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My analysis is different.
I do not apologize for that. In fact the way I do things differently helps provide the higher percentage of accurate support & resistance
levels which my long term subscribers make consistent profit.
Many appear confused that I provide both bullish and bearish analysis. Some say that I’m hedging my bets or don’t know which way
it’s going. In fact that isn’t true. I have spent many years studying price. Price is the only way to forecast accurately. It does develop in
structures that when recognized do provide excellent indications of not only where it’s going but also when the underlying
assumption is proven wrong.
However, there are countless potential variations that could fit into these structures. Is price going to retrace 23.6% or possibly 50%,
or even 61.8%? It can retrace 100%! It would be no sense in advising traders to buy/sell at the 61.8% retracement as it may stall at
50% in which case the opportunity is lost. It could retrace 100% which will trigger the stop loss.
In more directional moves price has its own structure and each currency has quirks and more common wave relationships that it
often (but not always) tends to follow. Therefore if price stops moving in a structure that would confirm that the directional movement
then there are often very clear support/resistance levels that indicate a larger reversal.
While these may be against my bias, they are clearly fundamental trigger levels in my analysis. It is possible to make considerable
profit out of trading these breaks.
My approach is that if I only provide analysis that supports by directional bias for the day, then if I’m wrong then a subscriber will not
get value for money. He/she has nor guidance for those instances. I don’t consider that good service…
However, it does mean that a trader must think about his trades and where the next profitable move may be.
I do not apologize for that. In fact the way I do things differently helps provide the higher percentage of accurate support & resistance
levels which my long term subscribers make consistent profit.
Many appear confused that I provide both bullish and bearish analysis. Some say that I’m hedging my bets or don’t know which way
it’s going. In fact that isn’t true. I have spent many years studying price. Price is the only way to forecast accurately. It does develop in
structures that when recognized do provide excellent indications of not only where it’s going but also when the underlying
assumption is proven wrong.
However, there are countless potential variations that could fit into these structures. Is price going to retrace 23.6% or possibly 50%,
or even 61.8%? It can retrace 100%! It would be no sense in advising traders to buy/sell at the 61.8% retracement as it may stall at
50% in which case the opportunity is lost. It could retrace 100% which will trigger the stop loss.
In more directional moves price has its own structure and each currency has quirks and more common wave relationships that it
often (but not always) tends to follow. Therefore if price stops moving in a structure that would confirm that the directional movement
then there are often very clear support/resistance levels that indicate a larger reversal.
While these may be against my bias, they are clearly fundamental trigger levels in my analysis. It is possible to make considerable
profit out of trading these breaks.
My approach is that if I only provide analysis that supports by directional bias for the day, then if I’m wrong then a subscriber will not
get value for money. He/she has nor guidance for those instances. I don’t consider that good service…
However, it does mean that a trader must think about his trades and where the next profitable move may be.
UNDERSTANDING PRICE IS THE MOST IMPORTANT FACTOR IN TRADING
Let me attempt to describe what I mean by this and how my most profitable subscribers make their profit…
I use cycles to identify the overall direction. Is the main trend up or is it down? Conveniently I can utilize the terms “weekly cycles” and
“daily cycles” but in fact they all integrate into one large structure of cyclic pressures which affect price.
I use Elliott Wave as my main tool for understanding how price should move within the underlying direction. Elliott Wave provides
structure, the manner in which price should develop and when complemented by Fibonacci and harmonic ratios it is possible to
identify likely stalling areas in both trend projections and corrective retracements.
Let me attempt to describe what I mean by this and how my most profitable subscribers make their profit…
I use cycles to identify the overall direction. Is the main trend up or is it down? Conveniently I can utilize the terms “weekly cycles” and
“daily cycles” but in fact they all integrate into one large structure of cyclic pressures which affect price.
I use Elliott Wave as my main tool for understanding how price should move within the underlying direction. Elliott Wave provides
structure, the manner in which price should develop and when complemented by Fibonacci and harmonic ratios it is possible to
identify likely stalling areas in both trend projections and corrective retracements.
