Category Archives: Timeframes

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

EURAUD 60 minute – Starting to Trend

Median Line Analysis using pitchforks seeks to identify and define trend at an early stage so that analysts and traders can then follow the strengthening and weakening of price over time. By determining the path of price we are able to anticipate likely areas of support and resistance with great accuracy.

Chart 1:

euraud-60-chart1

In this instance we are following the EURAUD on a 60 minute timeframe and looking at it in the light of the context that our larger charts were giving us. In terms of the bigger picture we were in an area of potential support so honed in on this 60 minute timeframe in order to look for evidence of a change of behaviour.

We were watching the resistance provided by the lines of the red fork. Note that there are two lines marked by a series of red circles – we followed as the resistance provided by the lower of these lines turned into support and then again as the same happened along the higher of the two lines. Price was effectively “stepping up” in the line of the fork – a bullish sign as resistance turned in to support. The process continued along the dashed red quartile as shown by the blue circles eventually moving through the highest line of resistance in the red fork.

Given this change of behaviour we looked to see if we could draw a pitchfork to define the new move. Using the distinct A, B and C pivots we looked to see if the new blue fork could be validated by the action along its angles. The first indication that it was working came from the touches along the handle, indicating that the angle of ascent was indeed worth following. Note also the resistance along the puce Sliding Parallel –  remember that it is not the lines of the pitchfork itself that are important, rather it is the angle in which it is drawn.

Price retraced from this anticipated resistance and moved all the way back t the Lower Parallel of the fork. The action at the first red arrow further validates the fork – note how price spiked to support and then reversed. Even though we saw this line violated on the next approach we were still watching to see the effect of the Lower Parallel when price reached it again at the second red arrow. Three solid bars finding support along this line of previous activity have led to a move this morning from 1.4462 to a high so far of 1.4538 – not a huge move but one that could have been taken with a tight low-risk stop.

I will continue to monitor the movement of price within this pitchfork, looking to follow the strengthening and weakening of trend. If price pushes to a higher resistance in the angle of the fork and support steps up as well, then we will be looking for higher prices. If however we find a lowered resistance then it is likely our support will be under pressure and we may expect lower prices in the future.

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

AUDNOK Daily – Not Mainstream

The Cross Pair Analysis service covers a large number of non-US Dollar vehicles on an ongoing basis. One of the more unusual ones in our sights is the AUDNOK – which over the years has shown a tendency to trend well for long periods. Chart 1 shows the recent Daily moves in the pair without any annotation – it looks as though price is moving in a fairly horizontal range but I think most would accept that this would be somewhat difficult to trade.

Chart 1

audnok-daily-chart1

By establishing a path of price and monitoring the strengthening and weakening of trend, Median Line Analysis allows traders to analyse and profit from a vehicle using high probability and low risk entries.

Chart 2 shows the same AUDNOK Daily but with a pitchfork added. I have used the significant late July low as my A pivot and the next significant high and low as my B and C. All of a sudden the chart “comes to life” and numerous supports and resistances become apparent. Our brains are constantly looking for patterns in what we see around us and drawing a pitchfork gives context and makes sense of the movements of price.

Chart 2

audnok-daily-chart2

In order to determine that we have indeed found the correct path of price we need to see activity along the angle of the pitchfork that we have drawn. This does not have to be along the main lines of the fork itself but it does have to be in the angle of ascent (or descent in the case of a downfork). Here there are a series of resistances along the arrowed Sliding Parallel just under the Median Line of the fork. These would alert us to the probability that we were correctly defining the path of price – we would watch the continuing action along the lines of the fork, building a picture of likely areas of support and resistance. Further confirmation would come from the last two red arrows in the line of the Quartile and this is so even though price had dipped beneath the Lower Parallel of the fork in the area of the puce circle. Remember it is the angle defined by the fork not the fork itself which is important to the methodology.

