Potential Bearish Push To 0.83420 | $NZD $USD #forex
Traders,
FUNDAMENTAL BACKGROUND:
On a fundamental basis, NZD may have demonstrated all the bullish strength it could following its 0.88345 just about 14 days before RBNZ raised its central rate from 3.25 to 3.50%. While the Pavlovian Forex trader might have anticipated a rallying in the currency on the back of this rate increase, one has to look into the weighing of debts, compounded with the decrease returns from lower milk futures to expect that further price upside have become glowingly limited by export costs and weaker revenue potential for this export-dependent economy.
With this fundamental background, one would tend to look for further downside in price action, in terms of pattern development and predictive/forecasting model-based analyses.
PATTERNS ANALYSIS:
One pattern I look for is the Shark-to-Five-Zero (or simply: Shark and 5-0) patterns.
For one, Sharks, if living up to their signature extensions (i.e.: 1.131 x 0-X) whereby the terminal Point-C completes such pattern BEYOND Point-Zero (yes, very unusual geometries), then I tend to look at this as a market-driven directional indicator. First, as you may recall, Sharks are quasi-patterns, in the sense where they start at a qualitative point called ZERO, and complete at Point-C, which is very different to all other classic patterns which maintain their standard X-A-B-C-D anatomical points.
But this is an important detail, because being quasi-patterns 9i.e.: almost complete), they in fact seek completion by acting as gate-keepers to an associated pattern called Five-Zero, or simple 5-0 ("five-oh"). The 5-0 pattern thus completes at a conventional Point-D, which is classically situated at 50% of the B-C impulse leg, hence its 5 and 0 for 50.
Now, looking back at the chart, and keeping the directional meaning of a Shark extending past a historical structure low of 0.84013, one has to suspect that bears will remain in charge for MOST of the price field.
I say most, because the 5-0 will probably find expression all the way to 0.85883, thus pulling its geometric envelop at a point that has been validated multiple times before (see the large rectangular feature which would otherwise lay hidden as an occult geometry).
While there is never any certainty about which pathway price is about to follow, here we are simply talking about a Shark-to-Five-Oh follow-through, not because it has to happen, but simply because the fundamentals are calling for further downside. Therefore, situating ourselves relative to upside potential, and being able to approximate what the upside (counter-fundamental reaction) levels can be should help the trader avoid wasting time if indeed this pair were to fall further after a time-consuming rally.
For the sake of speculating visually on the possible price action/pathways, I have drawn blue arrows to depict the most probable pathways, while grey arrows depict the less probable, and the lightest depicting the least probable. ALL of these levels are geometrically defined, except for the top-most, which has been defined by the model given the low probability scenario of a significant adverse excursion.
(...)
Analysis continues in body of discussion thread
(...)
David Alcindor
FUNDAMENTAL BACKGROUND:
On a fundamental basis, NZD may have demonstrated all the bullish strength it could following its 0.88345 just about 14 days before RBNZ raised its central rate from 3.25 to 3.50%. While the Pavlovian Forex trader might have anticipated a rallying in the currency on the back of this rate increase, one has to look into the weighing of debts, compounded with the decrease returns from lower milk futures to expect that further price upside have become glowingly limited by export costs and weaker revenue potential for this export-dependent economy.
With this fundamental background, one would tend to look for further downside in price action, in terms of pattern development and predictive/forecasting model-based analyses.
PATTERNS ANALYSIS:
One pattern I look for is the Shark-to-Five-Zero (or simply: Shark and 5-0) patterns.
For one, Sharks, if living up to their signature extensions (i.e.: 1.131 x 0-X) whereby the terminal Point-C completes such pattern BEYOND Point-Zero (yes, very unusual geometries), then I tend to look at this as a market-driven directional indicator. First, as you may recall, Sharks are quasi-patterns, in the sense where they start at a qualitative point called ZERO, and complete at Point-C, which is very different to all other classic patterns which maintain their standard X-A-B-C-D anatomical points.
But this is an important detail, because being quasi-patterns 9i.e.: almost complete), they in fact seek completion by acting as gate-keepers to an associated pattern called Five-Zero, or simple 5-0 ("five-oh"). The 5-0 pattern thus completes at a conventional Point-D, which is classically situated at 50% of the B-C impulse leg, hence its 5 and 0 for 50.
Now, looking back at the chart, and keeping the directional meaning of a Shark extending past a historical structure low of 0.84013, one has to suspect that bears will remain in charge for MOST of the price field.
I say most, because the 5-0 will probably find expression all the way to 0.85883, thus pulling its geometric envelop at a point that has been validated multiple times before (see the large rectangular feature which would otherwise lay hidden as an occult geometry).
While there is never any certainty about which pathway price is about to follow, here we are simply talking about a Shark-to-Five-Oh follow-through, not because it has to happen, but simply because the fundamentals are calling for further downside. Therefore, situating ourselves relative to upside potential, and being able to approximate what the upside (counter-fundamental reaction) levels can be should help the trader avoid wasting time if indeed this pair were to fall further after a time-consuming rally.
For the sake of speculating visually on the possible price action/pathways, I have drawn blue arrows to depict the most probable pathways, while grey arrows depict the less probable, and the lightest depicting the least probable. ALL of these levels are geometrically defined, except for the top-most, which has been defined by the model given the low probability scenario of a significant adverse excursion.
(...)
Analysis continues in body of discussion thread
(...)
David Alcindor
