Compare & Contrast with Christopher Lewis

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As of a moment ago, I determined I would come to this thread to consider the foreign currency pairs in terms of two concepts, "errant sons" and "boundary violations."

Though its weekly trend is neutral, with USDJPY having been in consolidation for the past two to six weeks (depending on one’s perspective), the two-week price flow remains very bullish. Moreover, at 136.04, the rate has reached the bottom of the weekly price range by one estimation. (The other number I calculate to be the bottom of the range is 134.92, merely another 112 pips below the current price.

Accordingly, I will be watching for the right opportunity to buy this pair, which is to say, when the 32-, 16- and 8-hour baselines all reverse course to assume bullish trajectories. (This would be a "Four-day Errant Son" setup.)

 

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LOOK TO BUY THESE PAIRS IF THEY GET INTO AN ERRANT SON SCENARIO ON THE HOURLY CHARTS...
AUDUSD

Even so, I should note that in the grand scheme of things (i.e., from the perspective of the 40-day price flow) this pair remains bearish, and should the rate climb above 0.6974 (it is presently at 0.6921) it will enter "Errant Son" territory with respect to the associated baseline.

 

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LOOK TO BUY THESE PAIRS IF THEY GET INTO AN ERRANT SON SCENARIO ON THE HOURLY CHARTS...
AUDUSD

The Aussie-U.S. dollar got into just such a scenario with respect to the 16- and 32-hour baselines about 12 hours ago when it dropped down to 0.6877. Permission to enter a long position would have been granted about seven hours ago when the two-hour baseline began to hook north. Exiting the position now would have resulted in about 40 pips' worth of profit.

 

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WHAT SUGGESTIONS DO YOU GET WHEN YOU LOOK AT THE FOUR HOUR CHARTS?

• Buy AUDJPY if and when it rebounds off 48-hour temporal support.
• Sell AUDUSD when the 32-hour baseline hooks downward. Until then, buy it whenever it is an Errant Son with respect to a bullish 32- and 16-hour baseline; and/or banks off 48-hour temporal support.
• Consider buying EURGBP below 0.8416.
• USDCHF is looking a extremely bearish 16- and 32-hour baselines.
• Be prepared to buy USDJPY if the time is right should if fall below 134.69.

 

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WHAT SUGGESTIONS DO YOU GET WHEN YOU LOOK AT THE FOUR HOUR CHARTS?

USDJPY went all bearish last week, yet the four- and 12-day baselines are still bullish. Given this fact, and seeing as how the pair has been stuck below 136.83 for two days, don't be surprised to witness it bust a move to the north any time now.

 

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This is the last reported view on USDJPY from Pezza (from last Thursday)...

However, in comparing and contrasting it with my own measures, I see this pair as having reached the bottom of the six-day price range, and as a result, am really not expecting it to drop much farther, if at all. But on the other hand, the eight-hour baseline has not yet turned north, and until and unless that happens, this asset still requires that traders regard it as bearish.

 

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LONG RANGE PLANNING...

The construction of the following market condition interpretations depended heavily on the twelve-day price flow, formerly considered to be the measure which conveyed where exchange rates were headed in the long run; the 40-day price flow, adopted as what is, in reality, the valid measure indicating where exchange rates are ultimately headed in the long run; the six-day price range envelope, beyond which rates seem very reluctant to venture; the 12-day price range envelope; the 24-day price range envelope; and the 40-day price range envelope.

GBPUSD has been climbing for approximately 10 days now, yet most of the longer-term measures are still bearish. Given that the top of the six-day price range is currently estimated to be somewhere in the neighborhood of 1.2324 to 1.2347, I'm anticipating a major selling opportunity to develop somewhere between that region and where the pair is presently located at 1.2177.

I see just the reverse happening with EURJPY. On Friday, the pair came very close to bouncing off the base of the six-day price range, which was calculated to be at 135.35. (It bounced at 135.53.) Given that the bottom of the 12-day price range is estimated to be around 133.97, I wouldn't be surprised to see a major buying opportunity unfold between that level and where price is now at 136.20.

USDCHF is becoming an "Errant Son" with respect to a bullish 40-day baseline, while at the same time approaching the base of the six-day price range. This is why I see the potential for a possible major buying opportunity to manifest somewhere between its present level and 0.9402.

 

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I'm supposedly going to be returning to live trading on Wednesday, God willing, and I have all the knowledge and tools I need to be profitable everyday, provided I don't make any foolish mistakes. So, the goal is to avoid them at all cost, and if one is made, to never make it twice. (Keep records!)

Toward that end, I am reviewing and collecting from everything I've written in the past that was worthwhile, and intend to fold it into my daily routine. This includes the weekly price range, which cannot be duplicated on lower-time-frame charts and must therefore be referenced independently/separately. This is especially important given that I intend to be trading Nadex weekly knock-outs.

With this in mind, let me note that AUDUSD is above the projected weekly price range. This does not mean the rate will be falling next week, but it does mean I should keep it in mind in case I see signs of weakness. Also, USDCHF is below the projected weekly price range. This does not mean the rate will be climbing next week, yet I should keep this in mind in case it begins to show signs of strength.

Both pairs will need to be reviewed at the start of the week (on Sunday) to see if their condition remains the same once fresh figures are calculated for the new round of sessions.

Based on a quick but substantive review of this week's charts, of all the alternative approaches I have at my disposal, I think the tactic represented below, the "23-Minute Errant Son" strategy is superior (by far) to everything else...

The first mistake I need to avoid is focusing so much of my attention on pullbacks that I forget about the importance of consulting temporal support and resistance, so let me start compiling a checklist of everything, to which I can refer until I have it all memorized.

 

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DAILY ROUTING (THUS FAR):

1. Check the weekly charts to see if any of rate is above or below the projected weekly price range. (This does not mean that a reversal is imminent, but it might mean that a dramatic reversal could occur if stimulated by related economic data.)
2. View the daily charts to see if any of the currency pairs is evidencing a hook (reversal) at the top or bottom of the six-day or 12-day price range. (If the reversal follows through, it could mean several days of a committed/continued trend.)

Speaking of daily charts, though the six-day trend is bullish, and the 12-day trend just transitioned from bearish to neutral, GBPUSD is looking at a 40-day trend that remains solidly bearish. After spending a couple of days heading north, the daily trend appears to reversing direction to rejoin the two-day trend in the decent it initiated six or seven days ago. I should therefore be prepared to take advantage of opportunities to short GBPUSD when and where this seems to make sense (if it really does appear to be initiating a new leg downward).

USDJPY is doing the exact opposite. What's more, it is doing so after having rebounded off statistical support on Wednesday and Thursday in the form of the lower end of the six-day price range somewhere in the neighborhood of 131.84.

(The "clincher" will be when and if the four-day baseline joins the two-day baseline heading north!)