Monthly Archives: May 2014

A Quick Update – CADCHF 240 minute

I have looked at this vehicle in a previous article and discussed how it could be followed and traded using the methodology of Median Line Analysis. What we look to do at an early stage of a trend is to seek out and define the path of price of a pair and, having done that, use the lines of support and resistance that soon become apparent.

Chart 1:

a1-cc

Chart 1 is a copy of the one I discussed in early May. We had quickly established this all-important path of price as the CADCHF moved above and away from the declining red lines of resistance. We used the distinct A, B and C pivots to draw our pitchfork and looked to validate it, ie to see if there was any price action along the angle of the lines that we had drawn in order to show that we were indeed tracking the path of price. The Upper Parallel resistance, the Median Line resistance and the puce Sliding Parallel support all confirmed this and we noted how a trade from this last line would have been low-risk and high-probability. Resistance was seen at the green horizontal from the early April spike high.

Let’s take a look at Chart 2 and see what has developed since then. After the rise from 0.7987 in the fourth green circle to the horizontal at 0.8160 we saw a small retracement. It is apparent from the action along the Median Line of the pitchfork how important this line has been in providing support and resistance since the first red arrow at the beginning of April. I have highlighted other instances of this with more red arrows. You can clearly see that after the green horizontal touch price fell back and found support along this Median Line. We noted this prior line of resistance was becoming support – a bullish indicator in the same way as it would be if we were looking at lines on the horizontal. The stepping up of support from the puce Sliding Parallel to the Median Line indicated a strengthening of trend along the angle of the fork and it was no surprise when price pushed higher and broke through the horizontal green resistance.

Chart 2:

a2-cc99

Respecting the supports and resistance along the path that we had drawn we encountered a pause precisely where anticipated – along the Sliding Parallel from the late March high originally to be found as a blue dotted line in Chart 1 – changed to a puce line in Chart 2 so that it is more apparent. Once more we see a retracement from anticipated resistance in the puce circle and we note how the vehicle falls back before finding support along the green horizontal. Again resistance becoming support is bullish and we watch another move higher before once again encountering resistance at the same Sliding Parallel in the second puce circle.

I will continue to monitor and trade this chart using the lines of support and resistance that Median Line Analysis has allowed me to identify. If price pushes through the current Sliding Parallel resistance I will look to the Upper Parallel as the next likely line of resistance – it acted as such in early April. Obviously if the puce Sliding Parallel was breached and then in turn became support, that would be further bullish action. However, if price moves lower I will look for continued support along the green horizontal and, beneath that, along he Median Line of the fork. We are tracking the strengthening and weakening of trend along the path of price that we have identified.

The Cross Pair Analysis service 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, sometimes, 20 minute ones.

I recently hosted a webinar looking at the Cross Pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8759

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

Revisited – GBPAUD 60 minute

In a previous article I looked at the GBPAUD on a 60 minute chart and I wanted to return to it once again. That article showed how we had established that we had found the path of price and discussed how we looked to follow the strengthening and weakening of trend along the angle of the pitchfork that we had drawn in order to describe it.

Chart 1 shows how the path of price continues to have effect even as the vehicle falls from a high of 1.8297 in early May to the first green circled low of 1.7828 a couple of weeks later. What I have tried to make clear is that it is the path of price that is all important, not the lines of the pitchfork itself. We do not discard a pitchfork if price moves above or below the Upper or Lower Parallel nor do we view the Median Line as some sort of “magnet”. We are using the fork to define the angle along which price moves.

Chart 1 is a very good example of this. Even though price has indeed fallen below the Lower Parallel the two green circled lows on 14th and 15th May are still in the line of the fork – the blue dotted Sliding Parallel drawn from the first low successfully catches the second low the next day. A trader taking a long in the second circle at 1.7836 would only need a stop of 10 or 12 points to be safely beneath the previous low of 1.7828. Median Line Analysis using pitchforks allows us to predict with great accuracy likely areas of support and resistance and to take high-probability, low-risk trades along the lines we have established.

