Trade Levels Not Individual Bars or Price

Interpret Price at Key Reference Levels Not at Tick-by-Tick Price.

Identifying key identified price levels in advance will help me understand the direction price wants to go.  When looking at a chart to see what is happening or not happening I must have a frame of reference.  The live bar is only useful in relation to established significant qualified levels, is price moving towards or away from a level.  Chances are if it’s not going towards one level then it’s going to the other.  Those levels can be support or resistance areas, higher highs, lower highs, lower lows, higher lows, and or Fibonacci retracements or extension areas.

Things to identify on a chart:

  • Current and recent impulse legs. Ideal impulse leg is from a LH to a LL and HL to HH with stong bars majority being of the same colour.
  • Fib retracement levels of impulse legs and adjusted as the leg lengthens.
  • Fib extension levels, drawn once a strong key fib retrace level has been hit, especially, .382 and .618, or  a full retracement has occurred.
  • Horizontal lines at support and resistance levels.

 

To test this idea, below I have placed the 4-hr chart for AUDUSD, USDCHF and GBPUSD with identified levels and marked areas for possible trades.  I will update each of these charts after the close on Friday or if levels achieved before then.

Identifying levels and key structure areas should help the worry and uncertainty of trading, but more importantly give me defined things to look for on a chart.

AUDUSD

AUDUSD 4 HOUR CHART
AUDUSD after rate decision, which sounded bearish, price has been dropping sharply after the pre rate announcement rally. Nearing ABCD completion at Fib Extension levels and approaching Key support from Oct 2011

USDCHF

usdchf 4 hr
USDCHF possible short trade at resistance region or long if it drops down to 1.618 which also align with structure support.

GBPUSD

GBPUSD
At .618 level which aligns with a structure Lower High. Look for reversal signal to short

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UPDATE

AUDUSD Update

Trade levels not bars
Was looking for buy signal at Fibonacci extension confluence.  Buy entry could have been on 1.414, 1.272 confluence but the safer entry would have been on the break above the down pin bar.  Targets could be .382, .618 and or the 21 EMA which is not shown on the chart.  It looks like price has more to rally up.  I don’t expect .618 to hold if retested.  Looking now for a double top to .97931 but must wait for up rally continuation signal on lower time line (1 hour chart).

USDCHF Update

Fib Extension confluence did not hold
USDCHF. In this case Fib extension confluence did not hold BUT price did not rally up to the identified Resistance level suggesting it had more down side to go.  It went down to a double bottom on the previous HL that produced the most recent HH for a full retrace.  This may still have more to go down but both Long and Shorts should be considered closely with patience until near term structure levels have been broken.

GBPUSD Update

GBPUSD 4 hr chart
GBPUSD has had a nice stair step rally up to a previous HH breaking and closing above it.  The entire move up has not had a structure level broken or tested to the down side.  This rally may have more to go.  Look for possible entries on the immediate leg .382 retrace but up signals must present on lower time lines.  If price does retrace further down a better entry might be at a .382 / .618 confluence lining up with a previous LH level.  Both the 21 EMA and Ichimoku is strong Bullishly aligned.
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Aussie Dollar approaching May 2012 support again, will it hold?

AUDUSD is approaching strong support of 0.95821 again, will it hold or break through?
AUDUSD is approaching strong support of 0.95821 again, will it hold or break through?
  • Today’s price action had an almost .618 retracement of the current 4 hour down leg.
  • Two 4-hour bars did close above the .382 retracement levels but the second one left a pin bar just short of the .618 level
  • The short lived rally up is now followed by a move back down qualifying for a possible AB=CD completion.
  • If the AB=CD does complete it will be between the 1.272 and 1.414 Fibonacci extensions but more importantly it will mean a break below the strong support from May 2012 of 0.95821
  • If it does break through a possible completion of the AB=CD pattern will be around price level .94439
  • Will the support level of 0.95821 hold on a 3rd attempt to break through?  If it does hold and cannot break below then a the Fibonacci extension points of 1.618 aligns nicely with structure resistance for a possible short trade, around .97539

How to trade it from present price of about .96085?  This evening there is light Aussie, and USD News tonight, and tomorrow with BOJ Gov Kuroda Speaking at around 8pm EST.

AUDUSD 4-hour chart

4 hour chart
AUDUSD
  • 4 hour chart completed an almost perfect AC=CD pattern
  • AB=CD pattern also completed very close to the fibonacci expansion 1.618 of the AB leg
  • The completion was found at the support low from May 2012
  • Blue box is critical zone, will it be resistance and come back down to at least a double bottom?  or will it break through to at least point C?