According to The Daily Forecaster subscribers...
Well, it maybe that due to a move becoming more complicated that the underlying analysis is incorrect and the anticipated trending
move doesn’t follow-through higher. This will mean that Wave 1 was actually a Wave (a), Wave 2 was Wave (b) and Wave 3 was
actually Wave (c). Thus a larger correction is due.
Breach of the key support area that breaks the upward structure can be a great trading opportunity!
Do you really want to be without the potentially profit-making knowledge of what will happen if a support or resistance area breaks?
move doesn’t follow-through higher. This will mean that Wave 1 was actually a Wave (a), Wave 2 was Wave (b) and Wave 3 was
actually Wave (c). Thus a larger correction is due.
Breach of the key support area that breaks the upward structure can be a great trading opportunity!
Do you really want to be without the potentially profit-making knowledge of what will happen if a support or resistance area breaks?
Take a simple 5 wave move. This represents a trending move (or part of a counter trend.)
Without going deeply into Elliott Wave, each wave has guidelines that will provide common
areas of when they will stall, how far they will correct or extend. In addition each wave
should also develop in a particular way that should be in accordance with that particular
type/position of wave. In particular Wave 4 has common retracement levels which may be
used to take advantage of the extension in Wave 5.
Now let’s look at a 3 wave move. This represents a corrective structure.
Without going deeply into Elliott Wave, each wave has guidelines that will provide common
areas of when they will stall, how far they will correct or extend. In addition each wave
should also develop in a particular way that should be in accordance with that particular
type/position of wave. In particular Wave 4 has common retracement levels which may be
used to take advantage of the extension in Wave 5.
Now let’s look at a 3 wave move. This represents a corrective structure.
HOW DO YOU KNOW WHICH SUPPORT OR RESISTANCE WILL PROVIDE THE TRADE?
It is impossible to be 100% correct in forecasting markets. Therefore we need tools to strengthen the odds in our favor. Which
support will hold in an uptrend? Which projection will price move to in a trend.
I like to be correct 100% of the time. This is the way I measure the success of my analysis. However, pride doesn’t always make
profit. It is therefore imperative that you do your own due diligence.
This is where a news release can have a larger impact in extending a trend or even suggest a price reversal. So what can you do to
protect yourself at these times? My key support/resistance levels are recognized as providing high percentage trade opportunities.
The key is to filter the choices by other techniques.
It is impossible to be 100% correct in forecasting markets. Therefore we need tools to strengthen the odds in our favor. Which
support will hold in an uptrend? Which projection will price move to in a trend.
I like to be correct 100% of the time. This is the way I measure the success of my analysis. However, pride doesn’t always make
profit. It is therefore imperative that you do your own due diligence.
This is where a news release can have a larger impact in extending a trend or even suggest a price reversal. So what can you do to
protect yourself at these times? My key support/resistance levels are recognized as providing high percentage trade opportunities.
The key is to filter the choices by other techniques.
TRADE SET-UPS
Very simple techniques using simple indicators can be used to try and identify when a reversal in a correction is about to allow the
underlying trend to resume, or maybe even break. I have given a few ideas in the Articles page. You should try and find a technique
with which you feel comfortable.
Let’s take an example.
On the 23rd December 2009 I noted in my analysis for EURUSD:
Bias: I feel we'll move back higher to 1.4372-00 again today but expect new lows next week…
Consider Buy Set Ups at: 1.4235-40
Bullish Analysis: Although we broke below 1.4261 the follow-through was weak and this suggests a complex correction
which found a low at 1.4217. I feel we are more likely to see a slow grind higher today back above 1.4275 and then probably to
around 1.4330-38. Expect a pullback here and take care as it could be modestly deep but probably remain above 1.4260-75. This
should reach back to the 1.4372 high and probably just above but no more than 1.4400-11. Thus, only above 1.4411 would cause a
deeper pullback and then we should be watching the 1.4525-70 area for a cap.…
Well, will it be safe to just assume that the 1.4235-400 area will support? Indeed, will the high come at 1.4372-00 again?
