The Hallmark of Accurate Technical Analysis? - Money
The hallmark of accurate Technical Analysis is the ability to spot market movements several days and weeks ahead of other Traders for larger trading gains. This puts you at a significant advantage when it comes to trading these expected moves, while confirming the superiority of your Methodology. A few examples of Chart Forecasts using only Candlestick Patterns and Signals shows how this accuracy can be achieved to provide real results, without the use of Statistical Indicators or Economic Analysis.
On July 1 this year, there was a Bullish Consolidation Breakout on the AUD USD that appeared to indicate the
continuation of the strong uptrend in place. This would possibly have taken us
to the 0,9757 Resistance of October 2013 and provide strong Day Trading and Swing Trading gains.
DAILY CHART - BREAKOUT
DAILY CHART - EXPECTED TARGET
However, this would gave way to a strong Bearish Reversal Candle that took out our Stop Loss when we entered to go long.
DAILY CHART - FALSE BREAKOUT
DAILY CHART - BREAKOUT
DAILY CHART - EXPECTED TARGET
However, this would gave way to a strong Bearish Reversal Candle that took out our Stop Loss when we entered to go long.
DAILY CHART - FALSE BREAKOUT
With this sudden change, one had to now re-examine the Currency Pair to determine if it would attempt to rally once more or start a Bearish trend in favour of the US Dollar. Based on the range and the nature of the candles of the previous trends since July of 2013 (Section 5 - Consolidation Trading on the Forex Market) and this most recent False Breakout, the pair was now more likely to decline within the context of a large Pennant Consolidation.
DAILY CHART - CONSOLIDATION FORECAST
This expected decline to Support eventually began on September 9th when a Bearish Candle broke the Support of a Consolidation setup. This would lead to a sharp 600-Pip decline over 3 weeks, completing the formation of the Pennant with the 2nd Resistance point.
DAILY CHART - CONSOLIDATION BREAKOUT
DAILY CHART - LARGE PENNANT FORMED
Since this setup was in sync with the Methodology, my clients were able to take advantage with a 148-Pip trade between the 11th and 17th of September.
TRADE SETUP
DAILY CHART - AUD USD TRADE RESULT
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| Live Trades executed on Dukascopy Platform |
The AUD NZD was another pair that offered a profitable trade in line with our strategy. It also formed another Consolidation pattern a few weeks later that was in line with my analysis.
On August 25, 2014, there was a brief Bullish breakout from a Consolidation pattern on the Daily Chart that allowed my clients to capture 69 Pips, just ahead of the reversal a few days later.
DAILY CHART- AUD NZD PENNANT
DAILY CHART - AUD NZD 69-PIP TRADE
Given the large size of the Pennant that was being broken, most analysts would have expected the move to last for several weeks and provide hundreds of Pips in trading gains. Fortunately, based on the parameters of my Methodology, my clients would not have been caught by this reversal. Our targets are always set to anticipate these pullbacks in the market regardless of the long-term forecasts.
These targets are at major price points in the market that either lead to temporary pullbacks before the breakout continues or reversals in trend direction. Since one can never be certain about what will take place at these areas, we always exit there for large, assured, short-term gains (Section 6 - Consolidation Trading on the Forex Market).
As this reversal continued, the nature of the candles suggested that the pair would not go back inside of the Pennant but would form a smaller Consolidation above the Resistance (Section 5 - Consolidation Trading on the Forex Market).
DAILY CHART - AUD NZD FORECAST
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| Trade executed on a Demo Account, but too Risky for a Live Account |
As can be seen in the chart below, our expected formation has now materialized. A Pennant has now been formed that could give way to another Bullish breakout for sharp Aussie gains.
DAILY CHART - AUD NZD PENNANT FORMED
Finally, the CHF JPY whose pattern of Consolidation reflected the ongoing story of low liquidity and market volatilty, was also projected to decline. This followed yet another False Bullish Breakout attempt above its Resistance boundary.
DAILY CHART- CHF JPY PENNANT BREAKOUT
DAILY CHART - CHF JPY ENTRY SIGNAL
This reversal was expected to lead to a decline to the Support area at 111.91. Trading this movement was possible and my clients were able to capture 76 Pips of this decline after a small initial loss.
TRADE SETUP - CHF JPY
DAILY CHART - CHF JPY RESULT
SUMMARY
The accurate analysis
of these major chart patterns can be done without Statistical
Indicators or Economic Data that are usually late to the party. This market
has a predictable cycle of patterns and signals that are seen across the Forex Market every day and for all Currency Pairs. Once they are identified and analyzed with the right set of Technical Parameters, your forecasts are more likely to match
up with actual market movements- movements that can
be traded for large and consistent profitability.
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Duane Shepherd
(M.Sc. Economics, B.Sc. Management and Economics)
Currency Analyst/Trader
Contact: shepherdduane@gmail.com
Twitter: @WorldWide876
Facebook: DRFXTRADING
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