I’ve been following STOXX for a friend overseas and I truly hope that he and his family and friends are OK w/ all this craziness going on …hat tip, friend.
net-net, my friend contacted me a couple years ago and asked about European Banks and, in particular, the STOXX. it was hard to email him back because what I saw – which unfortunately was proven to be correct was a multi-year triangle that had been forming since 2009. it’s ramifications? well, the STOXX WOULD go to new lows and, more than likely, ACCELERATE the move lower because … that’s the nature of moves out of triangle. in my world of using crayons, I have no idea, nor do I care ‘what’ caused the market move one way or the other. there are ALWAYS a thousand reasons. for me, it’s a pattern that helps one manage risk and help one determine how much $$$ to risk and then pull the trigger.
Here’s the updated STOXX chart:
I went back and captured the daily chart showing the target zone … two years ago, chart below:
Note, Darth Vader and the Dark Side connotation with the mouse image below ….
My biggest LOSSES were back in the day trying to trade the FED Decision in the spot currency markets. There I said it.
What I came to realize, for me – maybe not for you – is its addicting, adrenaline filled adult version of Cowboys an Indians. I can’t even begin to estimate the number of people frantically clicking their mouses for BIDS and ASKS and seeing the easy money then evaporate into the losses but then turn into winnesr and then losers and then, ultimately, closing the position at the market and saying – “great I made money” or “I am so thankful I am out of the market.” Come on, admit it, if your a trader you’ve more than likely jumped into the cage with the gorilla’s juggling dynamite. (OBTW, the dynamite is lit – which means, it will BLOW UP)
Go ahead, click that mouse at 2 EST and you might as well be throwing money up into the center of a tornado with an insane idea that you know where the money will land. (hint: you don’t)
How big is the Spot FX currency market?
(note, at any given time the “retail” market is able to trade roughly 1.5-1.8 trillion)
so, what do you do? well you plan … you play “if-then” and look to enter the market long after the chaotic swings. Trust me, this takes discipline, letting 200+ pips move go in whatever way they are going to go and – sit on your hands.
#3 – as a discretionary trader and somewhat impulsive personality – I have a rule of life: DO NOT TRADE W/IN ONE HOUR of any major fundamental news announcement. NO MATTER HOW BIG THE MOVE.
I’m not trying to preach here – I’m reiterating my gameplan for today at/around 2 EST. Bottom line is there is no gameplan – I’m NOT going to trade a FED RATE announcement. I will watch the chaos like a sniper and prepare my next move … why?
Well, as you can see over the past couple posts the USD is at/approaching a crucial juncture. I honestly don’t know which way it will go but we have MAJOR patterns on the EURO, POUND, YEN, AUSSIE, KIWI that need to work themselves out. The EURO has been in a trading range for a YEAR. It’s also showing some similarities to the bottom that was formed in November 2000.
So, the charts below are going to be my gameplan for post-FOMC tonight around the Asian open.
CHEERS – Bart
EURO MONTHLY:
deeply oversold – the most ever since 2000
consolidation occurring like 2000. should resolve soon
RSI butting up against resistance (polarity)
EURO WEEKLY:
note the RSI has “recovered” but isn’t in the oversold region of the past rallies – it has “recovered” with no real move UP – it’s consolidating.
note the contracting triangle
EURO DAILY: here’s my gameplan for the EURO in a nutshell
the PATTERN shows a consolidating triangle. they occur in 5 waves a-b-c-d-e and the “wave” relationship should be .618 of the preceding wave. the “bc” wave has done that and we have a very nice pattern for “cd” in/around 1.0644-1.0720.
would like to see that hold w/ a move up into “e” to complete the sequence.
IF we break hard to the downside and the pattern is broken then “assume” that “e?” was the end of the consolidation and get short looking for a daily close below lower trend line as confirmation.
IF we break strong to the upside then look for “breakout targets” and watch price action in/around these areas. If continually strong and a DAILY close ABOVE 1.171 then TRIANGLE THESIS IS WRONG. Adjust
I like ratio analysis .. it shows rotation, strength vs weakness and a bunch of stuff.
Greece and Eurozone have been all the rage and, well, rightly so – I guess.
But I’m trying to tune all that out and just draw some pictures.