Chart 1:

y1-1

Chart 2 shows how price moved from the anticipated support at 1.7836 to a high of 1.8334 in a matter of days. Potential resistance at the Median Line – as on the 12th – was taken out by a single strong bar, indicating the likelihood of a move higher and also, perversely, confirming the continued validation of the fork. From the high we see price starting to retrace, moving once more to the downside. We quickly establish a line of resistance in the red circles along the Upper Parallel and before long are able to draw the puce line of resistance from the recent high. Note how price is stepping down once more in the blue fork, all the while respecting the puce line of resistance that we have just drawn.

Chart 2:

y2-2

Chart 3 shows what happens if we draw a pitchfork from the same high in place of this line. We are using a variant known as a Modified Schiff whereby the origin is moved 50% in both time and price from the A pivot towards the B pivot. You will notice that not only does this provide an Upper Parallel line of resistance the same as the puce one, but the body of the fork provides some very good context and detail as to what is happening to price as it declines. After the Upper Parallel rejection of the red fork on the 27th price declines before finding support along the quartile of this fork. We had no reason to know that this would happen beforehand but having seen that it did happen we are then open and aware of the possibility of it happening again and again. We have predicted and proved a line of support where previously there was none. Similarly we note that resistance has lowered from the line of the Upper Parallel to the line of the Median Line – again what we have done is create a channel within which price is moving. We will now continue to monitor the path of price looking to see what happens as price challenges this support or resistance – we are following the strengthening or weakening of trend along the channel that we have drawn.

Chart 3:

y3-3

The Cross Pair Analysis service 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, sometimes, 20 minute ones.

I recently hosted a webinar looking at the Cross Pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8759

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

The Bigger Picture – GBPNZD Daily

Following my reference in the last article to the Daily chart of the GBPNZD giving us context I have been asked if I would expand on this a bit. What we are looking to do with Median Line Analysis is to find and define the path of price by using pitchforks. Having established the valid angle of ascent or descent we then look to track the strengthening or weakening of trend along this path. Using pitchforks we are able to predict with great accuracy likely areas of support and resistance and to use these to our benefit in our trading.

Chart 1:

z1-gn

Chart 1 shows how the price of GBPNZD has moved on a Daily timeframe over the last few years. We are pattern-seeking mammals and we need to organize the action that we see in order to make sense of it and to give it context or perspective. By looking for the path of price and defining it by means of a pitchfork we are able to do this.

Chart 2:

z2-gn2

Chart 2 shows such a pitchfork that uses the very obvious A, B and C pivots to do so. What we are looking for to validate the pitchfork – to prove that it is defining the angle of ascent of price – is to see action along the lines of the pitchfork. By this I don’t mean that this has to be along the Median Line or Upper or Lower Parallels but I am looking for something that is in the line of the pitchfork. In this case the Sliding Parallel action just above the Median Line is evidence that this pitchfork is doing its job.

In order to explain what I meant in the previous article I have highlighted a couple of Sliding Parallels in Chart 3. We already have evidence that the lines of the fork are working – that they are providing support and resistance along their angle – so we look to trade off these lines.

Chart 3:

z3-gn3

The last touch on the lower puce Sliding Parallel in the first green circle is at 1.9218 and the previous low is at 1.9196 so a long trade could be taken off the Daily chart with a 22-30 point stop (depending on your broker). The target for the trade would be the higher puce Sliding Parallel where a line of prior support was potentially a line of resistance. Price did move precisely to this line finding resistance in the first red circle at 1.9722 – a move of 500 points from entry.

From there it fell once again and we anticipated and saw support along the lower Sliding Parallel once more. On this occasion price touched it again in the second green circle at 1.9277 and once more pushed higher to anticipated resistance along the same Sliding Parallel at 1.9764 – again a move of nearly 500 points.

This was the context and the expected support and resistance that I was referring to in the previous article. Hopefully it is apparent that putting together the context here and the detail previously discussed would enable traders to take advantage of the strong moves that we have seen. From the Daily chart that I have shown here it would have been possible to bank approximately 1000 points in this vehicle whilst using the smaller 240 and 60 minute charts to clarify detail and to minimise risk. Median Line Analysis allows us to predict these areas of support and resistance with great accuracy.

