Monthly Archives: October 2013

GC 240 min

Median Line Analysis using pitchforks is a methodology that allows us to predict areas or lines of support and resistance with extreme accuracy.  It sounds simple, but the key to the analysis is correctly finding the path of price. By using the lines of the pitchfork and watching the strengthening and weakening of trend along these lines we are able to gauge the likely supports and resistances along this path of price. With tight stops and proper money management numerous significant trades may be taken as price moves along a path that often seems pre-ordained.

GC 240 minute chart 20131030

Very briefly – the blue pitchfork was validated by the two early Median Line touches and then the Sliding Parallel touches labelled (1). A $3 stop below prior support would have given a move from 1318 to the Upper Parallel at point (2) at 1434. This was an obvious point to lighten the long or close it entirely.

As price started to fall the red pitchfork came into its own – this coupled with lowering of resistance and support in the blue fork (particularly resistance at point (3) under the blue Lower Parallel) gave plenty of scope for shorts. The red circles are examples. Note however how price is still respecting the lines of the blue fork even as it steps down…

The lows were confirmed by the series of green circles as price started to step up again in the blue fork. Note how despite a fall from 1434 to 1250 the lines of the blue fork STILL WORK…

GC 240 minute chart2 20131030

Looking closely at the chart you can see any number of trades both large and small that could have been taken along these lines with minimal risk and generous returns.

Find out more at: https://www.coghlancapital.com/cross-pair-forex-charts-analysis

NZDJPY 240 min

Median Line Analysis using pitchforks is a methodology that allows us to predict areas or lines of support and resistance with extreme accuracy.  It sounds simple, but the key to the analysis is correctly finding the path of price. By using the lines of the pitchfork and watching the strengthening and weakening of trend along these lines we are able to gauge the likely supports and resistances along this path of price. With tight stops and proper money management numerous significant trades may be taken as price moves along a path that often seems pre-ordained.

NZDJPY 240 minute chart 20131030

The first thing to note on this NZDJPY 240 is how in the blue circles along the red Sliding Parallel resistance turned into support. This tells us that price is likely to move to the upside and indeed it does, finding resistance at an area of prior resistance along the blue Upper Quartile in the red circles.

From there price moves higher before topping at the Upper Parallel in the green circle. The fact that price then falls back and cannot reach the Upper Parallel again tells us that it is running out of steam. We find resistance emerging once more along the Upper Quartile as shown by more red circles. Furthermore not only is the ceiling lowering, but the floor is lowering too. Support is showing up at lower levels in the fork. What was once support along the blue Sliding Parallels becomes resistance and price moves lower. Another way of looking at this formation is as a head and shoulders along the line of the fork with the green circle being the head and the red circles the shoulders

Price is currently between support along the Lower Parallel (prior support) and resistance under the red Sliding Parallel. We will continue to monitor this strengthening and weakening of price along the lines of the pitchfork. Once again finding the path of price is an essential part of Median Line Analysis and we will look to take trades in accordance with the lines of support and resistance that are revealed.

Find out more at: https://www.coghlancapital.com/cross-pair-forex-charts-analysis

CHFJPY Weekly

The Cross Pair Analysis service looks at non US Dollar pairs for two main reasons – firstly, they are under-analysed by the majority of traders/investors and secondly, they are subject to extremely large moves.

Median Line Analysis using pitchforks is a methodology that allows us to predict areas or lines of support and resistance with extreme accuracy.  It sounds simple, but the key to the analysis is correctly finding the path of price. By using the lines of the pitchfork and watching the strengthening and weakening of trend along these lines we are able to gauge the likely supports and resistances along this path of price.

As an example of the massive moves in these pairs and the accuracy with which we are able to analyse them I would like to show the CHFJPY on a weekly timeframe. In this example I am using a Schiffed Pitchfork with a point of origin labelled “A” in 2000.

The first green circle in May 2010 shows a Lower Parallel touch at 76.42, Price then moved to the Upper Parallel and the red circle shows a high of 108.71 in August 2011. That is an incredible 3200 points in 15 months.

CHFJPY-weekly-Chart

But then, in the next 11 months, it fell over 3000 points to 78.37 before finding support once more at the Lower Parallel in the second green circle. Having found this anticipated support, price has risen again to 109.74 and is once more within touching distance of the Upper Parallel. This third move has so far been worth 3100 points in fourteen months.
So, three moves and 9000+ points in three years all strictly described by Median Line Analysis.

