Today I am going to introduce the custom indicator I use to define trends and Consolidation. I developed the indicator out a necessity and have found it more and valuable as time goes by. For this pair I have three horizontal lines on the indicator. The two outside lines at -.0150 and +.015 indicate levels at which I can expect consolidation and choppy price action to be the predominate market. These levels are different for other pairs and other time frames.

For the GBPCHF we are approaching the -.0150 level now. In the chart below I identified just such an area. Although price did move down over the next week and a half the price levels at that time were almost the central corridor for consolidation for the next 5 months. A touch of the line does not indicate the trend is over. It merely suggests that this level is a level of common interest in the market and that it could very well be seen in the future. You may also notice that every black candle created during that period of consolidation was filled back in.

The trend on this pair is still rather new if you see it as a down trend. It has broken below the 1.6116 low from 10/13/09 but hasn't closed below there yet. The low from 03/10/09 is just a bit further lower at 1.5846. 1.6000 will be key going forward. If you are a firm believer in the down trend short positions here for a test of 1.6000 and 1.5850 might just be a solid play. The pair is consolidating to the downside indicating some downward pressure. I like the long play from 1.6250 to 1.6300+. I also really like a move back to 1.645o though I may have to wait for a few days or weeks to get that. The market is very choppy right now and may stay so until Friday's NFP release.

Here is a great example of this from 2005-06. After reaching the +.0150 line the pair promptly fell back and spent the next 8 months in a sideways chop that was killer if you you were trying to play breakouts.

Comments

Add New Search

Write comment

Name: Email:  do not notifynotify Website: Title: UBBCode:         -color-aquablackbluefuchsiagraygreenlimemaroonnavyolivepurpleredsilvertealwhiteyellow -size-tinysmallmediumlargehuge     Please input the anti-spam code that you can read in the image.

Powered by !JoomlaComment 3.26

3.26 Copyright (C) 2008 Compojoom.com / Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."