Monthly Archives: July 2014

Silver declines due to strengthening of the greenback; foreseeing a potential comeback

Silver prices have weakened on the general market as the U.S. dollar continues its upward scale. Despite data that shows the U.S. index is showing signs of a multi-year bullish pattern, experts are divided on the issue of the uptrend. Despite the economic improvements in the U.S., many analysts agree that America’s reserve currency lacks the catalysts to sustain its strength. The looming risks to the U.S.’ road to recovery such as the peak oil issue can result in this recent uptrend stalling, giving precious metals like gold and silver time to recover.


Silver technical analysis

Silver traders seem to be on alert as the precious white metal nears resistance at 21.10. According to the candlesticks chart below, it appears that there would be enough support for the silver market’s reversal, with support at 20.80. At this point, investors should be looking at buying opportunities when silver’s value drops to the $20 price mark.

May – August is silver’s weakest months, so it’s best to buy the precious white metal during this period. Investors may visit BullionVault’s live price chart to see the price today, as well as silver’s price fluctuations during May and August in previous years. In 2005, for example, silver was at around $7 per ounce at the start of May, and was at $7.29 per ounce by the end of August. However, at the beginning of September, silver picked up and started at around $7.60 per ounce and ended the year at around $9.08 per ounce.

GBPCHF 60 minute – Double Tap

By Ben from Coghlan Capital.com

I wanted to take a quick look at this pair to give an example of how the methodology that we employ could be used by a trader to take a high probability, low risk long on a 60 minute timeframe.

At the heart of the analysis is early recognition and definition of the all-important path of price of a vehicle. We look for evidence of a change of trend across all timeframes and in this case both the Daily and the 240 minute were showing price finding potential areas of support and the possibility of a leg to the upside. Such a move will obviously show on a 60 minute chart before it shows on a 240 minute one or on a Daily. Given this, we started to look for pivots for our pitchfork in order to correctly show the possible line of ascent of the pair.

GBPCHF-60-chart1

Chart 1 shows the very obvious A, B and C pivots and the pitchfork we are using is a variation known as a Schiff (or unmodified Schiff). Note that the A is at the low of the spike in early June – it is pure coincidence that the origin of the fork appears to be at the high of it…… The Schiff is drawn by moving the point of origin 50% of the distance from the A to the B in price but not in time. It is a move along the vertical axis only.

Having drawn the fork, we need to validate it ie to establish whether price is indeed moving in the same angle as the lines we have superimposed on it. We do this by looking for price action along the lines of the fork. This is not necessarily along the Upper or Lower Parallel, the Median Line or the Quartiles, we are looking for activity in the angle of the fork.

On this occasion there is action along the existing lines – there is resistance along the upper Quartile as shown in the green circles and there is both support and resistance along the Median Line in the series of red circles. We can be pretty certain that we have successfully defined the angle of ascent or the path of price by means of the pitchfork that we have drawn.

Note how support in the third red circle turns into resistance in the fourth – as on the horizontal when support becomes resistance we view this as a portend of bearish behaviour. Indeed price did fall from the Median Line resistance, finding a few bars of support at the lower Quartile before arriving at the Lower Parallel.

Note that at this point, in the area of the first red arrow, that we did not know whether or not we would find support at this line. It had not been tested before but the methodology raises the likelihood of this being a line of support and it is certainly an area that we would be watching closely. Because of this uncertainty we would not just “buy the line” until support had been proven and until we had a prior low beneath which to place our stop. The fact that price bounced some forty points from this first touch before returning to test the line again was what we would be looking for.

The second red arrow shows price back at the Lower Parallel for two bars – a long taken here at 1.5213 could have been protected by a stop beneath the low of the bar at the first red arrow at 1.5210. Our target would initially be the Quartile at 1.5277 (this was prior support and would be a likely place to encounter resistance) easily encompassing most risk/reward criteria.

What in fact happened was that price spiked straight through the Quartile and most traders would be following this action and probably allowing their trades to run. As I write this we have pushed higher to the blue dotted Sliding Parallel at 1.5325 and I will continue to monitor this potential line of resistance to see if price turns back from here or whether it continues higher.

I hope I have shown that the early recognition and mapping of the path of price by means of a pitchfork will allow traders to look for high probability areas of support and resistance and enable them to take low risk trades in the vehicle of their choice.

The Cross Pair Analysis service looks 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.

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

The following link takes you to a recording of the webinar dated July 9th :
http://www.coghlancapital.com/node/9300

GBPAUD 240 minute – More Detail

Following on from yesterday’s webinar in which I commented on this pair I have received a number of emails asking me to look at it in more detail. The methodology that we use seeks at an early stage to recognise and define the path of price of a vehicle. Using pitchforks allows us to monitor the strengthening and weakening of trend along the line of ascent or descent.

