Monthly Archives: April 2014

A Check In – EURAUD 60 min

I had a look at this pair in some detail last week and wanted to check back to see how it was progressing. Remember that Median Line Analysis seeks to determine the path of price of a vehicle, defining it by means of a pitchfork and then to track the strengthening and weakening of trend along the angle of the drawn lines.

We last looked at the vehicle in the vicinity of the blue circle in Chart 1. We had followed price as it moved from the three touches at the Lower Parallel all the way to resistance at the Upper Parallel. What was interesting me was the stepping up of support that we were seeing in the line of the pitchfork – from the Lower Parallel to the blue dotted Sliding Parallel marked by the series of red circles. The first three red circles show where this line was resistance and later how it becomes support.

Chart 1:

euraud 60 minutes

From the blue circle price does indeed rise once more to resistance at the Upper Parallel before falling again to our newly defined raised support. Despite the spike down seen in the third red circle we continue to see that the floor of the vehicle has risen in the line of the fork. As on the horizontal, when we see that the floor has risen we can anticipate that the same will happen with the ceiling. Accordingly it is no great surprise when the prior resistance along the Upper Parallel is breached and we see price push higher – in this case to the green circle where resistance is noted along the line of the outer Quartile. Note how just under the Upper Parallel we again have a blue dotted Sliding Parallel where resistance has once more became support.

From this Outer Quartile resistance there has been a strong reversal and we look to the chart to see where and why we have found support. As price fell one of the areas of potential support was along the line of the Lower Quartile. If you note the red arrows, it was a line that had previously acted both as support and resistance therefore it was an area to which we were looking for the same once more. Despite a fall of nearly 200 points from the green circle price did indeed find support along this Quartile and since the double touch at the line it has rebounded over 100 points.

By quickly establishing the path of price and watching the strengthening and weakening of trend along the lines defined by the pitchfork we are able to look for high probability areas of support and resistance in any vehicle on any timeframe.

The Cross Pair Analysis uses Median Line Analysis to cover a dozen non-US Dollar pairs on a daily basis, looking at context via Weekly and Daily charts and in detail via 240, 60 and 20 min ones.

If you would like to find out more about our analysis or services please follow the link:
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I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

Textbook Moves – EURAUD 60 min

Median Line Analysis using pitchforks seeks to define and then follow the path of price of a vehicle using the angle of ascent or descent of the lines that we draw as high probability supports and resistances. The Cross Pair Analysis service looks at a dozen non-US Dollar pairs via daily videos and amongst those that have been catching our eye recently is the EURAUD 60 min.

We had been following the decline in this pair for some weeks although since early April we had been alive to the possibility of some “bottoming out” being apparent. Chart 1 shows how we followed price as it found lows in the red fork and then started to “step up” across the fork both in terms of support and resistance. The first green circle shows how on the 16th price found resistance at the red Upper Parallel and reacted away from it. The next day price reacted once more to this line – albeit in a lesser fashion – before breaching the line and finding support along it in the second green circle.

Chart 1:

euraud-chart1

This change of behaviour led me to draw the blue pitchfork to the upside using the distinct A, B and C pivots. It was very early to do so at this point and we needed to establish the validity of the fork ie that it was indeed defining the new path of price that we had discerned. There was at this point some possible resistance along the Upper Quartile and potentially some support developing along the Median Line.

Chart 2 shows how the vehicle moved over the next few days. Price did indeed continue to find support along the Median Line as shown by the red arrows and in fact a narrow channel formed with resistance along a Sliding Parallel again marked with red arrows. We could be reasonably confident that we had indeed found all-important the path of price.

Chart 2:

euraud-chart2

Note how price fell on the 22nd to find support in the last green circle at the Lower Parallel of the blue fork and also significantly once more along the line of the red Upper Parallel. As on the horizontal when prior resistance becomes support that is deemed bullish and this is precisely what happened here. The Lower Parallel of the blue fork continued to act as support before price exploded to the upside from 1.4722 in the purple circle – very obvious here is how close one could have placed a stop in order to benefit from the move.

A rapid rise of 200+ points to expected resistance along the Upper Parallel ensued with price reaching 1.4929 in the second and third purple circles. As price dropped back from this exact touch we note that the fork continues to define the moves of the pair. The last two red arrows show how support is now showing along a Sliding Parallel that was previous resistance and furthermore the red circles indicate that this may be happening once more along the higher line of the upper Quartile.