The Cross Pair Analysis service 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, sometimes, 20 minute ones.

I recently hosted a webinar looking at the Cross Pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8759

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

Duelling Pitchforks – GBPNZD 60 minute

Members of the Cross Pair Analysis service have been closely following recent action in the GBPNZD 60 minute chart off the back of what we have been seeing in the larger Daily chart which is shown here as Chart 1. It is obvious from this that price has been moving in a channel defined by the two puce Sliding Parallels and the recent circled touch on the lower one has given rise to a solid move to the upside. By looking at the context of the larger chart and then the detail of the smaller 60 minute ones, we were able to put together a comprehensive “map” of recent action.

Chart 1:

x1-gnd

Chart 2:

x2-1

Chart 2 shows the GBPNZD on a 60 minute basis and you can quickly see that the blue fork is well validated. Using Median Line analysis we are looking to define the path of price of a vehicle and to follow the strengthening and weakening of trend along this path. As price retreats from a brief foray above the Upper Parallel the line that is most telling is the one that I have highlighted in puce – this line first provided support and then turned into resistance, strongly implying that the pair would continue to move to the downside. In the same way as on the horizontal, when a line of support in a pitchfork becomes a line of resistance, it is deemed bearish. Note also the green circled support at the Warning Line – this is a line beneath the Lower Parallel the same distance from the Lower Parallel as the Lower Parallel is from the Median Line. Even though price has moved below the strict confines of the fork we continue to track it by means of the angles given by the fork – remember it is the path of price that is important and not whether or not it stays within specific lines.

Chart 3:

x3-gn60

Chart 3 shows the same chart in close-up and with the red pitchfork highlighted. When price found resistance along the puce Sliding Parallel in Chart 2 we drew this red fork to the downside, looking to see if it too correctly defined the path of price. The series of red circled resistances at the Upper Parallel shows that it did indeed succeed in doing this. Note also the green circled support along the line of the Quartile before price dipped beneath this line and it then became resistance. The last green circle shows the touch on the blue Warning Line that we have previously mentioned and is close to finding support along the red Median Lien as well.

Note how price rose once more to anticipated resistance at the red Upper Parallel before pushing through and up to test the red outer Quartile. The breach of this line and subsequent retesting of it from the upside – as shown in the blue circle – was a further bullish sign. Even though the red fork is downwards trending we can use the stepping up of support and resistance along its lines to give us a good indication of increasing strength in the vehicle.

Chart 4:

x4-2

However the main indicator of such strength obviously comes from the blue upfork that we have been monitoring for some time and Chart 4 shows in detail what we were following.  We watched how price found support at the blue Warning Line and then once more along the blue dotted Sliding Parallel on the 15thand 16th. It is very subtle but you can see that once more we found a line changing its role – this time from resistance to support and this would have been a bullish indicator. As price pushed higher it encountered the blue Lower Parallel which I have marked with a series of green circles. A line that was support on the 5th and the 13th was now proving tough resistance to overcome. Price dropped back, but only as far as the puce Sliding Parallel – you can note that we are seeing a stepping up of support in the line of the blue fork, from the Warning Line to the blue Sliding Parallel to the puce one. It was therefore no great surprise when in the last green circle price pushed above the Lower Parallel, and not only that, but also found bullish support along this line of prior resistance.

Price has moved to a high of 1.9660 – a good move from the Warning Line at 1.9270 and also from the puce Sliding Parallel at 1.9430 and the Lower Parallel at 1.9495.

I hope I have shown how initially using the context of the Daily chart we were able to look for and take advantage of a move to the upside. On the 60 minute chart, putting together price stepping up in the red downfork and seeing the action along the line of the blue upfork we were able to watch and predict likely areas of support and resistance.

The Cross Pair Analysis service 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, sometimes, 20 minute ones.

I recently hosted a webinar looking at the Cross Pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8759

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

Across Timeframes – AUDCHF

The Cross Pair Analysis service 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, sometimes, 20 min ones. I wanted to look at this pair in further detail and expand on what I had previously written to include an explanation of how we look across timeframes in order to map and define how vehicles are moving.