Let’s have a look at the 5 minute chart for that day.
Very simple techniques using simple indicators can be used to try and identify when a reversal in a correction is about to allow the
underlying trend to resume, or maybe even break. I have given a few ideas in the Articles page. You should try and find a technique
with which you feel comfortable.
Let’s take an example.
On the 23rd December 2009 I noted in my analysis for EURUSD:
Bias: I feel we'll move back higher to 1.4372-00 again today but expect new lows next week…
Consider Buy Set Ups at: 1.4235-40
Bullish Analysis: Although we broke below 1.4261 the follow-through was weak and this suggests a complex correction
which found a low at 1.4217. I feel we are more likely to see a slow grind higher today back above 1.4275 and then probably to
around 1.4330-38. Expect a pullback here and take care as it could be modestly deep but probably remain above 1.4260-75. This
should reach back to the 1.4372 high and probably just above but no more than 1.4400-11. Thus, only above 1.4411 would cause a
deeper pullback and then we should be watching the 1.4525-70 area for a cap.…
Well, will it be safe to just assume that the 1.4235-400 area will support? Indeed, will the high come at 1.4372-00 again?
Let’s have a look at the 5 minute chart for that day.
Let’s take a second example.
On the 17th December 2009 I wrote in the analysis for USDCHF:
Bias: I'd like to see the 1.0345-60 support hold for the rally to the 1.0452-79 target
Consider Buy Set Ups at: 1.0480 Consider Sell Set Ups at: 1.0450-79
Daily Bearish: Yesterday's pullback was the deeper one and that defines the reversal level. Thus, if 1.0339-45 breaks then look
for price to edge lower to the 1.0294-20 support. Take care here also as this is the previous swing low and pivot support so should
cause a reaction of some kind and I can't rule out a total reversal to resume the uptrend. Only break of 1.0290-94 would extend
losses through to 1.0230-60 at least and potentially 1.0194...
On the 17th December 2009 I wrote in the analysis for USDCHF:
Bias: I'd like to see the 1.0345-60 support hold for the rally to the 1.0452-79 target
Consider Buy Set Ups at: 1.0480 Consider Sell Set Ups at: 1.0450-79
Daily Bearish: Yesterday's pullback was the deeper one and that defines the reversal level. Thus, if 1.0339-45 breaks then look
for price to edge lower to the 1.0294-20 support. Take care here also as this is the previous swing low and pivot support so should
cause a reaction of some kind and I can't rule out a total reversal to resume the uptrend. Only break of 1.0290-94 would extend
losses through to 1.0230-60 at least and potentially 1.0194...
INTEGRATION OF ANALYSIS AND SET UP SIGNALS
To act on indicator set up signals one must have confidence in support and resistance levels. My methodology of deriving support
and resistance levels is based on my own adaptation of Elliott Wave and is recognized as being some of the most reliable levels in
the market.
Acting on either support/resistance or set up signals in isolation raises the chances of failure. While I will never claim that these
techniques will never lose money, with hard study and application these can provide solid results as my other subscribers clearly
find.
To act on indicator set up signals one must have confidence in support and resistance levels. My methodology of deriving support
and resistance levels is based on my own adaptation of Elliott Wave and is recognized as being some of the most reliable levels in
the market.
Acting on either support/resistance or set up signals in isolation raises the chances of failure. While I will never claim that these
techniques will never lose money, with hard study and application these can provide solid results as my other subscribers clearly
find.
| UNIQUE ANALYSIS |
Very clearly the day started in Asia with long sideways consolidation which remained above the 1.4340 support until early trading in
London. At this point it dipped down into the 1.4235-40 support zone and recovered quickly to resume the consolidation for a while
longer.
We had two signals to suggest that the 1.4235-40 support was valid and therefore the chances of the analysis being correct
increased.
First we had a bullish divergence. It didn't really come at the end of a trend but did suggest that any bearish momentum was failing.
Secondly, we can see an inverse head & shoulders, a reversal pattern. Both of these factors provided a stronger indication of a
stronger bullish move.