Bear in mind that this is a 60 minute chart and that the pair can be very volatile – it is therefore essential to continually monitor the action of price along the angle of the pitchfork in order to determine whether trend is strengthening or weakening. We also look at the pair via different timeframes and take these other charts into account in our analysis.

I hope that I have been able to explain by showing these very precise moves to demonstrate how Median Line Analysis can help the trader in predicting with great accuracy likely areas of support and resistance and allowing him or her to trade with high probability of success whilst using tight stops.

The Cross Pair Analysis uses Median Line Analysis to cover a dozen non-US Dollar pairs on a daily basis, looking at context via Weekly and Daily charts and in detail via 240, 60 and 20 min ones.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

As Requested – CADJPY 20 min

I received an email over the weekend asking me to have a quick look at the CADJPY chart on a 20 minute basis. Although this is not one of the dozen or so pairs that the Cross Pair Analysis service covers on a daily basis we do follow it intermittently and my charts are available to members to download whenever they wish.

cadjpy 20 minutes chart 1

Looking at the vehicle, there were two things that initially stood out to me and I have marked them on Chart 1. Firstly the ascending lows as shown by the thick green line and, secondly, the little push above purple horizontal resistance shown in the green circle. (The purple circle shows the point from which I measured this horizontal resistance.)

Remember that this is only a 20 minute chart and needs to be viewed in the context of larger timeframes. However, putting the two factors mentioned above together it was worth looking at the pair to see if we could find the ascending path of price that it was following.

cadjpy 20 minutes chart 2

Using the distinct A,B and C pivots I drew the Modified Schiff pitchfork shown in Chart 2. To draw this particular type of pitchfork we move the point of origin 50% of the distance between the A pivot and the B pivot both in terms of time and price. This gives us an angle of ascent less steep than that of an Andrews’ pitchfork and in this case to my mind better defines the move that we are seeing.

Of course we need to look to validate the pitchfork – to prove that it is indeed showing us the all-important path of price – and we do this by looking for activity along the angle of the fork. On this occasion I noted the circled areas of support along the Median Line and at the Lower Quartile as well as the touch and rejection at the Outer Quartile on April 16th. I am not bothered that price moves in or out of the strict confines of the fork itself – I am looking to see whether I have successfully defined the movement of price by means of the lines drawn.

The continued action along the lines of the fork as shown by the red arrows leads me to think that this has been done. The down arrows show resistance in the line of the fork at the Upper Parallel and the up arrows show support along the Median Line. We appear to be currently moving in a channel defined by the green lines and I will continue to watch this to see whether trend weakens or strengthens along this defined path.

Please remember that this is only a 20 min chart, but the principles that I have tried to apply here can be used across all timeframes and all vehicles. The Cross Pair Analysis uses Median Line Analysis to cover a dozen non-US Dollar pairs on a daily basis, looking at context via Weekly and Daily charts and in detail via 240, 60 and 20 min ones.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

Sideways? – AUDNZD 240

Members of the Cross Pairs Analysis service have been watching the AUDNZD over various timeframes. We have noted how over the course of 2013 it declined from 1.2680 in March to just under 1.0500 in early 2014. Since that low it appears to have spent the rest of this year drifting sideways. We are pattern seeking mammals so a look at Chart 1 quickly enables us to spot the highs and the lows of this action. But analysing things along the horizontal is not the only way to look at markets.

Chart 1:

sideways-an240

By using Median Line Analysis we are able to track the path of price very accurately and to see and predict lines of likely support or resistance with some certainty.

By looking at Chart 2 you can see how we have been defining price by means of two contrasting pitchforks. The red one to the downside has marked much of the decline of the vehicle in the latter part of 2013 – the blue one has been used to follow price since we detected a potential change of behaviour a few weeks ago.

Chart 2:

sideways-an240-2

The clues to the action come from the stepping up of support and resistance in the line of the red fork. There are many instances and examples of this and I have tried to highlight some of them by means of the series of green circles. The stepping up of support in the line of the fork indicates that trend is strengthening and we watch to see if resistance rises as well. Of particular note is finding that a line of resistance has become support – something that also holds true when one looks at price moves on the horizontal. Note, for example, the action along the highest red Sliding Parallel where the line of resistance in late February becomes support in late March. To many the fact that this happens at a lower absolute level would indicate precisely nothing, but because we are looking at action along a proven path of price this would stand out to us.