Chart 1:

audchf240-chart1

We had been following the AUDCHF 240 minute chart shown in Chart 1 for some months by means of an Andrews’ fork originating in mid-December 2013. We use pitchforks to define and delineate the all-important path of price and seek to follow the strengthening and weakening of trend as the vehicle moves along. Using distinct A, B and C pivots we were alerted to the fact that this pitchfork was likely defining the path of price by the green circled action underneath the Lower Parallel in mid-March. To some people the fact that price was outside the Lower Parallel would disqualify the fork and start them looking for something else. Remember our focus is on the path of price – in other words it is the angle along which price runs that is important. In this case it happened to be beneath the Lower Parallel, but what sticks out is the fact that it was along the dotted Sliding Parallel.

We continued to follow price noting how it “stepped up” to find arrowed support along the Lower Parallel and then moved higher to find resistance along the Median Line. Note how the purple highlighted Sliding Parallel acted as support before price stepped down once again to once more find arrowed support along the Lower Parallel. We are watching previously proven lines of support and resistance given to us by our early definition of the path of price.

From the Lower Parallel price started stepping up once more – the series of arrows show this move. Note the penultimate arrow shows support along a Sliding Parallel that had previously acted both as support and then resistance. This is also the case with the final red arrow showing how once again the purple Sliding Parallel acted as resistance and then once more as support. As on the horizontal when a line of resistance becomes support that is viewed as bullish.

Chart 2:

audchf60-chart2

Chart 2 shows the same vehicle on a 60 minute timeframe and is something I have written about in a previous article. This smaller chart allows us to use the same methodology and techniques to look at the moves we have seen in Chart 1 but in finer detail. Without going into too much detail – this is found in the previous article – the third green circle shows a conjunction of support and a low-risk, high probability place to take a long trade. The resistance along the red Sliding Parallel became support in the same place as we witnessed an arrowed touch on the tested and proven blue Lower Parallel. Not surprisingly price took off from here and we have been tracking it closely ever since. We are watching it move in the channel defined by the two purple Sliding Parallels though are aware of a potential stepping up of support as shown by the red arrows. A stepping up of support will often lead to a stepping up of resistance too and we are currently watching to see whether we now push above the Sliding Parallel resistance and set a new, higher channel in the line of the fork. The move from the blue Lower Parallel at 0.8155 is now worth some 210 points for a risk of a 10 point stop beneath prior support.

I recently hosted a webinar looking at the Cross Pairs – it is available to watch at this link:
http://www.coghlancapital.com/node/8759

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

Change of Behaviour – AUDCHF 60 min

I have received an email asking me to have a look at the recent change of behaviour that we have seen in the AUDCHF via the 60 minute chart. This is something that I will probably cover in greater detail in tomorrow’s free webinar – registration at the bottom of this article.

Chart 1:

aj-chart1

It is very apparent from Chart 1 that from early April the pair has been moving sideways to downwards and we have tracked this by means of a pitchfork. Using Median Line Analysis we look to find and define the all-important path of price. Having done this we are then able to look and trade off high probability areas or lines of support and resistance along the angle that we have discerned.

The initial validation of this downfork came from the series of lows along the lower quartile but perhaps more importantly it was the action in the series of green circles that drew attention. There was a stepping up of support in the angle of the fork, by which I mean that the areas in which support was to be found were becoming further away from the Lower Parallel. This tells us that there was a bottoming out in the vehicle and that it was certainly worth following to see if there was indeed a move to the upside beginning. Importantly the last green circle shows that support seemed to be establishing itself along the line of the Upper Quartile – a line that had previously been resistance.

Chart 2 shows how price continued to move to the upside and how when it breached the red Upper Parallel we drew the blue pitchfork in order to try to define the new path of price. Using the distinct A, B and C pivots we were quickly able to establish some validation of this new pitchfork by means of the Lower Parallel touches and reactions on 6th and 7th of May. We also saw a line of potential resistance forming along the blue dotted Sliding Parallel.

