Category Archives: GBPAUD

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

GBPAUD 60 minutes – A Fresh Approach

It has been said that we are pattern seeking mammals in that we look to make sense of the world around us by looking for rhythms or patterns in what we see. This is certainly true when looking at the chart of a financial vehicle – we are seeking to understand what is happening by fitting it in to a pattern that we can comprehend and follow.

Chart 1:

gbpaud-chart1

Chart 1 shows a blank chart of the GBPAUD on a 60 minute timeframe. The moves are obvious but there does not seem to be much rhyme or reason behind what is happening – certainly there is not enough information with which to make a solid trading decision. Median Line Analysis seeks to give a structure to these moves by quickly establishing the path of price and delineating it by means of a pitchfork. We are interested in the angle of ascent or descent that price is following and will look to trade off the strengthening or weakening of trend.

Chart 2:

gbpaud-chart2

Chart 2 shows what happens when we apply a pitchfork to the vehicle – we look for a distinct A, B and C to make the pivots of the fork, and immediately what appears makes sense of the moves that we have been following. Validation of this being the correct path of price comes from the activity along the line of the fork – the red arrowed touches along the Upper Parallel are evidence of this. Note also how support appears along the line of the arrowed Quartile – indeed if anything it has stepped up to here in the fork from the lows in late May.

Remember that it is the angle of the fork that is important not the lines of the fork itself – the fork is not inviolate or sacrosanct – and if we are happy that we have correctly defined the path of price we will not discard the fork just because one of its lines has been breached. That is the case here, where price moves through the previous resistance of the Upper Parallel and has potentially found a new line of resistance in the circles along the Warning Line. (A Warning Line is drawn equidistant from Median Line to Upper Parallel but outside the Upper Parallel.) I am also taking note of the support and resistance, evidenced by the last two red arrows, along the line of the Outer Quartile.

Chart 3:

gbpaud-chart3

When we see evidence of price showing a change of behaviour we will look to define this by means of a fresh pitchfork. In this case the breach of the red Upper Parallel led me to the blue pitchfork shown in Chart 3. Again I used a distinct A, B and C as my pivots and I am currently looking to see if there is action along the angle of the fork in order to validate it. I have circled two possible areas  that may do this – potential resistance along the Median Line and potential support along the Quartile. It is too early to say that this is a proven description of a new path of price but it bears following to see what develops.

Chart 4:

gbpaud-chart4

Chart 4 puts these two pitchforks together and this is what I am currently following in order to track price on this timescale. I am keeping an eye on the potential red circled resistance along the red Warning Line and also the green circled support along the blue Quartile. Should the red Warning Line be breached my attention will then turn to the next potential line of resistance along the blue Median Line.

I will be watching for supports and resistances along the lines of both forks to see which one is in control. Be aware that we may find one fork defining supports and the other defining resistances – both need to be followed. I will also be looking at this chart in the context of larger 240 minute and Daily charts.

Median Line Analysis using pitchforks seeks to provide order in the moves of financial vehicles. The methodology allows us to define the path of price and thereby look for anticipated areas of support and resistance. By following the strengthening and weakening of trend along these lines we are able to analyse and trade the vehicles using high-probability, low-risk strategies.

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

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