Beyond the Candles

hi fxgroup
you are great. thanks you

as expected usdchf has been rejected from R .

Hi,

Isn't that a 2WPB in the last 2 weeks?

gbpchf. the price retest the range and than the sellers took control again

No, it's not. In order to be a 2W bearish PB the second bar should have been the same size or larger (closing below) of the first bar.
Moreover, the (downside) tails show some buyers.
Therefore you have a decent chance price next week really behaving like this was a 2W PB but it's just "decent" not "sure".

Look at the next post (GBPCHF) of the same person, that one is a 2W PB. Once again, that PB is not really nice, as the first bar is acting somewhat like a PB itself and the second is more alike to an indecision bar (similar shadow and tail).

If you look at the daily time frame you'll see what's going on.

pb within the RM (not a class A pb tough the tail is not long) what do you think will be the next step??

Hi, thanks for the clarification appreciate it. In the daily, I notice there are 3 pin bars in the first 3 days of the week and subsequently prices are making lower low. I take it, its a signal to go short?

USDCHF? Could you please show a chart? I don't see them on my broker's chart.

The next step is for me to remind you what's this thread is about: "Beyond the candles".

Now, this might sound like an odd reply but it's really the best I can give you.
When you ask yourself "I see a PB / RM, what's next" you should ask yourself: "why am I asking what's next, when price tells me it already?"

Now let's analyse how and why.


Monthly chart

Price talks, often it talks so much that it's difficult to discern what's a bait and what's "real". Let's fire up the talking price, sitting on the monthly chart (attachment 1). You can see a broken important trend line. I will skip the fact that you can draw a wedge pattern telling you where price will go in the rest of this year. Let's stick to the immediate instead.

- Price compressed between the important monthly line (basically 1.55 RN) and the nearby 1.6 BRN. This, by FXGroup teachings, means price will range between them. Tight range = fight between buyers and sellers = danger sign.

- The (unconfirmed) "inversion" at about August 2012 did not form a 2M PB and is missing a key property of first chance inversion patterns anyway (size). This means momentum is weak.

- Consequence of the two above, look at the battle bars showing buyers and seller, that is another danger flag.

- Look at the swings: on the M scale we are more or less in a RM forming also a lower high (even if individual bars made an higher high). This means that the downtrend is still strong and this depresses buyers momentum. Until the inversion is complete (double bottom or similar) and confirmed (RET M) price will stay "gracile" and trading in there with the WPD-WPG tecnique alone, with no additional "FXGroup tricks" could prove challenging.

See how MUCH price says just by opening the proper chart and drawing all of 3 horizontal lines (only 2 needed)?

But in order to know what price says we have to want to listen to it. This only happens if we look at and post the monthly chart!


Weekly chart

Having looked at the above, the weekly chart (attachment 2) floods us with information.

- Price is in a blue RM. It exited for a bit but re-entered back and that has a precise meaning.

- The RM has a median line and price formed an inner (black) RM about at the half of the outer RM. This is called "market dynamic" effect and it's another of the notions one day FXGroup might want to show.

- Even not knowing about the above, we can see the blue RM is a triple bottom. The third bottom is a special pattern still not discussed here, which I used to call "triple bar PB". Price is retracing and doing its stuff all around those two enclosed RMs, look at the retracements and stuff.

- Price closed inside the RM. This alone tells you what's the next step: "wait!". If you go on the daily chart you'll see a big bullish bar closing within the RM, which in FXGroup terms is called "exhaustion bar". Those have all sorts of specific properties, one of them is they are deceiving about what price will do next.


So, the answer is: "wait for the next bar(s)". If you know what you are doing and accept the fact that the trend at the moment is basically in a transition and thus won't help you, then you could make one profitable trade in the very next days. It will involve some tecniques beyond the current thread scope though.

my question was A rhetorical question! anyway thank you for your comments and your analysis.
in the monthly chart you can see that the trendline was not strong enough to push the price downwords. the price is sliding sideways. this means that the trend is weak and there is enough space in the weekly and daily to play with it.
take a look at the weekly chart. we see RM . the tops are getting higher and the support stay in the same level.
last bar is PB. its length is almost 80% of the RM! as i understand the chart, the next step is, the price will reach the upper level of the rm! (at least) why? becouse the bullish momentum within the borders of RM is very strong.

(hope you are not in a cave near me...).

Hi, sorry for not being clear. I am referring to GBPCHF, as shown in the attached. I circled the PB in the picture.

You can't use "stale" signals to determine a price target. I call it stale because by now that PB target has been reached already so there's not much you could "squeeze out" more from it. The target was the price low of the bar 3 bars before it.

If you want to look at targets with a longer time span, you have to switch to the weekly or monthly charts. There, when you see a PB you will have a couple of days on daily to see price going through such PB target(s).

Noted. Thanks and really appreciate your help and kindness in explanation.

Hi Fxgroup,

I have a qustion for you: these two for EURAUD, which one do you think is right. I feel it is not a RM.
Please comment.

Thanks for putting up a chart of this pair, I have been watching this for quite some time as well. In my opinion it is just not " ready " to trade yet. If you buy ( go long ) you encounter all sorts of very important levels.

Note the M level @ 1.2891, which previously stopped a bullish monthly candle.

So to minimize risk I would wait until we know how this resistance area is handled by buyers and sellers.

On the other hand, I wouldn`t want to go short now, as we DO have strong bullish candles, and then we would go short right into support @ 1.2500 BRN.

From a trend perspective on weekly, we are now from confirmed bearish ( lower highs and lower lows ) switched to sideways. There are higher lows as you point out in your ascending triangle, but so far no higher high above that range.

Result : I will wait another week or two.

Good trading to all, I hope that fxgroup shows up more often !

M.

P.S. Pattern traders will see the inverse head & shoulders possibly setting up, which gives interesting targets, but better to wait for confirmation in the style of fxgroup, ---- no use to go long too early, just because the chart looks a bit like a " discovery " in Technical Analysis....

Hi All,

It is quite simple, but not easy, as we have to pay attention on good MM.

P.S Exactly Michael, right about pattern, well spotted.

I was wondering why there is not much intresting in this thread, from my point of view it is one of the best I ever read.
Maybe Fxgroup is too buisy, but all simple principles were explained and the rest is just digging, like Dfumagali advised.

Thank you Michael and Dariusz, good comments. You guys point out some things I didn't pick up. I think I'd better to stay out to avoid the risk!

Oliver

I can answer this.

Which thread is going to be more popular:

- the one promising quasi-automated, quick profits made over 1 hour of intraday trading on the 5 minutes chart with indicators doing the thinking for you

- the one promising effort and having to use the brain, taking a long time to learn, a solid method that makes profits over a week, with a lot of checks so most potential trades end up having to be discarded?

You can have both static and dynamic RMs affecting a certain range. EURUSD is expecially keen about this but other EUR pairs do that too.

Looking at the bigger picture we can see an inverted head and shoulders forming the right shoulder. If and after the pattern has been confirmed, price will rise up for about the head - neckline distance.

i would wait until price will close above BRN 1.3000 to buy. note that there is a bullish flag in the chart. the price already made pullback on it.