As price moves through the resistances of the red fork we follow the change of behaviour by drawing a blue fork to the upside from the distinct A, B and C pivots that we note. We are looking to define the movement of price to the upside and look for early validation of the fork to show that we are indeed on the right track. The red arrows along the blue Lower Parallel and the later line of resistance of the Sliding Parallel show that we have been able to find this all important path of price. With our lines in place the pattern and movement of the vehicle becomes visible and a trader could very easily use these lines with some confidence to create low-risk trading opportunities.

The Cross Pair Analysis uses Median Line Analysis to cover a dozen non-US Dollar pairs on a daily basis, looking at context via Weekly and Daily charts and a detail via 240, 60 and 20 min ones.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

As Requested – AUDCAD 20 min

I have received an email asking if I would have a look at the AUDCAD 20 minute chart – one of the pairs that we cover in the Cross Pairs Analysis service – and I am happy to do so. The bigger picture shows that the vehicle has been moving to the upside but is in an area on both the Weekly and Daily charts where we might anticipate some resistance.

By taking it down to the 20 minutes as shown in Chart 1 we can see the effect of this potential resistance in a shorter timeframe. In Median Line Analysis we are looking to establish the path of price and to then track by means of the parallel lines of a pitchfork. Finding this path at an early stage is obviously advantageous so we try to validate the angle that we are following as quickly as possible. We do this by watching to see if price is acting and reacting to the lines we have drawn – here that is clearly the case as can be seen from the series of red circles. They show a line of support establishing itself along the dashed lower Quartile and a line of resistance forming along the line of the upper Quartile.

Chart 1.

audcad-20min

Once we are happy that we have defined the all-important path of price we then look to see if the trend is strengthening or weakening along this channel or, more precisely, this series of channels. In this case the trend weakened from resistance at the last red circle and support did not show itself until the Sliding Parallel marked by the first red arrow. Note how I am not concerned by the fact that this is outside the main lines of the fork – all I am watching is the angle of ascent.

If we follow price forward we see that support has “stepped up” from the Sliding Parallel to the Outer Quartile – the second red arrow. A strong bar from here initially finds resistance at the Median Line before topping out once more in the first green circle at the prior resistance of the upper Quartile.

Twice more price falls to the support marked with red arrows along the outer Quartile – support is constant in the line of the fork. However the resistance that I mentioned at the start of this article is apparent in the lowering of resistance in terms of the fork as shown by the series of green circles. From the upper Quartile it has lowered to the Median Line and from there to the Lower Quartile. As happens on the horizontal, when we see resistance lowering we are aware of the possibility of support lowering too.

To date support has been constant along the outer Quartile but the lowering of resistance makes me somewhat wary. Price seems to be currently finding some difficulty getting above the Lower Parallel of the fork, and if this continues it will be a further lowering of the resistance that we have noted. I will watch to see if this indeed occurs as well as monitoring the noted support. If price should push above the Lower Parallel I will look to see if it can at least reach the prior resistance of the lower Quartile as shown in the last green circle.

I hope that I have shown how we monitor the strengthening and weakening of trend along the pitchfork – how the same principles that are used on the horizontal can be used along the angle of the pitchfork. Median Line Analysis allows us to predict likely areas of support and resistance with great accuracy across different vehicles and varying timeframes. The Cross Pair Analysis covers a dozen non-US Dollar pairs on a daily basis, looking at context via Weekly and Daily charts and a detail via 240, 60 and 20 min ones.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

Running Well – AUDCAD 240 min

Another chart that we have been following for some months is the AUDCAD 240 min shown in Chart 1. The pitchfork originates from an A at the low at the end of July and is a simple Andrews’ pitchfork. What we have successfully done is draw a series of parallel lines that accurately reflect the path of price of this vehicle. Being “pattern seeking mammals” the task of determining potential future moves in price is made so much easier by drawing and then following lines derived from the angle of ascent of the pitchfork.

Chart 1:

ac240

The important thing is to determine whether what we have drawn is valid ie it is correctly showing the angle along which price is moving. We look for early indications of “action” in the line of the fork – it is not so much the Upper or Lower Parallel, the Median Line or the Quartiles which are so important – rather the fact that price is following the angle set out by the pitchfork.

In this instance we were quickly able to note the constant dotted line of resistance marked by the series of red circles. Having detected this, further moves were explainable and predictable by means of the proven angle of the fork. Noticeably the Sliding Parallel support indicated by the two red arrows – if we had not validated the angle of the fork we would have had no reason to expect or anticipate the move from the second of these red arrows.