Here’s the deal .. when the DAX underperforms the NYA (the candles go down) then the EURO bottoms and goes UP against the dollar (red line)
So, we just finished a SELL PATTERN of RELATIVE STRENGTH of the DAX vs NYA. So, the DAX should underperform and, if 2015 is any guide, then the EURO should bottom and start up for a tradeable long.
candles is the relative strength of the DAX vs NYA. the line is the EURO vs USD. NOTE the inverse relationship …
If you read this blog you know that we’ve been a dollar bull, for a while. Great … how do you make money from that? Do you simply step into the fray and short the EURO right here right now OR do your rules require you to wait for a PATTERN to appear … my rules are the latter.
so, you’ve seen some “support” areas ID and, while they worked for a bit, they were all taken out, eventually. SO I WAIT …
this AM, some craziness about ECB, rates cut, QE ( I like QEE – quantitative easing European), deflation and blah blah blah. who cares ….
let’s find a pattern for support and MAYBE BUY this puppy up into the 1.32-3400 handle. Or, just wait for the bounce and sell pattern to appear.
either way, here’s my latest attempt.
I’m pulling out fundamental frequencies and arcs/waves/music … the Voo Doo is in full grunt (reference flying fighters – full afterburner = full grunt) and am now looking for the 1.3000 handle to offer support. We’ll see …don’t read too much into the charts. Just think of a ROCK hitting the WATER and depending on the velocity and weight of the rock hitting the water WAVES will appear and those waves are mathematically defined by their periodicity, frequency and period. Folks, same goes for the market …
Believe it or not …
rock hitting the water and waves appear
if you don’t believe this lie is true, ask the blind man as he saw it too! http://strobowave.com/index_7.htm
typical TA looking for targets for a (insert HOPE) bounce
note in the chart below, we define the rock hitting the water as the initial impulse move down. from there we can calculate the fundamental frequency and come up w/ a target. that is the horizontal blue line ….
since WAVES are being produced we can now project those waves for price and time targets. how do we do that … we use the POLARITY PRINCIPLE. expand the initital impulse arc by fibonacci (music), sacred geometry (1-5, square roots, inverse of those square roots) and the equal octave scale of music. the KEY is to use past ARC resistance and support and look for the future areas transposed on the arcs as you project them. as technicians we “usually” use horizontal support and resistance. we are basically doing the same thing but w/ a twist … we are using the natural plane of the markets movement (X,Y,Z) to see the waves and therefore musical polarity.
Summary: perhaps, it’s my background as a Naval Aviator for 11 years. I just read a post about “fighter pilots and organizations” and one of the points was the art of the debrief. so, as I post “stuff” on this blog I attempt to make it all “real time” because those snap shots allow me to “adapt and overcome” (my favorite Naval Aviation saying) and see where we are in the game plan moving forward.
Cliff notes: the first target we had for the dollar index has been taken out but we have another target, shown below, that “should” cause resistance/pull back. Folks, this thing could break wide open and explode (reference HD pattern) but I’m looking to “enter” and will wait for a pattern to form so I can MANAGE RISK. I will not “just enter” and put a random stop “there” …. no, I will wait and wait and wait and wait and wait till the pattern appears. So, here’s another one below:
a POTENTIAL gameplan …up to 82.40-82.50 and then BUY at/around 81.09
Euro makes up, roughly 50%+ of the index so what is going on there ….?
EURO vs USD – finishing a 3rd for a bounce … ?
how about the Swissy …?
Swissy … pattern just a little higher?
how about the GBP vs USD?
GBP showing some signs of a little lower … bounce
YEN vs USD …. nice little pattern up here (note NK225 yet to hit .786 and make higher highs …)
if we lose 104.43 to the upside then big potential the next move has occurred, looking for gameplan above to unfold
USD vs CAD — either a flat to end at 1.0850 or lower. Key is simple .. WATCH FOR 5 WAVES TO UNFOLD DOWN and then BUY at/around levels indicated for another run …
USD vs CAD
Aussie vs USD ….
AUSSIE major low …?
the post below is from February 13, 2014 and I believe it’s important to rehash the most recent moves in the US Dollar. Believe this move has room to go, however, we need to patiently wait for a corrective pattern to form.
this move in the dollar is real so try to get long in the most risk adverse manner possible. as you can see from the post below as the 79 level was repeatedly getting tested I did, admittedly, start to question my strong dollar scenario. that was surely one ugly level for a while but I do think the dollar will strengthen into the low 90’s target that we have been calling for.
take your time and go thru the post below …some AMAZING geometry. Also, remember, ALL of my charts are REAL TIME w/ no backward look .. they are as I saw it.
Bart
February 13, 2014
used GOOGLE to look for a picture of Gorillas Juggling dynamite – this is the best I could find
Early in my career I had the wonderful opportunity to get training from Joe Di Napoli (www.fibnodes.com) Highly recommend learning some of his techniques but, most importantly, his understanding of the market structure and the players in the game. One of his favorite sayings is we must realize that “you are entering into a world where the market is truly a caged gorilla juggling dynamite and – the dynamite is lit!”
