NZDUSD DAILY CYPHER
i've been following this pair on the hourly time frame for some time now, and notice some inconsistencies occurring, so i went to the higher time frame and saw this setup. currently the price is trading at a strong support level(support because i'm viewing the overall structure bullish trend) so if price break past this level, i'm looking for a reversal at the 61.8% of my current structure.
Patterns? patterns are just a face that represents something that is within the chart that is not usually identifiable by the average trader. I believe that a trader must learn how to identify what is within the chart first, before learning to identify a pattern. Patterns should be learnt after as an easy way of spotting what is within the chart that is actually saying there will be a reversal.
What is inside the chart that one should be able to identify before a pattern?
Ans: support and resistance that varies based on their strength.Using this cypher as example: An A leg can be formed by a support that's not so strong, however it is identified as the wave 3 (Elliott wave) that's a subwave within the wave 5 which went on to form the C leg of the pattern. The B leg is usually formed by a very strong support.. It is usually a Phi level which works more harmonic when the 61.8 is the retracement since this Phi correlates with the 1.27% extension (which is perfect for our C leg.
math time now. If 61.8 correlates with 1.27, and 38.2 goes with 1.618, what does 50% correlates with?
Ans: 1.272- .618 = .654, just as .654 + .50 = 1.154.(which is very close to our A-C which is 1.142). but lets not work with very close. lets calculate why it's 1.142 and not 1.154
we establish that the higher the retracement, the lower the extension, so therefore, our B leg is 0.516. .016 more than 50%. Next: .016 x .618 = .01. 1.154 -.01 =1.144 (which is practically our A-C.
Our C leg is a combination of Phi and strong resistance, and also a 5th wave.
to get to our D leg we must past B since it's our strongest support so far, {which is why one can trade from C-B in a pattern). Psychology now plays an important role in clearing our B point. Traders will realize that we just topped out at a 5th wave and will look for a 61.8 retracement. therefore, getting past B will be easier than before.
One of the hardest task is identifying D. Conventionally persons will automatically assign a 78.6 for the D leg, but it should be assigned based on strong, Support (now resistance when bearish). in this case, there is a strong support at the 78.6. We also have some strong support at the 61.8 which we will not take for granted, but we put priority over a more recent support.
Hope it's clear enough to understand.
next is to use whatever indicators you usually use to know when to enter. With the interest rate decision pending, there should be some volatility very soon on this pair. A trade like this is worth losing, we trade worst and accept a loss, this is worth the shot.
Most likely the rates will be unchanged, it's usually the statement that has the bearing due to the RBNZ (government involvement) policies.
Patterns? patterns are just a face that represents something that is within the chart that is not usually identifiable by the average trader. I believe that a trader must learn how to identify what is within the chart first, before learning to identify a pattern. Patterns should be learnt after as an easy way of spotting what is within the chart that is actually saying there will be a reversal.
What is inside the chart that one should be able to identify before a pattern?
Ans: support and resistance that varies based on their strength.Using this cypher as example: An A leg can be formed by a support that's not so strong, however it is identified as the wave 3 (Elliott wave) that's a subwave within the wave 5 which went on to form the C leg of the pattern. The B leg is usually formed by a very strong support.. It is usually a Phi level which works more harmonic when the 61.8 is the retracement since this Phi correlates with the 1.27% extension (which is perfect for our C leg.
math time now. If 61.8 correlates with 1.27, and 38.2 goes with 1.618, what does 50% correlates with?
Ans: 1.272- .618 = .654, just as .654 + .50 = 1.154.(which is very close to our A-C which is 1.142). but lets not work with very close. lets calculate why it's 1.142 and not 1.154
we establish that the higher the retracement, the lower the extension, so therefore, our B leg is 0.516. .016 more than 50%. Next: .016 x .618 = .01. 1.154 -.01 =1.144 (which is practically our A-C.
Our C leg is a combination of Phi and strong resistance, and also a 5th wave.
to get to our D leg we must past B since it's our strongest support so far, {which is why one can trade from C-B in a pattern). Psychology now plays an important role in clearing our B point. Traders will realize that we just topped out at a 5th wave and will look for a 61.8 retracement. therefore, getting past B will be easier than before.
One of the hardest task is identifying D. Conventionally persons will automatically assign a 78.6 for the D leg, but it should be assigned based on strong, Support (now resistance when bearish). in this case, there is a strong support at the 78.6. We also have some strong support at the 61.8 which we will not take for granted, but we put priority over a more recent support.
Hope it's clear enough to understand.
next is to use whatever indicators you usually use to know when to enter. With the interest rate decision pending, there should be some volatility very soon on this pair. A trade like this is worth losing, we trade worst and accept a loss, this is worth the shot.
Most likely the rates will be unchanged, it's usually the statement that has the bearing due to the RBNZ (government involvement) policies.
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