If we move forward and look at what has been happening this month we see that resistance as shown by the down-pointing arrow has turned into support along yet another Sliding Parallel. We will look to see if price continues to “step up” and whether we can push above resistance at the Median Line. If we can we will look to see if we can at least match the move to the Sliding Parallel above the Median Line.

We are also following the purple action/reaction line and looking to see if prior resistance is now becoming support along this axis. It is always important to update your charts as the day and days progress. The Cross Pair Analysis covers a dozen non-US Dollar pairs on a daily basis, looking at context via Weekly and Daily charts and a detail via 240, 60 and 20 min ones.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

Early Recognition – AUDCHF 240 min

When making use of Median Line Analysis we are always looking to define and follow the path of price. Very obviously being able to do this at an early stage is an huge advantage and we constantly look for ways to “prove” or “disprove” the pitchfork that we have drawn to give us this edge.

Chart 1:

audchf240

Chart 1 shows the AUDCHF 240 min chart with a pitchfork drawn from the very obvious A, B and C pivots. What immediately stands out to me here is the fact that we have action along the angle of the pitchfork even before we get to the BC axis. The first three red circles show that the handle of the pitchfork (obviously marking the line of ascent of it) are clearly providing a line of support to price. This immediately gives us an advantage over those who are looking at price in terms of horizontals – we are not only seeing a line of support but we have a reason for it and perhaps most importantly we are therefore able to predict likely future areas or lines of support and resistance.

Further validation comes in the main body of the pitchfork as we can see from the series of red circles – we have found a line parallel to the angle of ascent of the fork which exhibits both support and resistance. (Please note that there are numerous other instances of such Sliding Parallels which I have not shown for the sake of clarity of the chart…..) Clearly we have shown that we have drawn a pitchfork which correctly defines and delineates the path of price of this vehicle.

The chart also shows that we do not have to stay within the bounds of the pitchfork itself for it to continue to work – a fork is not immediately “broken” if price moves outside the Upper or Lower Parallel. In this instance price moved below the Lower Parallel before finding support along a Sliding Parallel indicated by the first two red arrows. The important thing to me about this support is that it is still in the line of the fork – we are still following the path of price. Continuing to follow the series of red arrows one can see how price has “stepped up” in the line of the fork. As on the horizontal, a stepping up of support can indicate that resistance too will step up and accordingly we have watched price move higher – all the time making use of parallels along the line of the fork to do so.

Price is currently nudging at resistance along the Median Line of the fork – this has acted as resistance before, notwithstanding the brief foray above it on the last visit. We are looking to see whether this Median Line resistance can be cleared and perhaps in turn become support, presaging the possibility of even higher prices to come. Alternatively if it continues to provide resistance you could then make an argument for a head and shoulders set-up to be in place along the line of the fork with the Median Line being the line of the shoulders’ resistance. It is important to continually monitor price as its moves evolve as well as to be aware of context and detail from various timeframes. The Cross Pair Analysis service provides daily analysis of non-US Dollar pairs via Weekly and Daily timeframes as well as by 240, 60 and 20 minute intraday charts.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

Looking at Detail – GBPJPY 20 min

I have previously looked at GBPJPY via the 50 min chart but thought that it would be interesting to shown what we have been following on the shorter timeframe of the 20 min.

Chart 1 gives a good idea of the context in which we drew our pitchfork to the upside. What we are looking to do is to correctly find the path of price and then we look to follow it or define it by means of a pitchfork. We are not too concerned whether price moves above or below the Upper or Lower Parallels of the pitchfork so long as it continues to provide action along the angle of the lines we have drawn.

Chart 1:

g2-xx

Chart 2 shows the pitchfork that we drew in more detail – with the four red circles showing the line of support that we were looking for in order to validate the fork by showing that we had indeed found the path of price. More aggressive traders emboldened by what they were seeing on the 60 min chart shown in the previous article may have decided to take a long trade from this Lower Parallel – a long taken in the fourth red circle at 168.85 would have needed a stop of half a dozen points to be beneath prior support along the Lower Parallel. The eventual high on this chart was 173.16.

Chart 2:

gbpjpy20-xx

However it is more likely that traders would have waited until a line of proven support along the Lower Quartile before considering entering o the long side – as shown by the series of red arrows. These continual moves higher from a line defined by the angle of the fork would enable a minimal stop to be used with the possibility of a considerable move to the upside. As we continue to follow the action we note resistance at the Upper Parallel as shown in the first green circle. Quite soon we see price move through this resistance and in the second and third green circles we note that resistance has become support – note how exactly the line of the Upper Parallel defines this change of behaviour.

