Posts by "trump"

$DXY & EUR/USD

$DXY, what do we have from an analysis point of view. Well, quite a lot. Lets start with a monthly chart. The bottom of 31/03/08 and 28/04/11 are ascending at a Gann angle of 7.5dg. The high of 31/05/10 met resistance on the -26dg moving average from the high of 28/02/02. (long term stuff) The highs of 27/02/09 & 31/05/10 produced RSIs of 65 & 62 respectively, still in the monthly chart.

If we go back to the 05/10 high, (weekly close 11/06/10) (June 2010 in the monthly chart is a shooting star type of candle, the lower wick is a little long )and bring the analysis forward, (lets try and make the analysis more useful than last weeks lottery numbers, very useful last week, but of no value now)

From the high we have completed a double Zig Zag X triangle correction, a triple complex Elliot corrective pattern. This part of the analysis is seen in the weekly chart. You can view the last part of the correction (the triangle, and thus the end of the correction) from the 29/04/11 to the 02/09/11, the close of 09/09/11 is the termination of the triangle, enclosing the a b c d e correction.

This rally (i.e. the one that any short EUR/USD positions profited from) (and why not) met resistance at the -26dg moving average from the high of 11/06/10 (again weekly close)(the high wave candle). The daily close was 04/10 hanging man still in $DXY, this produced a bullish engulfing pattern in EUR/USD. If you use 360 min charts (quarter of one day) I like to use charts at a ratio of 4:1, the low in EUR/USD formed a perfect RSI failure swing, together with a simultaneous break of the down trend line from the high in EUR/USD from the 29/08/11, a very strong signal to place a long trade in EUR/USD from the 04/10. The next lower chart, would be 90 mins, but you will see a lot of noise/knee jerk reactions to economic announcements in these very low timeframes.

If you now view the daily $DXY from the low of 29/08/11, we could count the highs and lows to produce a 5 wave Elliot count:

12th September is count 1
15th September is count 2
22nd September is count 3
27th September is count 4
4th October is count 5 with the hanging man candle.

If you draw a Fib from the CLOSE of the 4th October to the CLOSE of 26/07/11 (I always truncate wicks when drawing fib retracements, I think wicks are failures, and I do not consider them for Fib work.) (Draw the fib down to find support) The 26/07/11 was used as that is the current base of the market for the $DXY. The CLOSE of the 14/10/11 sat exactly on a 50% retracement from the low from the 26/07/11(Its the base of the current move up) to the high of 04/10/11.

If you look at a EUR/USD weekly chart, low of 11/6/10, and drawn a 15dg/18.75dg and a 26.25dg moving average/trend line, you will see why the decline in EUR/USD has met support/resistance at the level it has. It is currently at resistance from a 7.5 dg trend line stemming all the way back to 05/02/ 08. In a weekly chart the current cyclic ascent is at 7.5dg, in a monthly a higher 18dg, as you look at shorter time frames you will notice the decreasing ascent/decent of angles used. ( I never draw horizontal support/resistance lines)

But what about above and below of where we are in EUR/USD?

Support would be at 26.25dg, drawn from the low of 06/11/10, the week of 16/09/11 used it as support, and closed above it, after that, we will see support at the 18.75 dg and then 15dg. The weekly close of the 17/10/11 used the 18.75dg.

Resistance would be where we currently are, at the 7.5dg from 05/02/08, (14/10/11, weekly close, closed exactly on it), (from 3 years earlier? Yep) look at the daily high of the 14/10 in EUR/USD at 1.38925 ), we are yet to see a close above this in the current rally, if the market broke this, you would see resistance at the 7.5 dg trend line from the low of 27/05/11, that held support for 15 weeks encasing the symmetrical triangle. (weekly chart)

Good luck with your trading.