Chart 2:

aj1-chart2

What this Median Line Analysis allowed us to do was to meld two concepts to provide a low-risk, high-probability long trade from the third green circle on 8th May. Firstly look at the puce Sliding Parallel in the angle of the red fork – the first two green circles show where it acted as resistance and the third shows where this resistance became support. As on the horizontal when a line of resistance is breached we look for price to come back and test that line. The second important line ids the Lower Parallel of the blue fork – this has already been tested and validated as a line of support on  a couple of occasions and we could look for it to provide support once more.

When these two factors coincided at the same point in the third green circle they provided an obvious place to look for a long trade. By placing a stop beneath the horizontal brown line at 0.8160 we were using prior support as our safety net. The long could then have been taken at 0.8167 at the conjunction of the puce Sliding Parallel and the blue Lower Parallel. A mere ten point stop would have been enough to enter this trade with some confidence.

Since then price has indeed moved considerably higher – the current high being 0.8315. I hope that I have shown how Median Line Analysis using pitchforks allows us to quickly establish the path of price and to use high probability lines of support and resistance to enter low-risk trades.

The Cross Pair Analysis service 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.

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

I will be hosting another one on Tuesday 13th May – free registration available here:
https://www4.gotomeeting.com/register/145063263

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

Still Running Well – CADCHF 240

I received an email following my last post about the CADCHF 240 asking about resistance becoming support and what that tells us. When we are looking at moves in terms of the horizontal we deem it to be bullish if resistance breaches and then becomes support. It is exactly the same when using Median Line Analysis except instead of using the horizontal we are using the path of price as defined by the angle of the pitchfork. We are looking at support and resistance along these angles so it is logical to view a breach of such resistance followed by support along it in the same way as we do on the horizontal.

Chart 1:

cc240-2

The email referred specifically to an instance of this to be seen in Chart 1. In early March there was a red dotted line of Sliding Parallel resistance that I have marked with green circles. We had been following the pair in downtrend for some time via the red fork and noted how price popped above the red Upper Parallel before declining once more. We marked the high of this move with the Sliding Parallel and continued to watch the movement of price.

Once more it moved above the Upper Parallel and in the second green circle not only pushed through the Sliding Parallel but came back to test it from above. The successful breach and retest of this line was a further factor leading us to the idea that the pair was about to move higher. This was one of the indications that we used, in conjunction with others listed in the previous article, and led us to draw the blue pitchfork in an attempt to define the new path of price that this change of behaviour had engendered.

I have detailed the validation of the blue fork in the previous article and it is interesting to note how well the lines in the fork have worked since my last comments. Remember that what we are attempting to do is to define the path of price of a vehicle by means of the pitchfork, creating channels by means of high probability lines or areas of support or resistance. There has been a strong move up from one of these lines – the Sliding Parallel highlighted in puce. This was a line that we had previously determined was providing support – it was a solid floor. By taking advantage of this line – and note how there was no reason on the horizontal for support to exist there – a trader could have taken a long with not only a high probability of success but also a tight stop to safeguard the position.

A long from the last low along the Sliding Parallel would have been at 0.7987 with a stop below the prior low of 0.7970 and an initial target of the Median Line (prior resistance) at 0.8105. In fact price has spiked through this potential resistance and I would now be looking to see if the green horizontal at 0.8160 does anything, or perhaps higher along the blue Sliding Parallel in the area of 0.8220. If price fell back I would look to see if the prior resistance of the Median Line now became support. Median Line Analysis does not guarantee that particular lines work – nobody can do that – but it does provide very accurate areas to look at for potential support and resistance.

The Cross Pair Analysis service 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.

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

I will be hosting another one on Tuesday 13th May – free registration available here:
https://www4.gotomeeting.com/register/145063263

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

Stepping Down? – CADCHF 240

Median Line Analysis using pitchforks seeks to define and follow the path of price of a vehicle thereby providing traders with high probability areas of support and resistance. Members of the Cross Pairs Analysis service have been following this 240 minute chart for some time.

Through the early part f the year we were watching the vehicle decline and tracking the gradual stepping up of both support and resistance in the red downfork. In late March price moved above the red Upper Parallel and we started to look for a pitchfork whereby we could follow this change of behaviour.

