DRFX FOREX SWING TRADING

___________________________________________________ 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 Uptrend Line was broken with a pair of D...

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. In the chart below, we can see that the Bullish Candles that attempted to break out long from the Pennant were eventually taken out by the slow Bearish Candles that took us back inside of the Consolidation. DAILY CHART - FALSE BREAKOUT   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...

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.  DAILY CHART - STRONG UPTREND We can now see that it has started to breakout from this 2nd Pennant with strong Bullish Candles above Resistance. DAILY CHART - PENNANT 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; These alternate forms can be seen in the diagram below taken from the Tradin...

After a strong Uptrend that started in 2013 and which has been defined by an Inner and an Outer Uptrend Line, a large Bear Crown/Head & Shoulders pattern has now appeared to signal the start of a new Downtrend in favour of the Yen. This pattern, along with Double Bottoms, Double Tops and Consolidation Breakouts are the typical setups seen ahead of a major change in market direction. Given the size of this Bear Crown setup and the fact that this has been formed on the Daily Chart, there is a large probability that the Japanese Yen will appreciate  significantly  against the Kiwi over the next few months and years to come. Taking a look at the broader picture, we can see the direction of this pair over the last 6 years. DAILY CHART - LARGE UPTREND 2009-2015 A closer look at this pair reveals a large Bear Crown/Head and Shoulders Pattern that has now been formed at the Inner Uptrend Line. DAILY CHART - BEAR CROWN SETUP This t...