MAJOR TREND CHANGE EURO JPY EASY 250 PIPS - mathematical forex trading system review

MAJOR TREND CHANGE EURO JPY EASY 250 PIPS ~ mathematical forex trading system review

The bearish pattern now seen on the EURO JPY as part of a major trend change, could either be one of the largest Bear Crowns you will see in the Forex or a setup for a very large Pennant Consolidation. A small Pennant has just been broken on the Daily Chart that could provide 250- 280 Pips of potential trading gains. However, given the uncertainty of the larger formation taking shape, this might actually be a very risky trade.

The Pennant broken can be seen here along with the potential take profit areas if the breakout takes place. The Breakout Equivalent is the expected target to be hit based on the size of the Pennant, while the Weekly Range is the average distance that this pair moves when it is trending.

DAILY CHART - PENNANT BREAKOUT

DAILY CHART - BREAKOUT TARGETS

On the face of it, this looks like a very straightforward Consolidation Breakout setup with a strong bearish candle signal. If this breakout materializes, the targets would be hit within 3-6 days to give traders a good profit in a market offering very few opportunities. This may even be supported by a very large, though awkward-looking Bear Crown Setup and a movement towards the major Outer Uptrend Line.

DAILY CHART - BEAR CROWN

DAILY CHART - INNER & OUTER TREND LINES

Breaks of Trend Lines that follow the end of a major trend usually lead to movement towards an Outer Trend Line if this exits. However, another look at the setup also gives us the impression that this awkward pattern may actually be a very large Pennant that is being formed. This would mean that a Reversal and False Breakout will actually be the pattern that we actually see that leads to the 2nd Support of this Pennant being formed.

DAILY CHART - CONSOLIDATION ?

This setup actually looks to be the more likely outcome given the unusual pattern of this currency pair. Such large Consolidations also tend to appear when the market is transitioning from the end of a major trend to the start of another.

DAILY CHART- EURO USD

DAILY CHART-  AUD USD

Aggressive traders could take the chance to trade this breakout in case we are wrong about this large Pennant. But given the examples of similar setups across the market, it may be better to forgo this one and wait for another, clearer trade setup.

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LAST GASP AUSSIE RALLY AHEAD OF SHARP DECLINE - automated forex trading system reviews

LAST GASP AUSSIE RALLY AHEAD OF SHARP DECLINE ~ automated forex trading system reviews

The Aussie-Dollar pair has definitely been testing the patience of traders over the last few weeks, with an extended period of Consolidation above the most recent Uptrend Line. This period of market indecision could either be a setup to resume the current uptrend, or lead to the break of the Uptrend Line to start a downtrend. With the Monthly Range of this pair having been hit (see Trade Manual) and the possible formation of an even larger Pennant taking place, a bearish reversal looks to be the more likely outcome for the rest of 2014.

Both a Pennant and a Small Range have now been formed as the pair slowly drifts sideways below the Uptrend Line. The rally between 1 and 2 and then between 3 and 4 represented the 2 Weekly Ranges that completed the Monthly Range. As with all currency pairs, strong periods of Consolidation are normally formed ahead of either a resumption of the trend or that start of an opposing one.

DAILY CHART - CONSOLIDATION




One reason to support a bearish bias is the fact that we were in a large downtrend that formed with the breakout from a Pennant in 2013. Previous trends can still continue even when the Trend Line has been broken.

DAILY CHART- BROKEN PENNANT

A 2nd reason to expect the depreciation of the Aussie currency is that there have been 3 successive waves of Uptrends and Downtrends that are usually indicative of a large Consolidation setup being formed. The bearish breakout below this Uptrend Line would be the fourth wave and the one that would create the 2nd Resistance point of the Pennant.

DAILY CHART - NEW PENNANT?

Finally, the break of this Uptrend Line is likely to take place based on one of the peculiar aspects of the currency market. Sometimes when there is about to be a trend change, the market will make a last gasp new high or low that changes the angle of the existing Trend Line. When this happens, the market will then break this line to start the new trend.

DAILY CHART- PREVIOUS TREND LINE

The previous Uptrend Line was formed by connecting the S1 and S2 Support points, but when the new high was formed, the 2nd connecting Support point changed to the one below the Pennant.

DAILY CHART - NEW HIGH & TREND LINE

Several other examples of this can be found across all time frames and with all currency pairs.

DAILY CHART - EURO USD

 4 HOUR CHART- USD CAD

15 MINUTE CHART - NZD CHF

These types of Trend Line changes may be thought of as mere coincidences, but the frequency with which they occur makes this unlikely. Traders can use this knowledge to anticipate a trend change especially if the existing trend has had a very long run followed by a period of Consolidation.

The fact that several of the most popular and liquid currency pairs have also been in Consolidation supports the bearish scenario for the Aussie Dollar. Trends have been few and far between in an environment of low volatility and minimal interest rate differentials. Therefore, identifying and knowing how to trade these setups will allow traders to continue to make money.

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 ___________________________________________

Duane Shepherd 

(M.Sc. Economics, B.Sc. Management and Economics)

Currency Analyst/Trader

Contact: shepherdduane@gmail.com

Twitter: @WorldWide876

Facebook: DRFXTRADING 

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