Chart 1:

cc240

Chart 1 shows what we drew using the distinct A, B and C pivots. Of course until we started to see some validation along the lines of the fork we had no idea whether or not we were correctly defining the new path of price. The red circles show how we started to see action in the lines along the angle of the fork – there were three messy touches along the Median Line, two spiking touches along a Sliding Parallel and then a touch at the Upper Parallel before price fell away. Because all of this happened in the line of the fork we could rightly anticipate that further moves in price would also likely occur along the angle of ascent that we had drawn – ergo we had correctly defined the path of price.

Looking at the action since the Upper Parallel touch two things are apparent to me – firstly that there is a constant line of Sliding Parallel support (marked in purple) and secondly that there is a lowering of resistance as shown by the down facing red arrows. We have seen this resistance lower in the pitchfork from the Upper Parallel to the Median Line to a blue dotted Sliding Parallel and now potentially to the lower Quartile. Given this lowering of the ceiling we must be wary of a similar lowering of the floor – we must watch to see if support continues to hold along the purple Sliding Parallel as it has done where marked by the up facing red arrows. What we are seeing is a lowering or stepping down of resistance and a constant level of support – effectively we are seeing a wedge form in the pitchfork. it is important not to get wedded to the charts one is following but to adjust and update them as the vehicle progresses. We are using a powerful tool but one that needs to be monitored…..

We use Median Line Analysis and pitchforks to gauge the strengthening and weakening of trend along the lines that we have drawn. The methodology allows us to identify and utilise high probability areas of support and resistance in our trading.

The Cross Pair Analysis service 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.

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

I will be hosting another one on Tuesday 13th May – free registration available here:
https://www4.gotomeeting.com/register/145063263

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

Something from Nothing – GBPAUD 60 min

I have written before that we are pattern seeking mammals – by which I mean that we look for patterns in order to help us understand what is going on. Technical analysis looks to make order and reason apparent from the jumble of data with which we are presented when looking at financial vehicles.

Chart 1:

ga-chart1

Chart 1 shows the 60 minute bars of the GBPAUD beginning in early April. Even from a cursory glance at this the pattern is evident – a move from bottom left to top right – an increase in price over time. If we were looking to trade the vehicle the likelihood is that we would want to follow the trend ie to get long at some point.

In order to help with this we might draw the lines shown in Chart 2. They reflect the move and show likely area of support and resistance. However with Median Line Analysis using pitchforks we look to take this idea to another level by determining and defining the path of price.

Chart 2:

ga2

Chart 3 shows a pitchfork drawn from distinct A, B and C pivots and to my eye it manages to define the pattern of movement of price. When we put a “framework” around it this pattern becomes obvious and it makes it far easier for a trader to “work” the vehicle to his or her advantage.

Chart 3:

ga60-chart3

The initial validation of the pitchfork – showing that it was correctly defining the all-important path of price – came from the series of touches shown by the first set of red arrows along the puce Sliding Parallel. The fact that there was resistance along a line in the angle of the fork meant that we were potentially discovering a valid path of price. If you look at the Median Line just after the first red arrow you can see that price found support on it – so when price returned to the Median Line in the first green circle we would watch to see if once more it provided support. There was indeed a bounce from the first green circle and on a retest a trader would probably look to take a long trade.

This could have been entered at 1.7935 with a stop below previous support at 1.7928. The likely target would have been at prior resistance along the puce Sliding Parallel at 1.8040 but the very strong bar from support sliced right through this level and did not find resistance until the exact touch on the upper Quartile at 1.8137.

Having breached prior resistance we look to see where support manifests itself. One obvious place would be at this line of prior resistance along the puce Sliding Parallel and the upward facing red arrow shows that this is precisely what happened. Indeed we formed a new channel in the line of the fork demarked by the red arrows, with the upper Quartile as our resistance and the puce Sliding Parallel as our support.

I am now watching the pair in the approach to NFP to see if price has stepped up in support and resistance once more. Resistance appears to be pushing above the Quartile to a new blue dotted Sliding Parallel and support may now be stepping up from the puce Sliding Parallel to the Upper Parallel. I will continue to monitor this.

By using Median Line Analysis we were able to predict likely areas of support and resistance with great accuracy and I hope I have shown how traders can make use of this high probability methodology.

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