Resistance has moved higher from the Upper Parallel to the Outer Quartile as shown by the line of red arrows and it is not long before this line of resistance once again becomes support. Price is stepping up along the line of the fork and resistance has now moved to the Warning Line. We see four touches along this line before price starts to move to the downside. When the support of the Outer Quartile gives way, very soon this line becomes resistance – as shown by the red arrow pointing down – presaging a greater move to the downside.

We then look for lines that have previously worked as support or resistance to show themselves once again and this is what happens along the line of the Upper Parallel.  The last green circles show support once more manifesting itself along this line before once again it turns into resistance as the support gives way.

On Friday in the wake of NFP price moved rapidly lower and I am now looking to see whether we find support once more along the line of the Quartile as shown by the last three red arrows.

I hope I have shown how identifying the path of price early and defining it by means of a pitchfork allows traders to look at a vehicle in a different light and allows safe trades with tight stops to be entered with a very great degree of certainty.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018

Searching for Trend – GBPJPY 60 min

Median Line Analysis is a methodology to define and follow trend or, in other words, to monitor the strengthening and weakening of the vehicle along its path of price. We obviously need to be able to discern this path of price at an early stage and Chart 1 shows the pitchfork that I had been following on GBPJPY 60 mins through the early part of this year.

Chart 1:

gj1

The obvious A,B and C pivots are used to root the pitchfork and we then look to follow the rise and fall of price along the lines so defined. From the lows in early February price started to move higher and after pausing at the Upper Parallel of the pitchfork in the blue circle it moved out of the pitchfork entirely – clearly exhibiting a change of behaviour.

Chart 2:

gj2

In order to again follow trend we once more looked to draw a pitchfork that would enable us to define it correctly. The first real opportunity for this came in mid-March when the formation of a BC leg as shown in Chart 2 enabled us to draw an Andrews’ pitchfork from the very low in early February. It quickly became clear that despite the very exact touch on the handle of the fork, shown in the green circle, that this pitchfork was not precisely defining the movement of price along the angle of its lines. The sloppy action along the Lower Parallel as shown in the red circles is evidence of this. Because we had such defined pivot points it was therefore proper to look at variants on the Andrews’ pitchfork in order to better show the path of price.

Chart 3:

gj3

Chart 3 shows a Modified Schiff pitchfork which uses the same three pivots but moves the point of origin 50% of the distance both in price and time from the A to the B points. As you can clearly see from the chart this pitchfork does a far better job in describing and defining the way that price has moved. The series of arrowed supports along the line of the Lower Parallel were early indications that these moves were very much in harmony with the angles of the lines of the pitchfork.

Chart 4:

gj60

Chart 4 shows the pitchfork in much greater detail and the subtlety of the supports and resistances is much more apparent. Early indications of its validity could have come from the two Quartile touches shown by the red “down” arrows – but in reality these would have done little more than alert us to the possibility that we had a fork worth watching. It would have been the two Lower Parallel touches shown by the red “up” arrows that convinced us we were correctly tracking price.

From there on we would have been closely monitoring how price moved in the angle of the pitchfork – not just from an academic point of view but also with an eye to trading the vehicle in a safe but profitable manner. The slightly raised Sliding Parallel that I have highlighted in puce would be an example of this – it would have been validated by the second touch and reaction from it as shown in the first red circle. Prior to this it would have just been an area from which price turned – the second touch is what proves it and shows it to be an “actionable” line. On the third touch in the second red circle at 168.58 a long trade could have been taken with a stop beneath the prior low in the first red circle at 168.31. The initial target of this trade would have been prior resistance along the Quartile at 170.26 and it would not have been wrong to close some or all of the position once this was reached. However a more experienced trader might have seen the possibility of further gains and after a small retracement price did indeed move strongly through this resistance. The next target would probably have been at the Median Line and price did indeed reach this in the third red circle at a level of 172.31 before backing off somewhat.

I hope I have shown that Median Line analysis allows us to track areas of support and resistance with great accuracy once we have established and then defined the path of rice by means of a pitchfork.

If you would like to find out more about our analysis or services please follow the link:
https://www.coghlancapital.com/signup

I recently hosted a webinar looking at non-dollar forex pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8018