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  • EUR/USD – Falling Wedge Versus Trendline and 200-Day SMA

    From fxtimes.com

    The EUR/USD extended to new lows for the week. The The decline appears to be sitting at the a short-term declining trendline support as we gear up for the 9/26 US trading session. The 4H RSI has remained above 40 since the rally started late July, but is now finally falling below 40, indicating the loss of bullish momentum. As the EUR/USD continues to slide in the falling wedge pattern seen in the 4H chart, it is approaching a rising trendline that use to be resistance until broken on 9/7. The daily chart shows the EUR/USD’s correction against a rally that started 7/25 from 1.2042. The rally initially respected ... (full story)

it also looks like there is an hourly -somewhat- declining channel in play, tried a support line twice with the last candles.
Very interesting scenarios you have come up with Fan - especially with respect to the 200 MA (D1). My take though is that with < 1SD +ve move away from that line there may not be "enough" momentum to sustain a negative deviation away from the line at this stage (based on mean regression or reversion ideas). What is your experience? Do you feel the extent of immediate deviation is not a relevant consideration at this stage? Or would you say the primary "attraction" in this case is the H4 200 MA currently around the 1.26 handle (i.e. ignoring the implications of the rising line for a moment)?
1H... it's sideway
Manipulator,

With regard to the 200-day SMA. I feel that any overbought condition is completed resolved. and the market is back to its mean, ready for another lift off if the market can stay risk-on.

And, yes I don't see that much momentum downwards to cross the 200-SMA significantly at this point. But still feel it can push it to 1.2740-50 are.

The 200 4H SMA is the next level i will be tending to, because it is rising with the rising trendline from July. This "last line of defense" could be around 1.2650 if price continues falling towards it.

- Fan
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Is fan saying buy at 1.2820? Where i place stop? Target 1.29. Anyone else?
Price will rally back up to 1.2910 on some nonsense news before crashing...needs to pick up some steam first. Selling into that rally will be clever
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Yeah, falling until i short it, 2 times today shorted and it went up, second time i will not close short, so better do not short it
Don't enter before a retracement back to the MA (or in my case Coral) happens...easy game
Quoting Guest
Is fan saying buy at 1.2820? Where i place stop? Target 1.29. Anyone else?
Quoting 4exNinja
Price will rally back up to 1.2910 on some nonsense news before crashing...needs to pick up some steam first. Selling into that rally will be clever
I am actually on the same page guest. But treading lightly, with small position, like a scout. Maybe choppiness continues, that is the idea. But there seems to be a slight pick up in downside momentum this morning in NY, so be careful.

- Fan
Quoting fxtimes
Manipulator,

With regard to the 200-day SMA. I feel that any overbought condition is completed resolved. and the market is back to its mean, ready for another lift off if the market can stay risk-on.
Thanks and have a nice day got to quit now. I am particularly impressed by your point about O/B and similarly O/S I suppose and you are very correct in the sense you have used it. Loadedgun and I though focus on the 200 MA as the long-term mean per time frame (though any other MA can be chosen to define a volatility envelope). That is we see OB/OS as market extrema from which price reverts to the 200 MA (which we take for mean). Where that deviation is not significant we tend to suspect continuation after a bounce. This is of course neither here nor there just our way of looking at volatility structure. But as always great analysis and perspective from you. cheers
Quoting Manipulator
...Loadedgun and I though focus on the 200 MA as the long-term mean per time frame (though any other MA can be chosen to define a volatility envelope). That is we see OB/OS as market extrema from which price reverts to the 200 MA (which we take for mean)...
I use this concept as well. I use 3 std deviation "bollinger bands" from the 200SMA to help with the OB/OS angle.

- Fan
Waiting for another incoming Draghi "hakunamatata, we'll solve it" nonsense speech that allows the dumb money to rally back up to the 1.2910 range. What is he waiting for, people are rioting in Greece, Spain and Italy. Perfect setup for fooling the dumb money...go Draghi, pay us!!
USD home sales in 20
Sales dip...I guess Draghi doesn't have to give a speech to make the EUR rally a bit after all

Or not...seems like people are more concerned about the European riots and Italy vs Spain's "you ask for a bailout first!" tug of war than the dip in home sales.
Quoting fxtimes
I use this concept as well. I use 3 std deviation "bollinger bands" from the 200SMA to help with the OB/OS angle.

- Fan
Hey Fan glad you mention this - we did too initially. But as you know BB lags somewhat and we needed a tool that was essentially predictive. That is why we opted finally for polynomial regression apparatus. You will find it far more accurate than BB and because it recalculates based on the zero bar - it can graphically project direction apart from being rather firm on market boundaries.

As you know - apart from being a dynamic S/R moving averages are just the "dynamic mean" for mean reverting markets (depending on the volatility envelope you wish to trade e.g. 20 MA short-term Vs 200 MA long-term per time frame) so when using the regression model one really does not need it in theory but we found that adding it to regression channels is excellent for orientation based on mean reversion theory. Below are some sites where you can find more on these regression type tools. They are very helpful and take away much of the "guessing" about whether or not some trend line will hold or break. Cheers and great analysis BTW

http://www.google.com.ng/url?sa=t&rc...GuJhswQOhyyuUg


http://www.google.com.ng/url?sa=t&rc...2bh2nRr8XVr7vA

http://www.google.com.ng/url?sa=t&rc...EZVWqFLBThpXZQ
Thanks Loadedgun

Though the links are not working.

Would you email me the links at [email protected] ?

Thanks

- Fan
Hey Fan,

Yeh the chart would make sense because that trendline appears to be holding price down atm and it cant seem to hold above 1.2860 think i might close my long!!

Regards
John
Quoting F4r
Hey Fan,

Yeh the chart would make sense because that trendline appears to be holding price down atm and it cant seem to hold above 1.2860 think i might close my long!!

Regards
John
You got it John,

I am actually long in GBP/USD, and a very small position in EUR/USD. I like the set up in GBP/USD 1H chart better, at the end of an ABC correction, which doesn't mean that much, but along with other signals, it felt like there is a chance to rally. We'll see.

- Fan
  • Post #19
  • Quote
  • Edited at 7:02pm Sep 26, 2012 3:39pm | Edited at 7:02pm
http://www.forexfactory.com/showthread.php?t=89714

http://www.google.com.ng/url?sa=t&rc...mja19tncBU668w

http://www.google.com.ng/url?sa=t&rc...crZg2O2u2x8eVw

Hi Fan - these should work now. Can't find the site I wanted you to download a working model from. But in the first link you will find a usable indie for now while I still search for the better tool. But just want you to get a feel of what I mean and to use effectively you need to read up some algebra of polynomials and their graphs so you don't end up seeing it just as you would a more "sophisticated" BB. But will keep searching for the one I really want you to download and test. Cheers
USD is fighting EU up movement like mo**er Fu**ker
http://www.guardian.co.uk/world/gall...sis-protesters

http://www.guardian.co.uk/business/2...e-greece-spain


EURUSD up....interesting
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  • Posted: Sep 26, 2012 7:23am
  • Submitted by:
     fxtimes
    Category: Technical Analysis
    Comments: 21  /  Views: 3,859