both the reverse count to two significant swing lows and also i have plotted the projected reaction lines to both swing lows. The 'bottom line' here is that if these two methods are used together along with other less well known reaction line applications i can think of no indicators or trading system/theory that can so powerfully predict/project market turning points in price action. In the second weekend posting i will show you why i believe the USD Index is going higher ( contrary to my bullish view on the euro strengthening) and why the Reverse/Forward count from 83E to the recent late summer pivot/reversal point at 84F is so important

€£ reaction line web

How valuable is a trading tool like this? The web of reaction/warning lines gives an almost complete picture/map of market turning points and support/resistance. People like Dr Andrews used to talk about multi pivot lines, trend lines etc. but i am convinced that they are simple reaction lines of one sort or another.

Euro$

How far to go? Are we on the 3rd wave? There is a centre line at around 1.3200. I think this trend will continue for months and we will see Euro$ much higher.

Dec Wheat px failure

The Big Dubbya..continued

A big "W"

This is a simple pattern i have seen time after time in multiple time frames.it differs from a double/triple bottom as there are multiple touches but if you exclude the 'noise' of the market there is a clear 'W'. Anyone who is 40+ will remember the early 1970's film "It's a Mad,mad world"....in this film Jim Durante tells other cast memebers the treasure was placed under the 'big dubbaya' and then kicks the bucket ( literally!).With this pattern the 'treasure' is in confirmation of price exceeding the first swing high ie the start of the W on the top left hand side.

Euro$

Sometimes when i look at price i just do not understand why price stops here and there. Thats why i need a map of support and resistance to make sense of price action. Here's a one min chart form this morning that demonstrates this issue perfectly. Between the two of these charts i can see exactly what reaction lines are offering support and what lines offer resistance. The yellow and mauve lines are median lines - the rest are reaction or warning lines.

Soyabeans ( Electronic ZS).....continued

continuing on from the previous post...In the Metatrader chart i use the pink down sloping ML set/Fork to give me indication of price action strength. It never dips below 1030.75 and is in a sideways pattern( now often called an " Energy Coil"!) where the support is repeatedly tested ( you can see this clearly in the 1 min TF chart). In my opinion price usually (but not always) breaks out in the direction it was coming from so that you have a HP 'direction'. I will not bother to go into the trade details ( i am waiting for the public account to be active) but using reaction lines i am now waiting to catch price as it retraces and hits reaction line support( below)