In this instance having identified A, B and C pivots I drew the Schiff (or unmodified Schiff) pitchfork shown in Chart 1. This is a variant which moves the origin of the pitchfork 50% of the distance from Pivot A to Pivot B in terms of price but not in terms of time. Having drawn the pitchfork we need to validate it, by which I mean that we have to ensure that price action is occurring along the angle of the fork. The first, and very definite, indication of this is shown in the red circle as price exactly touched and then rejected away from the Upper Parallel as shown in the red circle.

gbpaud-240-chart1

Price fell from there beneath the Lower Parallel and found support along the dotted Sliding Parallel. During the webinar I tried to stress that it was not the lines of the fork itself that were important but the angle of ascent or descent that they followed. We do not immediately discard the fork just because price moved below the Lower Parallel – we would still be pretty confident from the Upper Parallel touch that we were defining the angle of ascent so would continue to look for further confirmation by means of continued support or resistance in the line of the fork. I focused in on the Sliding Parallel support, highlighting the arrowed bar, which showed a very strong move up and through the Lower Parallel, closing very close to its highs. In a counterintuitive way, the fact that it took such a strong bar to re-enter the fork does indeed further validate it.

In the webinar I noted how price moved higher to find resistance along the Median Line of the fork and how support stepped up to a line along the Quartile as shown in the series of red circles. I pointed out how a long trade could have been taken from this Quartile support, with a stop of as little as three points to place it below prior lows, and a target of the Median Line some 130 points higher. From the last in the series of red circles price move all the way to the puce highlighted Sliding Parallel – from 1.8050 to 1.8374.

Price has retraced somewhat form that level and we are currently looking to see continued support along the Median Line in the green circles. We have watched support step up from the Sliding Parallel beneath the Lower Parallel, to the Quartile and now potentially to the Median Line. All these levels have been in the line of the fork and we will look to continue to define the moves in this vehicle by means of this pitchfork.

I hope that I have been able to give more of an idea of the way that we use pitchforks to track vehicles by means of strengthening and weakening of trend along paths that we have identified. The analysis allows us to anticipate or predict areas of support and resistance with great accuracy and to use these to take high probability, low risk trades.

The following link takes you to a recording of the webinar dated July 9th :
http://www.coghlancapital.com/node/9300

The Cross Pair Analysis service looks  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.

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

CADCHF 240 and 60 minutes – An Update

I wanted to have another look at this pair which I first presented here in early May. The methodology that we use seeks to identify the path of price at an early stage and then to delineate or define it by means of a pitchfork. It is not the pitchfork itself that is important but the angle ascent or descent that it follows. By matching price to this angle we can then monitor the strengthening or weakening of trend as it progresses.

cadchf-2-240-chart1

We last looked at this pair in the area of the puce circle in Chart 1. We had been following as price rose from the puce Sliding Parallel following the series of touches in the green circles and had noted the constant line of resistance as shown by the higher puce Sliding Parallel. The validation given by the price action along these lines was sufficient for us to continue to follow it. Note how price moved strongly higher from the last green circle running into resistance at the higher puce Sliding Parallel and then falling back to find support along the grey horizontal.

Although we spend the majority of our analysis looking at movements in the angle of our pitchfork we are not immune to what happens along the horizontal. Here the fact that resistance later became support was noticed and deemed to be bullish. From this support price moved higher again before running into resistance once more along the same puce Sliding Parallel. Note how we are following support stepping up in the angle of the fork – from the line of green circles, to the arrowed blue Sliding Parallel beneath the Median Line and now to a higher arrowed Sliding Parallel shown in green. It is normal to expect resistance to be put under pressure when we see support stepping up and members of the Cross Pair Analysis service have been aware of this and watching these moves unfold.

We are looking to see if there is enough upside pressure to push through the puce Sliding Parallel that has acted as resistance since early April. It is less the breach of this line itself that is important but more where we find support on any retracement. If, for example, price pushed above the line and came back to test it from above and found support along it that would be a bullish indicator and would have us looking to challenge the higher line of the Upper Parallel that had been resistance once before.

cadchf-2-60-chart2

One feature of the Cross Pair Analysis is that we look at vehicles across various timeframes. Chart 2 shows the same pair on a 60 minute basis and Chart 3 shows the same vehicle in more detail. Note how once more we use a distinct A, B and C to draw our pitchfork – this time it is a variant known as a Schiff or Unmodified Schiff. Here the origin of the fork is moved 50% in price from the A pivot to the B pivot.

Chat 3 shows the validation that we found on this fork – the series of red circles denoting the activity that we saw along the Median Line of the fork and which told us that we had correctly defined the path of price. Note how we use the same techniques to mark a strengthening of trend along the path of price. Resistance in mid-June along the quartile of the fork moved higher to the Sliding Parallel just under the Upper Parallel and support along the Median Line also moved up to the Sliding Parallel denoted by the up facing red arrows. (Note incidentally that when this puce Sliding Parallel support briefly breached that support was found along the Median Line once more…)

cadchf-2-60-chart3

In the last day or so the puce Sliding Parallel resistance has been breached to the upside and we have seen price come back and start to establish support along this same line. We potentially have a bullish higher channel forming with the puce Sliding Parallel as new support and a higher green Sliding Parallel as resistance. We will continue to monitor this chart and use the shorter timeframe as a “canary in the ine” for our longer timeframe 240 minute chart.

The Cross Pair Analysis service looks  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 here:
http://www.coghlancapital.com/node/8759

I will be hosting another free webinar on Wednesday 9th July – registration is available at this link:
http://www.coghlancapital.com/node/9207

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