Category Archives: AUDNZD

AUDNZD 240 and 60 minute – Changing Behaviour

In my last article I stated that I wanted to “note how the lines of the pitchfork are there to define the path of price rather than to act as inviolate supports and resistances. Median Line Analysis seeks to recognise and follow the trend of price – the angle of ascent or descent – and to delineate this path by means of the pitchfork. We are looking for validating action along the angle of the lines and for the strengthening or weakening of trend rather than whether or not the lines of the fork remain intact.” Since I wrote that, even though the vehicle has continued to the downside moving out of the pitchfork itself, the lines that we have delineated continue to allow us to track price.

Chart 1:

audnzd-b-240-chart1

Image 1 is an updated 240 minute chart and shows these recent moves. We had originally validated the fork – shown that it is correctly marking the path of price – by means of the puce Sliding Parallel, showing support and resistance, just above the Median Line. We were slightly wary of the lowering resistance in the angle of the pitchfork as shown by the series of puce circles. Lowering resistance can lead to lowering support and this is precisely what we saw.

From the fourth puce circle price fell very strongly through potential supports – notably the Lower Parallel. Weirdly, the fact that such a very strong bar took price through this line does validate the line – it took such a strong bar to breach the support. What next happened also caught my attention – the previous support of the Lower Parallel (as shown in the first red circle) then becomes resistance as shown in the second and third red circles. As on the horizontal when support then becomes resistance that is viewed as bearish.

When we see a spike low, the practice is to draw a Sliding Parallel off this bar and this is the case with the puce line with the green circles. Again we see the same pattern develop as above – the line of support drawn in the first green circle is breached and is then retested from underneath. The trend continues with price stepping down, with support becoming resistance. Despite price falling beneath the Lower Parallel of the fork we still use the lines of it to show the strengthening and weakening of trend.

Chart 2:

audnzd-b-240-chart2

Image 2 shows a 60 minute chart of the same vehicle and indicates how one could follow the move lower using the same methodology but in a different timeframe. Remember that what we are looking to do is to establish the path of price using the obvious pivots as the A, B and C of our fork.

Note the line of resistance that is quickly apparent along the Upper Parallel of the pitchfork – this would be enough to keep a careful watch on it for an indication as to future moves. Price does spike above this line to the Outer Quartile before falling very strongly and you will note that support emerges at the other Outer Quartile – there is some “balance” or “equilibrium” around the Median Line of the fork with one Outer Quartile being resistance and one being support.

Note how price moved from this Outer Quartile support and established a new channel – running between the resistance of the green Sliding Parallel and the support of the Lower Parallel. If anything the last few bars show that resistance may have lowered somewhat and it now appears to be along the line of the Quartile. I will continue to monitor this chart looking for any raising or lowering of these supports and resistances that we have noted – remember that it is strengthening or weakening of trend that we are following here. The 60 min chart gives early warning of what to expect on the 240 minute chart and I will obviously relate this chart to the larger one and will watch that for any further breaches of the supports and resistances that we have noted above.

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

AUDNZD 240 min – Following the Slope

I wanted to take a look at this pair, and in doing so, note how the lines of the pitchfork are there to define the path of price rather than to act as inviolate supports and resistances. Median Line Analysis seeks to recognise and follow the trend of price – the angle of ascent or descent – and to delineate this path by means of the pitchfork. We are looking for validating action along the angle of the lines and for the strengthening or weakening of trend rather than whether or not the lines of the fork remain intact.

audnzd-240-chart1

Chart 1 shows the pitchfork we have been following on the 240 minute timeframe for this pair. The very distinct A, B and C points give us the pivots from which we can draw our pitchfork. The next task is to validate it ie to show that we are correctly describing the path of price by looking for price action along the angle of the lines that we have drawn. The obvious early indication of this is what happens along the puce Sliding Parallel as shown by the red arrows. A line of support just above the Median Line provides a very precise line of resistance when price rises to it once more. Having noted this, we would then be watching for further evidence that the pitchfork was providing support and resistance along its lines. Members of the Cross Pair Analysis service were prompted in the daily video analysis to look out for such support as we approached the Lower Parallel in the area of the first red circle.

This indeed provided support and a move from a low of 1.0751 eventually topped at 1.1039 once more along the highlighted Sliding Parallel that had been our prior line of resistance. This was a move of some 290 points from anticipated support to anticipated resistance using a simple but effective methodology.

One price reached the Sliding Parallel it proceeded to retrace – aided by pronouncements from the Bank of New Zealand. We watched how price fell strongly towards and eventually through the prior support of the Lower Parallel – a good lesson not to try to catch a falling knife. Rather than jumping in to a trade we wait for evidence that an established line is continuing to work. In this case we would only have got long at the Lower Parallel had we seen an initial reaction up and away from it, followed by a retest. If that had happened we would have looked to go long at the second touch with a stop below the previous (lower) first touch.

But that did not happen and instead we now find that price has dipped below the Lower Parallel. This does not mean that we immediately discard the fork – remember the important thing is it is the path of price that we are looking to define by means of the fork rather than the fork itself. Indeed the dip below the Lower Parallel can be of use in determining the future path of price – we will watch to see if a line of support (first red circle) now becomes a line of resistance (second red circle). This would be a bearish indicator and is something I am focussing on at the moment.

I have drawn a Sliding Parallel at the low of the dip and will also look to see if that line now becomes a continuing line of support. We potentially have a new channel forming with resistance along the underside of the Lower Parallel and support along the new Sliding Parallel. It is important to constantly monitor the charts as this channel is not yet validated – what it will do is show if the trend that we are following is strengthening or weakening. Remember that it does not matter that we are trading under the Lower Parallel – the fork is not invalidated – it is the path of price that we are following that is important…..

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

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