Additionally, if you have been reading this blog you’ll realize it’s focused 1) 100% on PATTERNS and 2) it’s unique value is tying PATTERNS into the circle of life (fixed income, equities, commodities, FX). W/in the context of the circle, the gorilla is the Foreign Currency Market. According to the Bank for International Settlements – the preliminary global results from the 2013 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity show that trading in foreign exchange markets averaged $5.3 trillion per day in April 2013.
The Dollar Index is somewhat important as it represents a basket of 9 currencies – the Euro representing a vast majority of it at 58%.
For all intensive purposes – it’s been “stuck” in a 4 cent range but PATTERNS suggest we are “prepping” for a big move … so, in order to get a “feel” for where we MIGHT be let’s go back to the “beginning” at 71 ish and work thru to present…
PATTERN at after the 71 low
more detailed look at the mirror image foldback present in the US Dollar
CLIFF NOTES: the BULLISH thesis is that after the 5 waves down from 121, a 3 wave (at a minimum) corrective pattern should ensue (A-B-C) and therefore the bounce has farther to travel. Additionally, it could mark a MAJOR low and we are starting back up for 5 waves. The BULLISH consensus for the US DOLLAR is that this move UP is not complete. Please see this chart below … and, notice the EXACT move up from the PATTERN shown above at the “2 or B” level.
note a clear 5 waves down should lead, big picture, to a 3 wave move up (at a minimum)
so where are we now? Without showing an “elaborate” count, we can see by the chart below that we smacked right into a “big picture” .618 price projection that had it’s genesis from the 71 price low.
.618 price projection on the US Dollar causing the resistance
here’s the possible bullish count from the “2 or B” low that shows a POTENTIAL 3rd wave underway. IF the count is correct, then the 79 level has to hold and is very crucial as it suggest that the 3rd wave should begin …soon and UP we go.
potential count showing a bull move
now, we need to drill down one more time frame – that of the 240 minute chart to see what we have going on. YES, we have a BULLISH PATTERN on the US Dollar at 80.05-80.08. In order for this entire thesis to be correct, then I believe this pattern needs to hold for the strength in the US Dollar to begin…
BULLISH BUY PATTERN PRESENT]
the last BULLISH PATTERN present …
PATTERNS fail …they are an EDGE and over time they have been statistically proven to give us an edge. But, what if this pattern does fail? Take a close look at the following two charts … I have not shown this before, but we need to take into account the 5 wave move down from 121 and the .618 price projection — they are starting to form a huge B wave triangle. The 5 wave move into the low is a BIG BIG A and then current structure is forming a BEARISH TRIANGLE w/ the ‘c’ portion just completing (due to the exact nature of the .618 price projection) and ‘d’ and ‘e’ to come …also note the purple trend lines. One forms a head and shoulders and the other is showing the support for the US Dollar since the ‘b’ wave low …
do we have a multi year bearish triangle forming?
here’s one last thing to consider …. take note of the measured move UP move from the past and what happened after it completed … a bearish omen?
a measure move omen ?
CLIFF NOTES:
w/ the deflationary forces present, the dollar SHOULD strengthen. A well formed count supports that and a PATTERN very very close also holds that thesis as correct and positive. The first is the once completing at 80.05 on a shorter time frame and then 79.53 on the daily. They need to hold – w/ the 79.53 as the major pattern if the bullish thesis is correct. Remember, w/ our rules we could go all the way down to 79 again so, for all intensive purposes the 79 level is the line in the sand. We have two symmetrical BUY patterns present …
HOWEVER, if we lose the 79.53 level THEN it will open up some serious selling. PATTERNS will then shift to the B wave triangle thesis …
Last, we have MAJOR patterns complete across the indices and they are “acting” like the double tops that formed in 2000 and 2007. We have the Dow Jones Transports finishing a pattern from the late 1800’s, we have a potential generational low in interest rates complete and PATTERNS suggest one more wave lower in the commodities …
It’s all coming together and one of the circle of life gorilla’s is going to drop their stick of dynamite and big old explosion is going to occur …
CLIFF NOTES: per our last post, the EURO found support in the area we were watching. (note – it went a little below so what I did is use the equal octave scale of music note A – 1.68179 extension and .68179 projection for the “exact” level where the pivot took place.) Now, believe this move does have lower to go so we’ll go to a lower time frame and look to see where the pullback should/likely end. Recommend a short again ….probably around Tuesday/Wed
EUR vs USD Daily
will wait to project potential corrective height after Sun/Monday … believe we do have time for the pullback pattern to develop.
