Don't be selfish

Study Case

Monday, 27 May 2013

MJ Gann method analysis on EURUSD Daily chart:

Without time applied:
Price was at its lowest at 1.20389. From here we analyse the price’s first true rejection point which will give us 50% retracement.
We notice that price respects the rejection at the 270 cycle and going down to touch the 180 cycle line. Retracement of 50% was calculated from 90 - 270 -180.
Price will now move from this support cycle (180) to complete the full cycle at 1.34668.

Applying time and price together:
Price’s first rejection was at 1.31023 (270) so we know that the next move will target the 360 cycle after a bounce at the 50% retracement point from 1.27428 (180). To confirm this move, we apply cycle lines (time) from the start of the lowest candle to the first candle that respects the rejection.
We now have four boxes and can start plotting the price meeting points. Also, we need to apply the time trend outside the boxes to help us identify if price is still within the predicted movements.
We noticed that price moved out of the time trend but this is ok because the predicted movement is “up”. The price moved ahead of the first meeting point reaching the first rejection point at 1.31023. Since price has reached ahead of time, it will move and correct itself to the next meeting point at 1.27428 at the end of the second time cycle. We can see that the price respects the appointment and meet up at the end of the time cycle.
Now that the move is confirmed, price will move from this point and the target is 1.31023 at the end of the 3rd time cycle. Again, we noticed the price moved ahead and exceeded the target before the end of the time cycle and eventually moved back to the meeting point when time comes.
Now that this is confirmed, we are certain that price will definitely move to 1.34668 to complete the full cycle.  Again, price is moving fast and completes the full cycle ahead of time.

What happens after a full cycle:
Price as we know it cannot move in straight lines so it must respect the nature of cycle and retrace. 

Cycle continuation:
Continuing where we left off previously when price achieved full cycle ahead of the meeting point. We are now observing if price will move back to the meeting point. Price was rejected from the upper trend and moving downwards to the meeting point. However, price broke the middle trend line after a bounce and continue to move downwards. Now nearing the end of the time cycle, the price is unable to make it to the meeting point and subsequently met the opposite meeting point at the lower trend line (white circle).

Out of the box:
Now we need to confirm 2 things- Price will retrace 50% from the full cycle before continuing upwards for another cycle, or price will now move 360 cycle downwards.

New cycle or bounce:
We will expect the price to meet at the second meeting point to complete the 50% retracement to confirm a continuation or a bounce. The price achieves 50% retracement (360 – 180) ahead of time again and bounces upwards from the middle trend line. We will now observe if the price will move back to the meeting point at the end of the cycle to determine the next target.  However, price has not moved back to the meeting point and continued to move upwards to the opposite end.

With that analysis, we still cannot confirm if the price will start moving upwards because its still within the down trend line. If the price breaks the upper trend line and closes above 1.31023 within the next few days, we can confirm a bounce and will target 1.34668 as our next target. If price is unable to break the upper trend line and is rejected within the next few days, we can confirm that price has started a down move cycle and our next target will be 1.23884

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