Symmetrical Triangle Pattern Formation in GOLD

GOLD Sell Below 1285 CMP 1287Stop @ 1300 TGT 1265 – 1245 – 1217

A Symmetrical Continuation Triangle (Bearish) is considered a bearish signal, indicating that the current downtrend may continue.

Description

A Symmetrical Continuation Triangle (Bearish) shows two converging trendlines, the lower one is ascending, the upper one is descending. The formation occurs because prices are reaching both lower highs and higher lows. The pattern will display two highs touching the upper (descending) trendline and two lows touching the lower (ascending) trendline. This pattern is confirmed when the price breaks out of the triangle formation to close below the lower (ascending) trendline.

Target Price

The target price provides an important indication about the potential price move that this pattern indicates. Consider whether the target price for this pattern is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5% before a pattern should be considered useful. However you must consider the current price and the volume of shares you intend to trade. Also, check that the target price has not already been achieved.

Gold is forming Symmetrical triangle pattern formation from the high of 1331 and support of 1268 and after it enter in the range bound, where it made lower top and higher bottom formation. It’s nearing the lower support level of 1285 and sustain below 1285 on closing basis it will give a confirmation of the breakdown of the triangle. Height of the triangle comes to 68 points (1331 – 1268) and calculation the target from the breakdown point of 1285 (1285 -68 = 1217) expected target comes to 1217$ in near to medium term.

One Pager Positional Report on WTI OIL

WTI OIL BUY @ 104 CMP stop @ 101 TGT 108 – 111  :- Wave III completion

                The basic pattern of the Elliott wave principle, how price moves not in a straight line but in a series of rises and retracements. Except for unusual circumstances, price moves in waves and not in a straight-line run. These waves are like the tide coming in. Price advances and recedes, advances a bit more and recedes, slowly creeping up the shore. The outgoing tide shows the wave advance not as far as previous waves, and withdrawing further. The motive phase is composed of three advancing waves, 1, 3, and 5 and counter trend waves 2 and 4. Following the motive wave comes the corrective phase. It shows two receding waves, A and C, with a counter trend wave between, B. The series, 1 through 5 and A through C can be repeated to show how the tide comes in, or price advances up the chart. If you were to zoom in on waves 1 and 2, you would see the same 1 through 5 and ABC combination. You can say the same about waves 3 and 4, 5 and A, B and C (with the structure reversed). In this manner, the cycle is fractal, meaning the closer you zoom in, the more motive and corrective phase combinations you see. If you were to zoom out, say look at the structure from across the room or from the other side of your yard, the 1 through 5 and ABC combination would take shape of waves 1 and 2.

            From the above chart WTI OIL after testing the lower support at 91.75 forming Double Bottom formation and reversal in price was seen and also have crossed the neckline at 100$ and tested the higher level of 105 from where short profit booking was seen. Rise in price from 91.4 to 105.2 can be consider as wave I of the Elliot wave theory and there after correction pattern tested the level of 97 in form of wave II which was near to 61.8% retracement of wave I which was coming at 96.3, but price reverted from 97 and in showing formation of inter wave of wave III. It in inter wave its again in (iii) wave where the expected target comes to 108$ and after a short dip till 106$ in form of wave (iv) will again move to test the level of 111 – 112$ where the inter wave (v) will get over with larger wave III.

One pager positional report on NZDUSD

NZD/USD SELL @ 0.8550 CMP stop @ 1.8700 TGT 0-8350 – 0.8200 – 0.8050

                The double top is a frequent price formation at the end of a bull market. It appears as two consecutive peaks of approximately the same price on a price-versus-time chart of a market. The two peaks are separated by a minimum in price, a valley. The price level of this minimum is called the neck line of the formation. The formation is completed and confirmed when the price falls below the neck line, indicating that further price decline is imminent or highly likely.

The double top pattern shows that demand is outpacing supply (buyers predominate) up to the first top, causing prices to rise. The supply-demand balance then reverses; supply outpaces demand (sellers predominate), causing prices to fall. After a price valley, buyers again predominate and prices rise. If traders see that prices are not pushing past their level at the first top, sellers may again prevail, lowering prices and causing a double top to form. It is generally regarded as a bearish signal if prices drop below the neck line.

