Daily Chart Art – August 4, 2010

AUDUSD: 4-hour

PoD Chart

Ay Caramba! Is AUDUSD in for a fall? Now I don’t know about you, but those higher tops and higher bottoms are looking a lot like a rising wedge to me. Stochastics also tells me that the pair is overbought, but it’s been in there for a while, so it’s still a waiting game. Hmm, I got a hunch that it would be a good time to sell if the pair breaks the psychological .9000 mark.

EURGBP: 4-hour

PoD Chart

Unless my eyes are deceiving me, that looks like a sketchy head and shoulders formation on EURGBP’s 4-hour chart. This chart pattern suggests that a downtrend could be waiting in the wings. EURGBP already broke below the neckline of the formation and dipped to a low of .8254 before pulling up. With the stochastics still crawling higher, upward price action could take place in the short-term. If the pair finds resistance at the 50% Fib, which lines up with the broken neckline, it might be in for a stronger drop.

GBPJPY: 1-hour

PoD Chart

I’m seeing double! – A double top, that is. Those two peaks are looking pretty sweet for a drop, especially if it breaks below the neckline around 134.00. Then again, the pair could also be forming an ascending triangle with those higher lows. If the double top continues to form, the 38% Fib at 135.00 might provide some short-term support for the pair.

  • shortpipin

    PIPPIN, SUPPORT AND RESISTANCE ZONES, COULD THEY BE VERTICAL AS WELL AS HORIZONTAL? I’VE NOTICED THAT PRICES SOMETIMES TEND TO REVERSE DIRECTION WHEN APPROACHING LEVELS OF SUPPORT AND RESISTANCE BUT, DON’T ACTUALLY TOUCH OR TEST THE S&R LEVELS. IF SUPPORT AND RESISTANCE ZONES ARE ALSO VERTICAL, IS THERE A PERCENTAGE OF THE RANGE THAT THESE REVERSALS CAN BE EXPECTED OR AN ACCEPTABLE PRICE PRIOR TO SUPPORT AND RESISTANCE TO EXPECT REVERSALS? I’VE ALSO APPLIED FIB RETRACEMENT AND SOMETIMES NOTICE SOME PRICE HESITATION AT SOME FIB LEVELS JUST BEFORE S&R. WITH AN ANSWER MAYBE I HOPE TO BETTER PLAN TO LOCK IN PROFITS AND EXIT MY POSITIONS PRIOR TO EXPERIENCING THESE EARLY REVERSALS

    THX

  • Big Pippin

    Hey shortpipin! Yes, the price sometimes reverses a few pips before actually reaching the support/resistance level. One reason could be that plenty of orders are located just below resistance or above support. Those traders probably made adjustments for the pip spread of their brokers and want to ensure that their orders get triggered. Others are probably going for the majority of the move and aren’t so nitpicky with getting the best possible price for the trade. Another reason could be that some major news report or economic figure was released right before the price hit support/resistance and caused the price movement to reverse right away. So I suggest you keep your ears open for such events and also make adjustments for pip spread. For instance, if you think USDJPY will find resistance at 87.00 and you plan to short, you can set your order 5 pips away at 86.95 to account for the spread. Or you can also enter at market once you see signs of a reversal. And like you mentioned, you can also make use of Fibs to determine those points near support/resistance where price could reverse.

  • shortpipin

    PIPPIN, SUPPORT AND RESISTANCE ZONES, COULD THEY BE VERTICAL AS WELL AS HORIZONTAL? I’VE NOTICED THAT PRICES SOMETIMES TEND TO REVERSE DIRECTION WHEN APPROACHING LEVELS OF SUPPORT AND RESISTANCE BUT, DON’T ACTUALLY TOUCH OR TEST THE S&R LEVELS. IF SUPPORT AND RESISTANCE ZONES ARE ALSO VERTICAL, IS THERE A PERCENTAGE OF THE RANGE THAT THESE REVERSALS CAN BE EXPECTED OR AN ACCEPTABLE PRICE PRIOR TO SUPPORT AND RESISTANCE TO EXPECT REVERSALS? I’VE ALSO APPLIED FIB RETRACEMENT AND SOMETIMES NOTICE SOME PRICE HESITATION AT SOME FIB LEVELS JUST BEFORE S&R. WITH AN ANSWER MAYBE I HOPE TO BETTER PLAN TO LOCK IN PROFITS AND EXIT MY POSITIONS PRIOR TO EXPERIENCING THESE EARLY REVERSALS

    THX

  • shortpipin

    THX PIPPIN

    SHORT

  • Big Pippin

    Hey shortpipin! Yes, the price sometimes reverses a few pips before actually reaching the support/resistance level. One reason could be that plenty of orders are located just below resistance or above support. Those traders probably made adjustments for the pip spread of their brokers and want to ensure that their orders get triggered. Others are probably going for the majority of the move and aren’t so nitpicky with getting the best possible price for the trade. Another reason could be that some major news report or economic figure was released right before the price hit support/resistance and caused the price movement to reverse right away. So I suggest you keep your ears open for such events and also make adjustments for pip spread. For instance, if you think USDJPY will find resistance at 87.00 and you plan to short, you can set your order 5 pips away at 86.95 to account for the spread. Or you can also enter at market once you see signs of a reversal. And like you mentioned, you can also make use of Fibs to determine those points near support/resistance where price could reverse.

  • shortpipin

    THX PIPPIN

    SHORT