CLIFF NOTES: the EURO bottomed on June 05,2014. It’s been correcting for 18 (long days). The most recent correction that occurred (intra day) on Friday was, just that, a corrective move in what I believe is the last leg of a “long” flat correction. Targets in/around 1.3700 are a good place to get into a short. Additionally, we could still POP up to 1.3800 so need to continue to monitor and be patient.
In any event the 1.39930 is KEY to the thesis that our 3 wave 1.5 year correction (labeled below as W-X-Y) is complete and we are on the verge of a major move lower in the EURO vs USD.
I woke up this AM and decided to do the Vesica Pisces for the EURO. Not sure why, just did, so below you’ll find the construction of the Vesica Pisces using the Euro as our template.
Background – in the ancient times the VP was used as the archetype for construction of everything. From the most minute DNA to the universe everything was constructed using these ratios. The key ingredient of the ratios is the fact they are using square roots. This isn’t going to be a diatribe about Fibonacci or anything like that. All I am going to say is Fibonacci is important but it is a subset of the discipline called sacred geometry. I am going to disagree and say that a .786 retracement is a Fibonacci number. No, it’s the square root of .618. That brings us to the subject of square roots and the inverse of square roots. That’s the key and that’s musical theory. Anything that vibrates can be understood by number and therefore, since I truly believe the “market” is vibratory then the same theories behind musical theory and square roots and vibration should work…. so, it’s the key square root structure of the market that is vibratory. And that my friends is the key …
Anyway, here’s the deal. 1) I picked, only because I liked it, a vector to use. 2) I never re-scaled my chart 3) I did not have any idea what was going to come up w/ the drill of creating the vector lengths from the center of the Vesica Pisces. 4) I think what appears is pretty amazing …5) ENJOY
note, the above dark blue line. This is the vector length that we are going to use. Again, I have no idea if it’s going to work or not. All of the above charts are “real time” just going thru the drill. The chart below shows how I used this radius vector to work with TIME:
note, using this vector length established a nice cycle potentiality … so, using the HIGH as the component for the next vector, we use the TIME component as the radius and make an arc. The vertical in this case will also be subdivided by the normal .382/.5/.618/.786 to look for fractal properties of price.
this next chart shows the subdivisions … again, all of this is real time as I worked on the chart just doing print to screens.
I think this shows EVERY MOVE in price for the EURO since the high. Our most recent high last week was .618 of the vector radius used in the beginning …
Digest and have a wonderful Mothers day w/ family and friends …
one of my mentors, Mike Jenkins, taught me to look for “turns” or “patterns” every 656/710 hours. against the backdrop of the fixed stars that is the time, in hours, that it takes for the moon to make a full revolution. the 710 hours is elongated because the earth is also moving … I’m not asking for anyone to go hog wild and crazy but if the tides, menstrual cycles, animal cycles and a host of “other” things are governed by this object in the sky why not the market? just simply looking for an edge people …
so, if we take NOW and go back 656/710 hours we get: 11/6/2013 11:31:20 PM (710) and 11/9/2013 :31:20 AM (656) those areas are marked w/ orange vertical lines on the chart below. now, I like that, basically, this counter trend move (or so I THINK) has, essentially completed a cycle. and, I also like that the blue arrow is a measured move extreme that basically appeared right at the beginning of the bounce from 1.3294. also, you’ll see labeled a rare yet plausible “triple 3” correction – WXYXZ corrective move. now, for the most part, a combination is “usually” HORIZONTAL in nature however when we have a zig-zag (as we do in the first corrective move (labeled W) then it can continue to go at a steeper angle … either way, I see this move/advance as corrective.
the other to note is the daily high today is 1.05946*W projected from X. 1.05946 is the ratio used for tuning in the equal octave scale of music …I would like to see a close below 1.36827 on Sunday night/else 1.3717 could be attacked.
EUR vs USD 12/06/2013
is this overall DOLLAR weakness (well kind of) or is the EURO ready to turn against a bunch of pairs? let’s check …
EURJPY attacking .618 from all time high and, a little higher, a major extension target
EURAUD showing 1,2,3,4,5 and .382 retracement
EURGBP a little higher w/ strong resistance at .8420
EURCHF BUY pattern failure
EUROKIWI SELL PATTERN from 12/05/2013
EUROKIWI sell pattern result from 12/05.
so, in summary, I believe a MAJOR turn is at hand for the EURO vs a number of crosses and the timing “appears” right for a potential turn in favor of the buck come Sunday night. TBD and we’ll see ….