Price rallied, met the inverse head & shoulder target and pulled back as is normally expected. Following this the FX-f Equilibrium
Cloud supported at all pullbacks . This even occurred at the correction around the 1.4330-38 area. Price didn't quite reach the 1.4372
high again but the break back below the Cloud followed by the failure to break above it again on the retest was a signal to take profit.
What we can see here is that the support indicated by the Elliott Wave structure combined with Fibonacci & harmonic ratios had been
confirmed by both the indicators and a classic price reversal pattern. This type of approach produces consistently profitable trades
as long as prudent money management techniques are applied.
London. At this point it dipped down into the 1.4235-40 support zone and recovered quickly to resume the consolidation for a while
longer.
We had two signals to suggest that the 1.4235-40 support was valid and therefore the chances of the analysis being correct
increased.
First we had a bullish divergence. It didn't really come at the end of a trend but did suggest that any bearish momentum was failing.
Secondly, we can see an inverse head & shoulders, a reversal pattern. Both of these factors provided a stronger indication of a
stronger bullish move.
Price rallied, met the inverse head & shoulder target and pulled back as is normally expected. Following this the FX-f Equilibrium
Cloud supported at all pullbacks . This even occurred at the correction around the 1.4330-38 area. Price didn't quite reach the 1.4372
high again but the break back below the Cloud followed by the failure to break above it again on the retest was a signal to take profit.
What we can see here is that the support indicated by the Elliott Wave structure combined with Fibonacci & harmonic ratios had been
confirmed by both the indicators and a classic price reversal pattern. This type of approach produces consistently profitable trades
as long as prudent money management techniques are applied.
When first presented with a price area which provides both a buy set up risk AND a sell set up risk it seems a bit strange. However,
these occur at pivotal areas where either I'm looking for a Wave 5 to continue but it fails - or indeed where I think we're going to see a
Wave c but which then sees follow-through in the same direction. In this latter case it could mean that we're seeing a direct trending
move instead.
In this example, it is the latter situation which has occurred. I was looking for a peak at 1.0450-79. Indeed, the initial rally stalled
precisely at 1.0479 and FX-f RSI formed a bearish divergence. This is a situation that would cause us to look for a double top or head
& shoulders - a reversal pattern that would confirm my suspicions that we'd see price top and turn lower.
However, in this instance it merely corrected and formed a sideways consolidation with narrowing ranges - a triangle pattern. This
would have alerted us to the potential for the uptrend to extend further and thus trigger the 1.0480 buy set up... This technique
provides traders with the areas where larger reactions in price may be expected...
these occur at pivotal areas where either I'm looking for a Wave 5 to continue but it fails - or indeed where I think we're going to see a
Wave c but which then sees follow-through in the same direction. In this latter case it could mean that we're seeing a direct trending
move instead.
In this example, it is the latter situation which has occurred. I was looking for a peak at 1.0450-79. Indeed, the initial rally stalled
precisely at 1.0479 and FX-f RSI formed a bearish divergence. This is a situation that would cause us to look for a double top or head
& shoulders - a reversal pattern that would confirm my suspicions that we'd see price top and turn lower.
However, in this instance it merely corrected and formed a sideways consolidation with narrowing ranges - a triangle pattern. This
would have alerted us to the potential for the uptrend to extend further and thus trigger the 1.0480 buy set up... This technique
provides traders with the areas where larger reactions in price may be expected...
| (c) Ian Copsey 2010 |
DISCLAIMER
Foreign exchange (Forex) and contract for difference (CFD) trading carries a substantial level of risk to your capital. There is a
possibility you may lose more than your initial investment and trading in these products may not be suitable for all investors. Ensure
you fully understand all the risks involved and seek independent advice if necessary.
Foreign exchange (Forex) and contract for difference (CFD) trading carries a substantial level of risk to your capital. There is a
possibility you may lose more than your initial investment and trading in these products may not be suitable for all investors. Ensure
you fully understand all the risks involved and seek independent advice if necessary.