The time between the two peaks is also a determining factor for the existence of a double top pattern. If the tops appear at the same level but are very close in time, then the probability is high that they are part of the consolidation and the trend will resume. Volume is another indicator for interpreting this formation. Price reaches the first peak on increased volume then falls down the valley with low volume. Another attempt on the rally up to the second peak should be on a lower volume.

            From the above chart NZDUSD reverted from the level of 0.8726 forming double top formation and is nearing the support level of 0.8515 which is the neckline of the pattern and once the neckline is broken below 0.8515 will confirm the trend for the down side move. Currently its trading at 0.8540 level and on closing basis if neckline is crossed will open the door for 0.8350 – 0.8200 – 0.8050 level where the previous bottom will be tested at 0.8050 which was seen in Feb. 2013 where lower level we can wait for. 

One Pager Positional Report on EUR/USD

EUR/USD SELL @ 1.3645 stop @ 1.3950 TGT 1.3250 – 1.2850 – 1.2450 – 1.2050

            The Rising Wedge is a bearish pattern that begins wide at the bottom and contracts as prices move higher and the trading range narrows. In contrast to symmetrical triangles, which have no definitive slope and no bullish or bearish bias, rising wedges definitely slope up and have a bearish bias. Even though this article will focus on the rising wedge as a reversal pattern, the pattern can also fit into the continuation category. As a continuation pattern, the rising wedge will still slope up, but the slope will be against the prevailing downtrend. As a reversal pattern, the rising wedge will slope up and with the prevailing trend. Regardless of the type (reversal or continuation), rising wedges are bearish.

From the above chart it has been seen that EURUSD has fallen from 1.4940 Level in Feb. 2011 and tested the lower level if 1.2040 in July 2012 where in around one and a half year it has drifted by 2900 pips and after the sharp down trend EURUSD moved upside and retraced by 61.8% retracement of the fall and testing the higher level of 1.3995 at point D where closing was seen below 1.3900 level just near the 61.8% retracement which was coming at 1.3820 level. Recently its facing a good resistance at 1.4000 on breakout basis and 1.3900 on closing basis we expect down trend to continue which is seen in last two consecutive days, Initial support of 1.3720 is broken of the first trend line and is nearing the next support of 1.3480 and if the same support is broken then down trend is confirm and it’s expected to test the level of 1.2050. 

It is forming RISING WEDGE pattern formation where height of the wedge from 1.3485 to the support of 1.2040 comes to 1445 pips and we have seen initial breakdown at 1.3720 and next breakdown is seen at 1.3480. Calculating the target fall from beak down of 1.3480 the expected target comes to 1.2035 which is also the previous bottom in July 2012. Till the time EURUSD is below 1.4000 one can expect the level of 1.2050 in medium to long term, where positional trader can enter with sell position with given target of 1.2850 – 1.2050 level around profit booking in phase manner. 

One Pager Positional Report on AUDUSD.

AUD/USD SELL @ 0.9230 stop @ 0.9500 TGT 0.8850 – 0.8500 – 0.8150 - 0.7700

            AUSDUSD after giving breakdown below 1.0010 which was the support trend line of the Symmetrical triangle has tested the support level of 0.8850, where this fall can be considered as wave I of the Elliot wave theory. After testing the support at 0.8850 we have seen a short pullback in price and tested the level of 0.9755 which was 50% retracement of wave I from point of 1.0580 to 0.8850 testing the level of 0.9755. Sharp reversal is seen from the wave II and it’s in the continuation of the wave III, this wave III is in formation and is in inter wave. Currently it’s in inter wave iii where reversal is seen from 0.9460 which has retraced by 61.8% of inter wave i and is in inter wave formation of wave iii where lower side is expected at 0.8400 to 0.8170. This is calculated by a-b-c pattern of 61.8% retracement theory where 0.8400 comes to be the 100% expansion and 0.8170 comes to 121.8% expansion of inter wave i. This level of 0.8170 – 0.8400 will be the completion of wave III in larger wave cycle and will give a short pullback in form of wave IV but not beyond 0.8800 and reversal in price might be seen from 0.8500 – 0.8600 range and will enter in wave V of the downside wave pattern formation.

            Taking the height of the triangle which is from 1.1080 to the bottom of 0.8770, difference of which is coming to 2310 points and breaking below the support trend line at 1.0010 expected target as per breakdown is seen at 0.7700 level in long term.