Category Archives: GBPNZD

GBPNZD 20 minute – Smaller Timeframe

I have received an email noting that I concentrate on timeframes longer than 60 minutes and asking if Median Line Analysis can be used on shorter charts such as the 20 minute. The answer is that it is applicable to any timeframe from Weekly down to tick charts, but with the volatility (and consequent potential for large gains) that we see on the Cross Pairs, I tend to look at 60 minutes or above.

Chart 1:

gbpnzd-20-chart1

To show how one could use the methodology on a 20 minute chart let’s have a look at Chart 1 which shows the GBPNZD. No matter the timeframe, what we are looking to do is to quickly establish the path of price and then to delineate the angle of ascent or descent by means of a pitchfork. I am always looking for distinct A, B and Cs in order to use as pivots and in this case the pitchfork variant that works best – or best describes the path of price – is one known as a Modified Schiff. The point of origin of the pitchfork is moved 50% in both time and price from the A pivot towards the B pivot.

Whether or not the pitchfork is valid, ie correctly describing the path of price, comes from activity along its angle of ascent or descent. In this case the angle of ascent clearly matches what we are seeing. For example, the first two red arrows show support along the line of the lower Quartile and the second two red arrows show resistance along the line of the upper Quartile. Clearly the lines of the fork are describing supports and resistances and it now remains to track the strengthening and weakening of trend along the defined angle.

Chart 2:

gbpnzd-20-chart2

As time moves on, note how price falls to the red circled Sliding Parallel just above the Lower Parallel. This can be seen in more detail in Chart 2 where the puce line shows the exact double tap on the lowest level we reach in the fork. Until the second touch we would not know that this was indeed a Sliding Parallel – it was a level we would be watching because we had found support there once before but until a second touch it had not been “proven”. Note also the slightly higher green Sliding Parallel – again a double tap on the line drawn in the angle of the pitchfork.

Chart 3:

gbpnzd-20-chart3

Chart 3 shows the way price moved up and away from the area of the Lower Parallel before running into anticipated resistance and falling back once more. not only did we find resistance along the Median Line but at the exact point at which it met the green line of resistance across prior highs. A trader taking a long form the lowest Sliding Parallel at 1.9486 would probably have closed their position at about 1.9598 where these two potential resistances coincided.

Since then price has retraced somewhat; in terms of this fork we are seeing a lowering of resistance – from the arrowed upper Quartile to the Median Line. We will watch to see if trend strengthens or weakens by watching if support now steps up or down along the angle of the pitchfork and whether resistance also continues to lower or not. I hope that I have shown how the methodology can be used on 20 minute timeframes and how by defining the path of price at an early stage we can look to high probability 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

Charting a Breach – GBPNZD Daily and 240 minute

Image 1 shows a Daily chart of the GBPNZD that I have shown in a previous article. I have discussed how Median Line Analysis allows us to track the path of price and the strengthening and weakening of trend along the angle of the pitchfork that we have drawn. The Cross Pair Analysis service has been following the evolution of this move and in particular tracking the support and resistance visible along the puce highlighted Sliding Parallels.

Image 1:

a1-gn

The anticipated support at the first red arrow would have allowed a long entry around 1.9218 and a stop below the previous low of 1.9196 with a potential target along the higher puce Sliding Parallel. The reason for this target was that we suspected that a line of prior support could potentially become a line of resistance. Price did move precisely to this line finding resistance at the first red down arrow 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 at the second up arrow 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. So after a cumulative move of approximately 1000 points we were certainly going to continue to follow the action of this pair.

We watch and trade the market across various timeframes and I think that it is instructional to look at Image 2 which shows the same pair on a 240 min basis. As I have explained, the essence of what we do is look to establish the path of price and the move through the lines of resistance of the red downfork led to the drawing of the blue one.

I drew this pitchfork very soon after price moved higher from what became the C point on 6th May. The reason that I immediately liked it was the series of green circled touches along the handle of the fork, indicating that indeed we were working in the angle of the fork. The Median Line touch and rejection in the first red circle followed by the first evidence of support at the first red arrow along the Lower Parallel increased my confidence. Price then dipped below the Lower Parallel and to many people this would be a reason to abandon the pitchfork and look again. However the methodology we utilise stresses the importance of the path of price rather than the sanctity of the lines of the fork itself. Indeed the second red circle shows how the Lower Parallel started working as a line of resistance indicating that the movement of price along the angle of the fork was still valid. Note how the bar marked with the second red arrow is a very strong bar – once it had managed to get above the resistance of the Lower Parallel, it is almost as if the pressure was released and it surged higher. This is all evidence that the pitchfork was working well.

Though we spend the majority of the time looking at the angle of ascent or descent it would be churlish to completely ignore what is happening on the horizontal – after all this is what most traders do and there are likely to be reactions to such lines. I drew the puce horizontal and warned that it might act as resistance – indeed it did how price moved up from the second red arrow at 1.9518 to the horizontal at 1.9764.

From there it fell back and not surprisingly found support once again along the Lower Parallel of the fork as indicated by the third and fourth red arrows. Median Line Analysis allowed us to anticipate such support and we continued to watch a wedge form between the blue Lower Parallel support and the puce horizontal line of resistance. Bearing in mind what we were watching on the Daily chart the breach of this horizontal and consequent backtest of support came as no great surprise.

Image 2:

a2-gn2

You will note that the blue fork is quite narrow and as time moved on the low on the 15th became more apparent. I therefore looked to see if I could use that as the C pivot of the pitchfork and found that it did indeed work well as shown in image 3. The green circles show the Sliding Parallel support that propelled price higher and the red circles show what looks to be Sliding Parallel resistance – though we need a few more bars and maybe a reaction to confirm this. I will continue to monitor this fork looking for strengthening and weakening of trend as well as following the fork shown in Image 2, which worked so well to take price through the puce horizontal on the 240 minute timeframe. On the Daily chart I will look to see whether price can stay above the highlighted Sliding Parallel and, should it fall back, whether that line of resistance becomes a line of support.

Image 3:

a3-gn3

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