Thursday, February 18, 2010

Feb 19: GBP USD - Travelling to ITD 3 low / MTD 10 low

We did hit ITD 2 high in 10 trading days as per my last post and then reversed sharply as the Fed increased the discount rate by 25 basis point.

Currently we are travelling to ITD 3 low which is due on average Feb 24. This would likely be MTD 10 low as well.

Tuesday, February 9, 2010

Feb 10: GBP USD - Travelling to ITD 2 High

Before reading the comments below, take a look at my last weekend's GBP USD Delta update from the navigation menu above in case you have not.

I am still going with the original count that we are currently moving to ITD 2 high. In addition, although I said ITD 2 high on average is due next Monday, there are two instances in the past few cycles where it was due in 10 calendar days, so that brings next Wednesday as a turning point if it were to repeat the same thing. This late ITD 2 high scenario could be possible if MTD low was due at 1.5533.

However, I am still leaning towards early or on time arrival of ITD 2 high, because I think the MTD is still travelling down. The alternate above however is something to keep in mind if we keep making new highs until next Wednesday.

Saturday, February 6, 2010

Feb 6: EUR/USD - Medium Term Low Possibly IN

Among the major currencies, EUR/USD has been the hardest hit, having fallen from 1.5142 to 1.3584 in 72 calendar days.

There is however an opportunity to go long early next week based on several observations. I have done a quick Delta MTD count for EUR/USD and it seems that it is quite probable that medium term low has arrived last Friday.

From the chart, we can see that MTD 12 low is due after the yellow line. Furthermore, in the last cycle, the length of time from MTD 9 to MTD 12 is 76 calendar days. In the current cycle, the length of time from MTD 9 high (1.514) to last Friday's low (1.3584) is 72 calendar days. With the weekend, the length of time from MTD 9 high to next Monday is going to be 75 calendar days, which is very similar in time compared to the last cycle.

A couple of things support the idea of a corrective bounce:
1. Stochastic is very oversold and in need of corrective bounce.
2. The distance between MTD 9 to MTD 10 is equal to the distance between MTD 11 to MTD 12 (bearish flag pole is completed).
3. The 1.35 - 1.36 area is the weekly ichimoku cloud support zone.
4. Last Friday we had a hammer candle.
5. USD Index daily chart made a doji last Friday

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