The dip to the puce circle in early March led us to draw a Sliding Parallel – again shown here in puce – from that point as a potential line of support. When price revisited that line a couple of months later we were watching it as a potential area of support. as is apparent form the puce arrows the anticipated support held and also gave traders the opportunity to take a long position with the benefit of a tight stop – for example by going long from 5.4877 at the second arrow with a stop beneath 5.4841at the first arrow.

As price moved away from this line of support a trader would probably move his or her stop to breakeven in order to use “the market’s money” in the trade. The two green circles show a bullish context as potential resistance along the underside of the Lower Parallel turns into support. As on the horizontal, when resistance becomes support we look for price to move higher. This is precisely what has happened with it now reaching an area of anticipated resistance in the larger green circle at 5.7890. Not only is this horizontal resistance as shown by the green line but also resistance in the line of the fork along the Quartile. The last two red arrows show that this was the previous line of resistance in the fork and, if the strength of trend was the same, we would anticipate that this would again be the line of resistance to watch.

Having moved from anticipated support to anticipated resistance I hope that I have shown how the methodology can be of use in analysing and profiting from the moves in a chart. I will continue to monitor the way trend is strengthening and weakening in the angle of the pitchfork that I have drawn.

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

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

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

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

Angle of Ascent – CADCHF 240 minute

Median Line Analysis using pitchforks seeks at an early stage to establish and then to define the path of price – the angle of ascent or descent of a vehicle. Having done this we then look to follow the strengthening or weakening of trend along the lines that we have drawn. The methodology allows us to predict likely areas of support and resistance in the line of the pitchfork with considerable accuracy.

cadchf-240-chart1

I have posted this chart before and noted how price has moved consistently along the angle of the pitchfork that we have drawn – how it has moved between support along the green Sliding Parallel and resistance along the puce one. An essential part of validating a pitchfork – determining whether we are indeed describing the path of price – is to look for continuing action in the angle of ascent (or descent) that we have drawn. In this case we noted the first red circle showing resistance at the Upper Parallel – something which caused us to keep a close watch on the fork for further confirmation. This came with activity along the Median Line of the fork where the line clearly showed both support and resistance as price evolved.

Specifically we watched how things developed along the puce Sliding Parallel – a series of exact touches and bounces as shown in the green circles were clear evidence of the line providing a constant line of support. The fourth green circle shows how price moved from the line at 0.7987 to a high of 0.8291 at the end of May.  A trader could have taken a low-risk, high-probability long trade from the puce Sliding Parallel, with a stop beneath previous low of 15-20 points.

Even though we spend the majority of our time following the movement of price in the angle of the pitchfork we are not immune to what happens on the horizontal. The vast majority of traders are looking at the latter patterns and the result is that price often reacts to these horizontal levels. In this case the grey line has provided both support and resistance to this vehicle as evidenced by the series of red circles.

What we do is try to put the package together. The initial move higher from the last green circle did encounter anticipated resistance in the second red circle along the horizontal. Median Line Analysis allowed us to follow support stepping up in the angle of the fork from the puce Sliding Parallel to the previously active Median Line and this led us to anticipate that price would indeed move higher. It pushed through the horizontal – falling back to find support along it – before reaching anticipated resistance a couple of times along the line of the green Sliding Parallel.

Since the last high in the first puce circle price has dropped back somewhat – it appears to be potentially lowering in the line of the fork. The three puce circles show resistance at the green Sliding Parallel, then beneath it at the blue dashed quartile and lastly at a slightly lower level once more. It must be stressed that these moves have not yet played themselves out and price could push higher once more, likely to the anticipated Sliding Parallel resistance or even higher to the Upper Parallel. However the potential lowering of resistance is something we will follow over the coming bars. We are also noting how price has once more found support along the grey horizontal – you could argue that we were effectively forming a wedge in the line of the fork.

As I stated earlier we use the strengthening and weakening of trend along the lines of the pitchfork to determine the movements of price of a vehicle. I hope I have shown how the methodology can give us high probability areas of support and resistance within the trend 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