Video Analysis of the Daily and 4 Hour Charts

[DRFXTRADING12]

The videos and Technical Analysis that you will see in this thread will be focused on the Daily and 4 Hour Charts which I use for my Swing Trading strategy.


In a nutshell, my strategy involves;


- Identifying Market Patterns and Signals using Candlestick Patterns;


- Waiting on the Daily and 4 Hour Charts to provide Entry Signals;


- Holding Trades for a Pre-determined Time Period based on each setup;


- Targeting 100 - 200 Pips on each trade;



I used to Day Trade the Currency Market several years ago, but after continuous losses, the switch was made to Swing Trading which has provided better results such as...

Even during periods of high volatility and market uncertainty such as the European Sovereign Debt Crisis, these types of trades were also possible..

Day Trading provides a tremendous adrenaline rush that can be addictive. However, the higher levels of market volatility in such a small time period makes this approach a very difficult way of making money.

With Swing Trading, patterns, signals and trends are a lot clearer. Your trades have a higher percentage chance of being profitable and you can achieve higher and more stable Rates of Return with minimal exposure to market volatility.


TECHNICAL ANALYSIS VIDEO

Today´s Analysis is on the NZJ JPY pair. This has formed a large Bear Crown/Head and Shoulders Pattern which indicates that a major trend change in favour of the Japanese Yen is in the making.

This pattern, along with Consolidation Breakouts, Double Tops, Double Bottoms and Trend Line Breaks are typical market patterns that signal an imminent change in market direction. The larger these signals and the larger the time frames that they are on, the greater the chance of a trend change and one that will last for a long time.


https://www.youtube.com/watch?v=NNIcw2RCgLY&feature=youtu.be


Lets see how this unfolds in the next few days, hopefully there can be a strong trading opportunity.

Duane

 

[DRFXTRADING12]

ANALYSIS OF GBP JPY CONSOLIDATION BREAKOUT

VIDEO ANALYSIS OF GBP JPY


https://www.youtube.com/watch?v=LWfBTPiff8U

This pair has been in a very strong Uptrend that began in 2012, forming an Inner and Outer Uptrend Line and 2 Large Pennant Consolidations.
We can now see that it has started to breakout from one of the 2 Pennants formed during this trend with strong Bullish Candles above Resistance.



DAILY CHART - CONSOLIDATION BREAKOUT

The manner in which this started is one of 3 ways in which these Consolidation setups tend to be broken in this market.

1) The First is when the market simply provides a Single Breakout Candle without any pullbacks.

2) The Second way is when the market pulls back on the inside of the barrier and then U-Turns to provide the breakout signal

3) The Third way- which is what has taken place here - is when the market initially breaks the barrier, U-Turns to test the barrier before U-Turning to give the signal that leads to the breakout.

DAILY CHART - BREAKOUT SIGNAL

As attractive as this signal has been on the Daily Chart, the size of the Stop Losses required to trade this breakout on the 4 Hour Chart have been too large.

Based on where we would have entered at the close of the Daily Candle, the Stop Loss would have been 332 Pips for the 1st entry option. With the 2nd Bullish Signal, the Stop would have been 169 Pips- both of which are too large for the average Retail Trader.



4 HOUR CHART - ENTRY SETUPS

So the overall setup and breakout signal on the Daily Chart were strong, but unfortunately can’t be traded based on the Stop Losses required.

In these situations, we simply either wait on another setup on this pair that offers a smaller Stop Loss, or move on to another pair.

 

[DRFXTRADING12]

NZD CAD FALSE BREAKOUT- AS FORECAST

VIDEO ANALYSIS OF FORECAST NZD CAD FALSE BREAKOUT


https://www.youtube.com/watch?v=YT3JSFHqRx8



The last time we examined this pair in April this year, we had projected a sharp decline in favour of the Canadian Dollar based on the False Breakout pattern that had been unfolding. The Bullish Candles that attempted to break out long from the Pennant were eventually taken out by slow Bearish Candles that took us back inside of the Consolidation. Based on this movement and the fact that False Breakouts usually lead to breaks at the opposing end of the Pennant, we had projected the pair to break towards the major Outer Uptrend Line.



DAILY CHART - PROJECTED DECLINE

Looking at the current situation on the Daily Chart, we can see that this forecast had in fact materialized over the last few weeks. Starting from the high of the start of the reversal, the pair has declined sharply by approximately 800 Pips.


DAILY CHART - SHARP DECLINE

Now, how could you have taken advantage of this profitable move?

Having seen the start of the breakout below the Support of the Pennant, the first thing to do would have been to draw the Downtrend Lines that were being formed. These Downtrend Lines can be used for the placement of Stop Losses with the assurance that your profits will be protected throughout the trade. The next step would have been to enter short at around the 0,9100 area, with a Stop Loss of 100 Pips placed above the Inner Downtrend Line. Your Limit Order would initially be set to the Outer Uptrend Line for a profit of 370 Pips.



DAILY CHART - ENTRY SETUP

As the market began to move in you favour, you would have moved your Stop Loss lower, breaking even initially and then locking in profits below your Entry. This would have continued until the market started to reverse bullish just above the Outer Uptrend Line target. Your Stop Loss would “sadly” have been taken out and you would have pocketed 300 Pips in gains.


DAILY CHART - 300 PIP PROFIT

This is one of the ways in which Breakouts and False Breakouts can be profitably traded in this market. Many of these opportunities are likely to continue to present themselves for us given the current environment of low liquidity that now characterizes the major Currency Pairs. As Swing Traders, we simply need to spot these setups and the appropriate signals provided to take advantage of them, for continued monetary reward.


Duane

DRFXTRADING

 

[DRFXTRADING12]

EURO USD FORMING CONSOLIDATION

The EURO USD may be in the early stages of forming a Consolidation Setup based on the nature of the sharp rally that has taken place over the last few days. If we see this play out over the course of the next few weeks, there may be an opportunity for us to trade within the boundaries of Support and Resistance until a breakout takes place.

As we can see in the chart below, the pair has finally broken the Large Pennant Consolidation that was formed between 2008 and 2014.



DAILY CHART - PENNANT BREAKOUT

Given the size of this Consolidation, we should expect this breakout to continue in favour of the USD for the Medium to Long-Term heading into 2016. However, as we can appreciate more clearly from the chart below, the EURO has started to rally in defiance of this overall outlook.



DAILY CHART - BREAK OF INNER TREND LINE

The Inner Downtrend Line was broken with a pair of Double Bottoms. This has been followed by a sharp rally that appears to be taking the pair to the Outer Downtrend Line. If that barrier is hit, the pair could continue even higher towards the Long-Term Downtrend Line before breaking back inside of the Pennant.

On the other hand, it could also U-Turn bearish to resume the overall direction of the Consolidation Breakout at either the Outer or Long-Term Downtrend Line.



DAILY CHART - FORECAST SCENARIOS

Despite the possibility of a bullish scenario that takes us back inside of the Pennant, the current strength of the Downtrend makes a bearish U-Turn the more likely outcome over the next few weeks. Another reason for this bearish outlook has to do with the nature of the candles that have led to the current rally taking place. The sharp movement, the small candles and the fact that the reversal follows a very long trend, are some of the signs of the start of a Consolidation Setup. This means that we could see a pullback at either of those two Trend Lines to form the 1st Resistance point of a Consolidation Setup.


DAILY CHART - PROJECTED CONSOLIDATION

If this materializes, then we will have opportunities to trade between Support and Resistance until the breakout takes place. We will do this by firstly determining the time frame that is controlling the signals and then analyze and trade accordingly for our 100 to 200 Pip Targets.


Duane

DRFXTRADING