It has been awhile since I've posted anything, but in all honesty there hasn't been much going on in the market, unless you're a channel trader, then you've probably had a field day with some of these pairs. Anyway, things finally seemed to start moving again over the past few days and while going through my PM analysis I noticed a potential reversal zone to watch on this chart. Now in no way am I saying or predicting that the market will indeed reverse at this point but there is some interesting Fibonacci ratio confluence between the 109.40's & 109.60's area. The Fibs I took were a the 1.272 extension the the most recent up move (A-B) & a 1.618 inversion of the retracement of that move (C-B). There is also a 0.382 retracement of the latest down move measured from a daily chart. Obviously you can't see it on this chart but trust me it's there. Do I have a sell limit placed at this zone?....Nope. But I will be keeping my eye on it and keep building my entry reasons as/if price action decides to reach it. There is some minor support near that zone as well which is a plus, but on the down side, if this pattern decides to complete a C-D move that is equal to A-B (giving us an AB=CD pattern) then that will take us to a much higher level which has some very good structure of it's own. We'l just have to wait and see what happens.
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Not much in the market I'm excited over but that doesn't stop me from drawing in lines and practicing my technical analysis. After-all it is a skill. Anyway with this chart I simply drew in a "What If" AB=CD pattern and saw that would indeed complete at a 1.618 fib extension which is always a good sign. this extension also lines up in an area very close to a 38.2 retracement level of the impulse leg to the left. Add to that there is a past history of market choppyness or structure. Nothing really dead on but as a whole that area looks prime for something. I personally don't have anything in my rules to trade this strictly on what I see now. But if price action does get down to that general area I will switch down to a lower time frame and see if I can catch a double bottom and get involved. If not then I just sit back and watch and call in a learning experience. My goal is not to lose money so if I'm not 100% comfortable with a trade set up I simply sit back and watch.
If you don't believe in the power of ratio's and market harmonics juts take a look at this chart. All of this happened before I was awake this morning, but if you follow the pink lines you'll see a larger AB=CD pattern completing at a 141.4 fib extension & 161.8 fib inversion zone, only to be followed by a smaller AB=CD pattern that completes at similar ratio confluence. Amazing how this stuff occurs. All that's needed is the skill to recognize it beforehand and the confidence to trade it. And a good set of rules of course.
Not much on the table for me trade wise today. Got stopped out for small profits on the 2nd targets of 3 trades last night. So today it's time to refocus and analyze for the future once again. IF this AB=CD pattern completes (we never know of course) it should end at a point of major support (1.3840's) This could be a great place to start looking for reasons to get short if the opportunity presents itself.
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