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

Tracking the Pair – EURAUD 240 minute

Over the past eighteen months Cross Pair Analysis members have tracked the movement of this pair from a low in August 2012 of 1.16 to a high in January 2014 of just over 1.58. Since then we have followed as price has declined to a recent low of 1.4505.

Median Line Analysis using pitchforks seeks to recognise and define the path of price of a vehicle and to monitor the strengthening and weakening of trend within the lines that we have drawn. It does not always suit traders to use the Daily timeframe so in the Chart I present a recent pitchfork on a 240 minute basis that we are currently using to determine this variance in trend.

euraud-240

The methodology involves using distinct A, B and C pivots and drawing the pitchfork to best determine the all-important path of price. In this case the variant we are using is known as a “Schiff” or “Unmodified Schiff” pitchfork whereby the origin of the fork is moved 50% of the distance from the A pivot to the B pivot in price but not in time. Having drawn the pitchfork we look to see if we can validate it ie if we see price action along the angle of the lines that we have drawn.

In this case we quickly note what is happening in terms of resistance along the Upper Parallel in the area of the green circle. The untested or previously unproven line provides a line of resistance to price which proceeds to fall from about 1.4980 to the third red arrow at just over 1.4550.

Median Line Analysis allows us to predict with great accuracy likely areas of support and resistance and you will note how the third red arrow lies along a green Sliding Parallel emanating from the low at the first red arrow.  Until we see consistent support or resistance along such a line we do not know whether or not it is indeed a Sliding Parallel. However given that we are confident that we have correctly described the path of price – the angle along which the vehicle is moving – it is certainly an area that we would be closely watching as price approached it. The fact that we have had not two but three bounces along this line adds to our confidence in it.

Price rose from this third touch at 1.4550 all the way back to 1.4870 and another line of anticipated resistance, our old friend the Upper Parallel. The first down facing red arrow shows this action very well and how, after a double tap, price then fell away from this resistance once more. Not only that, but we now seem to be establishing a line of resistance slightly lower in the fork – this is shown by the red dotted Sliding Parallel and the series of red down facing arrows.

We need to monitor this vehicle closely as we are potentially seeing a rising of support as well. After the support along the green Sliding Parallel we could argue that we are seeing a stepping up of support as indicated by the last two up facing red arrows. They are potentially showing that we are finding support along the Median Line of the fork. Effectively we are seeing a wedge developing in the pitchfork with rising support and lowering resistance. We will continue to monitor the char looking for strengthening or weakening of trend along the lines that we have drawn to describe the path of price. This pitchfork is particularly relevant because our analysis of the Daily timeframe (not shown here) indicates that we are potentially at an important point in terms of price.

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

A Quick Update – CADCHF 240 minute

I have looked at this vehicle in a previous article and discussed how it could be followed and traded using the methodology of Median Line Analysis. What we look to do at an early stage of a trend is to seek out and define the path of price of a pair and, having done that, use the lines of support and resistance that soon become apparent.

Chart 1:

a1-cc

Chart 1 is a copy of the one I discussed in early May. We had quickly established this all-important path of price as the CADCHF moved above and away from the declining red lines of resistance. We used the distinct A, B and C pivots to draw our pitchfork and looked to validate it, ie to see if there was any price action along the angle of the lines that we had drawn in order to show that we were indeed tracking the path of price. The Upper Parallel resistance, the Median Line resistance and the puce Sliding Parallel support all confirmed this and we noted how a trade from this last line would have been low-risk and high-probability. Resistance was seen at the green horizontal from the early April spike high.

Let’s take a look at Chart 2 and see what has developed since then. After the rise from 0.7987 in the fourth green circle to the horizontal at 0.8160 we saw a small retracement. It is apparent from the action along the Median Line of the pitchfork how important this line has been in providing support and resistance since the first red arrow at the beginning of April. I have highlighted other instances of this with more red arrows. You can clearly see that after the green horizontal touch price fell back and found support along this Median Line. We noted this prior line of resistance was becoming support – a bullish indicator in the same way as it would be if we were looking at lines on the horizontal. The stepping up of support from the puce Sliding Parallel to the Median Line indicated a strengthening of trend along the angle of the fork and it was no surprise when price pushed higher and broke through the horizontal green resistance.

Chart 2:

a2-cc99

Respecting the supports and resistance along the path that we had drawn we encountered a pause precisely where anticipated – along the Sliding Parallel from the late March high originally to be found as a blue dotted line in Chart 1 – changed to a puce line in Chart 2 so that it is more apparent. Once more we see a retracement from anticipated resistance in the puce circle and we note how the vehicle falls back before finding support along the green horizontal. Again resistance becoming support is bullish and we watch another move higher before once again encountering resistance at the same Sliding Parallel in the second puce circle.

I will continue to monitor and trade this chart using the lines of support and resistance that Median Line Analysis has allowed me to identify. If price pushes through the current Sliding Parallel resistance I will look to the Upper Parallel as the next likely line of resistance – it acted as such in early April. Obviously if the puce Sliding Parallel was breached and then in turn became support, that would be further bullish action. However, if price moves lower I will look for continued support along the green horizontal and, beneath that, along he Median Line of the fork. We are tracking the strengthening and weakening of trend along the path of price 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

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

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