Find out more at: https://www.coghlancapital.com/cross-pair-forex-charts-analysis

AUDNOK 240

Median Line Analysis using pitchforks is a methodology that allows us to predict areas or lines of support and resistance with extreme accuracy. It sounds simple, but the key to the analysis is correctly finding the path of price. By using the lines of the pitchfork and watching the strengthening and weakening of trend along these lines we are able to gauge the likely supports and resistances along this path of price. With tight stops and proper money management numerous significant trades may be taken as price moves along a path that often seems pre-ordained.

I would like to use the AUDNOK 240 minute chart to show the potential and potency of the methodology.

Chart 1 shows the characteristic Low-High-Low or A-B-C of a pitchfork with each point being a significant swing high or low. Having determined these points we start to look for evidence of price moving in harmony with the fork in order to validate it. The first purple circle with a Median Line touch is perhaps too close to the BC axis to properly validate the pitchfork – but the later two purple circled touches along the line of the Quartile would certainly do so. The very exact green circled touch on the Lower Parallel followed by the strong reaction away from this line would undoubtedly prove the validity of the fork and tell me that in future price was likely to move in a way defined by the angle of the fork.

AUDNOK 240 chart
AUDNOK 240 chart 1

Chart 2 shows what would have been a profitable and secure trade in this vehicle as price continued to obey the lines of the fork. On a return to another exact touch on the Lower Parallel at the red circle, a long could have been taken at 5.4553 with a stop below the (double bottom) previous low of 5.4392 as shown by the purple line. Price has moved to resistance along the red dotted Sliding Parallel – the fact that it was a Sliding Parallel would not have been apparent until the second touch on the line (red arrow) at a price of 5.6747. Further long trades could have been taken along the blue Sliding Parallel support (with minimal stops) with an objective once more at the red Sliding Parallel.

AUDNOK 240 chart
AUDNOK 240 chart 2

Price is currently moving in the channel between the two Sliding Parallels and we will watch for continued support and resistance along these lines. One or the other will eventually breach and we will continue to follow the movement of price along the pitchfork in order to determine whether price is strengthening or weakening in trend.

Find out more at: https://www.coghlancapital.com/cross-pair-forex-charts-analysis

A key line of resistance for the Euro in the 1.3070s?

I posted an alert on Wednesday (at 1 on the chart) that I felt the Euro and British Pound were in line for a bounce, with the Euro trading at 1.35 and the Pound at 1.5920. the Euro returned to support (2) andas of yesterday morning each had bounced nicely. During this move up from support I drew in the blue lines and indicated that I was watching for a move up to resistance (3 in the chart below). It worked nicely, the Euro rose overnight and hit the line AND rejected from it.

eurdocx_011013-

What are we to read from this? Two things, first the line IS active. Second, until we breach it, exercise caution. The line is currently in the 1.3570s but sloping down through time. Until we print in the 1.3080s I expect a move lower.

Those trading long at my support and switching to short at resistance would be looking at 90 pips profit thus far.

From the Front Line – Analyst Paul Coghlan discusses time frames

the_front_line

Breaking news: The RIGHT timeframe for trading currencies…

I provide analysis each day to hundreds of professional traders and with such an audience there are doubtless traders that focus on small, intraday moves and charts, trying to scalp a few pips here and there. Conversely there will those that focus on daily or weekly charts, looking to position a portfolio for long term moves.

Hopefully it is clear from this that there is NO right time frame. There is only a right time frame relative to each trader.

Take a typical forex trader who has a 9-5 job and is only able to look at charts 2-3 times a day. it is pointless him trying to trade a 10 minute chart. By the time he next looks at the chart there have been 40-50 new bars and he has missed several opportunities. He should likely focus on the 240 minute chart, meaning he will likely be able to keep up to speed with changes on the chart, being able to check-in on each bar.

Next example, a day trader sitting in front of his screen trying to extract a quick 20 pips form the Euro. For him/her the right time frame will be much smaller, possibly a 10 minute or 20 minute chart.

The consequences of stepping down the time frame is that you will be more vulnerable to events, new releases etc.

Think of it this way, a news release is akin to a pebble being dropped into the market, causing ripples. The 20 minute chart equates to a little bowl of water. The pebble has a big influence on the relatively small volume of water, the 20 minute charts show spikes and reversals, stopping traders out.

That same news release has a consequently smaller impact on the 240 minute chart which for comparison sakes we will say is a small pond. The pebble has less of an impact, smaller ripples.

Now consider a weekly chart. The news release causes a 100 pip move which barely registers on this chart which is an ocean, almost no ripples.

Bottom line, pick a time frame that matches YOUR lifestyle but in doing so recognize that the smaller the time frame the higher the chances of external new events causing volatility that will shake you out of your trade.