Forecasting Trends: Entry Signals

Hi!

The exciting opportunity we have right now is, not only do we have the smaller 15 week cycle due to end plus the potential double bottom, but we also have the longer term 10 month cycle ending, which means we are likely to see a more significant rally out from the cycle low.

A little while back we looked at the unique characteristics of bull and bear cycles; clues that enable you to forecast whether the cycle will have a higher probability to spend most of its time trading upward or most of its time trading downward.

This is extremely useful as it assists you to set up which direction you expect to trade.

Looking at the images below, can you see that although one is clearly bull and the other is clearly bear, both have something in common…

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Forecasting Trends: Support and Resistance, and AUD update.

You’ve heard me mention Support and Resistance a few times with the AUDUSD double top and also the possible double bottom on the USDJPY.

But do you realise there is Support and Resistance being played out in the market all the time… not only is there support and resistance in Price, but also as we are finding within Time from the cycles we are investigating.

Most often traders think that Price support and resistance is only on a horizontal scale, but it is also is created on angles too.  This is exactly what Trend Lines are – psychological support and resistance of traders over time.

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Forecasting Trends: Reversal Patterns

Hi Traders,

To this point we have been narrowing down the time frame in which there is a high probability turn, and is the start of a new trend.

But how do we further identify what is more likely the real turn and not a typical fluctuation or pull back of the overall downward movement?

This chart below shows that the USDJPY is currently trading both within the 15 week cycle zone and also the 10 month cycle zone.

I have highlighted 3 significant lows that have formed within the longer term 10 month cycle zone. The first 2 were not within the smaller 15 week cycle zone, it lowers their probability of being the actual turn, however as we were at the time awaiting the shorter term 15 week cycle we need to be mindful that shorter term cycles can be ‘contracted’ or ‘expanded’ when a longer term cycle is also due to end. 

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Forecasting Trends: Detecting characteristics of Bull and Bear Cycles

Having the skills to be able to identify whether a cycle is going to be Bull or Bear enhances your ability to predict the flow of the markets movements, and get the direction of your trading right.

There are certain key characteristics that appear as a cycle develops, which are clues to how the cycle will most likely unfold.

The first characteristics are;

  • BULL cycles ending price must be ABOVE its start.
  • BEAR cycles ending price must be BELOW its start.

In the first image below you can see end of the Bull Cycle, a significant low (pull back), that finishes higher than the price where it started. 

Its easier to explain with pictures…starting from the left is the first major low, then the market rises and then sometime later has a significant low distinguishable from the normal fluctuations, similar to the initial start of the cycle – but importantly this time the low is created higher above the cycle start.

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CTFC forces lower leverage… our solution to the problem!

Well, it seems that we’ve reached that infamous “11th hour”…

We’re fairly certain that you have seen loads of information regarding the latest draconian measures enforced by the CTFC / NFA on US brokerages but, just in case you’ve been hiding under a rock somewhere, these are the final nails in the FX coffin that get hammered in during this weekend: 

– leverage on major pairs (GBPUSD/EURUSD/USDCHF/USDJPY) drops to 50:1

– leverage on exotic pairs (basically, all other pairs) drops to 20:1

– repatriation of US trading accounts 

Of course, we mustn’t forget the previous changes to your trading freedom that have taken effect over the past 18 months: 

– leverage on all pairs reduced to 100:1 

– no hedging 

– FIFO 

Let’s run through each point with a simple, “shoot from the hip” explanation of how each point has / will affect your trading: 

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