After a massive plunge from AUD rate cut on 3rd May 2016, the topping pattern became clearer.
The first D1 chart shows a resistance confluence trendline.
Zooming in, this resistance confluence shows a price pattern in which 5 weeks of high was flushed. Price is currently now perched at the support level of 0.7500 a psychological level as well. It can also be seen as a neckline as previous 2 attempts to break were not successful.
Clue to short this will be from a bearish #trappedtrader signal, so that legitimizes the reason to why shorting will be done despite being at the current neckline suport. Should there be more retracement then more shorts will be added in.
A head and shoulders neckline has been completed. The neckline has been broken with a bearish trappedtrader signal. A clear indication of price being ready to resume downtrend.
How can #trappedtraders signal be used in conjunction with classical chart patterns for better trading synergy?
Price has reached a trendline resistance confluence, with the head and shoulders validating the resistance confluence of the trendline. The head and shoulder is also a manifestation of the dow theory at work when the zigzag up is violated and hence suggests a halt to the uptrend for several weeks. With the print of a shooting star on yesterday’s close, it thus suggest this head and shoulder pattern might be going to cause another downmove.
Going into h4, the shape of the head and shoulders is apparent. What is even better for a chartist will be a small blag, print by multi days worth of price movement. This represents the neckline being tested, and this bear flag is validated by the daily shooting star ( #trappedtrader) signal. An immediate short will be good if we wish to capture some pips within the next few days.
After RBNZ announcement of rate cut, price completed the head and shoulders in style. I have extensive observations on pivot in d1 line chart for the past 2 years. I notice that price often does a sharp turn from their levels.
I have thus placed a blind sell limit from the 2 x d1 pivot/ neckline / 4weeks low for a play on reactionary spike.
This will be something for week25.
Currently I only have a HTF chart to believe that price is heading for a reversal.
In order to join in this long, I am currently waiting for a LTF setup that will test 1.5000 as well.
there were already signs of topping out in week22.
A down flag had already appeared.
On this, a first short was entered. However the reality was that the position was taken out. My learning point
was that i have to manage better the SL to avoid getting flushed.
2nd June 2015
A more definite signal to the end of the pivot still lies with an expansion day.
Change in colored expansion days suggests the end of the pivot. I reshorted with smaller positions upon it.
ASX D1 trade outcome
exited at the bottom of the bear flag although eventually there was more downmove.
Had been waiting for this trade for a long time with big picture planning.
this is classic neckline retest of a Double Top. If price should print a right shoulder, then it will be the highest probability retest via a hns.
The bearish engulfing day was significant because it happened near the confluence of the neckline as well as a f6. A topping pattern here will be extremely high probability.